Some analysts question estimate of savings

WASHINGTON — One big reason the Congressional Budget Office projects that federal budget deficits would drop by $138 billion over a decade under the pending health care overhaul is that the bill includes a tax on high-end insurance policies. That accounts for almost 25 percent of the expected savings.

But the tax wouldn't go into effect until 2018.

"How can anyone have confidence this will go into effect?" asked Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group.

The tax was so unpopular this year that Democrats basically gutted its initial version, then postponed its impact for eight years.

Now opponents have eight years to lobby for its full repeal by a future Congress.

The tax estimate is part of the preliminary analysis from the nonpartisan CBO, a report that Democrats are using to trumpet their plan's big deficit savings and to persuade fiscal conservatives to vote for the bill. Analysts warn that it's based on several highly uncertain assumptions.

"CBO is the most trusted analysis out there, but everything they say, you should take with a humongous grain of salt," said Marc Goldwein, the policy director of the Committee for a Responsible Federal Budget, a Washington budget watchdog group.

It's tough because of legislative items such as these in the revamped health bill:

Medicare and other government health programs: The legislation assumes nearly $500 billion in 10-year savings from curbing waste, fraud and abuse and changing the way that health care providers such as doctors and hospitals are paid.

It assumes that the plan to cut physician payments by 21 percent this year remains in effect, although Congress has a long history of canceling scheduled pay cuts to doctors.

The CBO knows that, but it can analyze legislation only as it's presented. So its analysis shows some budget savings that are unlikely to happen.

Republicans say the savings are artificial, since the doctors' pay cut is expected to be canceled. Democrats counter that the bill would make up the difference with other savings by inducing more efficiency in the system, but analysts are skeptical.

"The question is will providers try to improve efficiency or come back to Congress to get their payments raised?" asked Robert Bixby, executive director of the Concord Coalition, a budget watchdog group.

Excise tax: The Senate had sought to impose a tax on high-end insurance policies starting in 2013. Labor unions balked, and the final version delays the tax's implementation until 2018 and raises the income levels on what can be taxed. The changes reduced the amount of likely revenue from $149 billion in the Senate bill to $32 billion now, and analysts doubt that even that may be realized.

Long-term care insurance: Some $70 billion is counted as savings from including a long-term care program in the legislation. Participants would pay premiums into the program for years before they entered the system, building up the fund, but the premiums would be spent in the future to pay benefits, so how's that a savings? Premiums and benefits are supposed to adjust automatically to match each other, but what if the program's income falls short, Goldwein asks.