CBO: Stimulus would provide nearly $90B to HHS, spawn healthcare IT adoption

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The Congressional Budget Office (CBO) has released a report approximating the costs of the current economic stimulus package currently being debated in the Senate with a new amendment, as well as estimating its assistance to the U.S. healthcare system.

Rep. Henry Waxman, D-Calif., chair of the House Energy and Commerce Committee, requested the CBO analysis of the proposed Senate revised H.R. 1. Sens. Daniel K. Inouye, D-Hawaii, and Max Baucus, D-Mont proposed a senatorial substitute to H.R. 1, which was passed in the House of Representatives last week

In the report, the CBO and the Joint Committee on Taxation estimated that enacting the entire Inouye-Baucus substitute for H.R. 1 would increase budget deficits by $694 billion over the 2009-2010 period, and by a total of $884 billion over the 2009-2019 period.

The bill would establish Medicare bonus payments, beginning in 2011, for providers that adopt and use certified I.T. systems. Beginning in 2016, Medicare would reduce payment rates to providers not using such systems. CBO estimates the provision would increase net Medicare spending by $17.7 billion over the 2011-2019 period. Medicaid also would establish bonus payments, but not penalties, resulting in a spending increase of $12.4 billion during the 2011-2019 period.

The office estimated funding would increase $23.4 billion for programs administered by the Department of Health and Human Services (HHS). For these funds specifically, the CBO expects that most of the funds provided would be spent within two-and-a-half years.

Under the current H.R. 1 substitute, the report estimated that about 45 percent of hospitals and 65 percent of physicians will have adopted qualifying healthcare IT in 2019. The CBO also estimated that the incentive mechanism would boost the adoption rates to about 70 percent for hospitals and about 90 percent for physicians.

Also, the Inouye-Baucus amendment to H.R. 1 contains provisions that would increase direct spending for unemployment healthcare insurance, healthcare, fiscal relief for states through the Medicaid program, and other programs. In total, CBO and JCT estimated that enacting the bill’s provisions would increase direct spending by $88 billion in 2009, by $107 billion in 2010, and by $269 billion over the 2009-2019 period, and would reduce revenues by $101 billion in 2009, by $219 billion in 2010, and by a net amount of $253 billion over the 2009-2019 period.

Four billion would be appropriated to several accounts in the Department of Veterans Affairs (VA), an increase of 25 percent compared with appropriations provided to those accounts for the current year to date, the office said. Almost $3.7 billion of the amounts provided would be for construction and maintenance of VA medical facilities. In recent years, the office said that those accounts have received significant increases in funding, and most of those additional amounts have gone unspent in the year they were provided. Consequently, CBO estimated that VA would spend only about 10 percent of those funds in 2009—rather than the usual first-year rate of 38 percent. CBO estimated that spending would increase in the second and third years, so that 50 percent of the funds would be spent by the end of fiscal year 2010, and more than 80 percent would be spent by the end of 2011.