CBO Study Said to Put Lower Price Tag on Health Care Reform Plans — With a Caveat

Much has been written in Knowledge at Wharton and elsewhere about extending health care coverage to more Americans. In Washington so far, there has been a lot of discussion surrounding "universal coverage" and the need to lower costs, but there is no wide-ranging health care reform proposal from the Obama administration or Congress. With nothing but vague notions out there, little is known about what the price tag might be.

But in an article titled "Numbers Racket," The New Republic says it has gotten wind of some cost estimates by the Congressional Budget Office (CBO), which is tasked with figuring out the real price of legislation offered by members of the Senate and Congress. Based on "rough proposals that reformers in the Senate submitted for consideration" the CBO came up with a figure of $1 trillion. The magazine says that's "a lot less than many outside experts had predicted." The outside experts' prediction? "A politically daunting $1.5 trillion."

The article suggests this reason for the lower estimate: "Even with a requirement that everybody obtain insurance — a so-called individual mandate — the CBO assumes that between a quarter and a third of the uninsured still wouldn't have coverage." Indeed, one of the intractable barriers to universal health coverage is that some people won't buy health insurance at any price, according to Wharton health care management professor Mark Pauly. In an article about the health care debate during the presidential election last fall, Pauly told Knowledge at Wharton that most of the uninsured in the United States are not sick or poor. "They are just taking a chance," he said. "You can't buy insurance in the ambulance on the way to the hospital and cancel it when you get out. It's worth noting that not everybody who fails to buy insurance is miserable."

The New Republic article says it is not clear what parameters guided the CBO estimates, so it is safe to say they are subject to change. The same can't be said of human nature.

Additional Reading from Knowledge at Wharton:

Social Security and Medicare: Trying to Tackle Two 800-pound Gorillas

Why Consumers — Not Companies — Should Make Health Care Decisions

'Major League, Middle Class Anxiety': Is the U.S. Closer to Universal Health Care?