By the Numbers: What's the difference between

$1 trillion and $600 billion?

Technically speaking the answer is $400 billion. The real question is: What is the difference between the Congressional Budget Office's (CBO) $1 trillion estimate of the Senate Health Education Labor and Pension (HELP) Committee's health reform plan from June 15th, and the roughly $600 billion estimate over ten years that is being discussed today?

For starters, the earlier bill was incomplete. It didn't include a public plan option, employer mandates (also known as "pay or play"), individual mandates, or other important cost-cutting features of reform that were still being negotiated. Now, HELP Committee leaders, Edward Kennedy (D-Mass) and Chris Dodd (D-CT), are circulating a letter describing two new components of reform, along with a revised CBO estimate of $611 billion. That significantly lowers the cost of the plan, and HELP leaders write that it, "combined with the work being done...in the Finance Committee, will dramatically reduce the number of uninsured - fully 97 percent of Americans will have coverage."

The two new components of the plan, according to the letter, are:   

1)    A national public plan option that would be available in every state, run by the department of Health and Human Services.
2)    Employer mandates that would require businesses to offer insurance to their employees, or pay $750 a year per full time employee—$350 per part-time employee—to help pay for their health insurance. Small businesses with less than 25 employees would be exempt from the mandate. The fee would generate about $52 billion over ten years to fund health care subsidies for those who can't afford it, according to HELP leaders.   

The $611 billion estimate is less even than what was to be set aside as a "down payment" in the Obama administration's budget. So could health reform really be done at that price over ten years?

Not likely. The reason is that this new proposal is also incomplete. As Jonathan Cohn at the New Republic and Ezra Klein at the Washington Post point out, the Senate HELP committee doesn't have jurisdiction over some of the components of reform that would be necessary parts of a final health reform bill. The Senate Finance Committee will have to expand Medicaid in order for the plan to cover 97 percent of the population. And that could add billions to the final tally. In the end, the $611 billion dollar plan could end being a $1 trillion plan, which is about what reform experts have predicted all along.

So just as the high estimates a couple of weeks didn't include important cost-cutting measures, today's estimate doesn't include the total cost of reform.  The bottom line is we're going to see a lot of estimates of a lot of plans get thrown around between now, and well, whenever the health reform plans get voted on. So sit back, relax, and enjoy the trillion-or-so-dollar ride.

—Kevin McCarthy, associate editor

Here's the text of the HELP Committee letter:

Dear HELP Committee Member:
No issue is more important to our constituents - or to our economy - than health care reform. As President Obama has said - and as even those who disagree about the particulars of reform understand inaction is not an option. The status quo isn't just unacceptable, it' s unsustainable.

As you know, last month we distributed initial legislative language for the HELP Committee markup of the "Affordable Health Choices Act." With bipartisan cooperation and a great deal of hard work, we have already made significant progress and completed our work on issues ranging from prevention to quality of care to the elimination of waste and fraud. Meanwhile, we have continued to discuss and incorporate good ideas from a variety of perspectives and both political parties - already, we have accepted 87 Republican amendments, and in the corning days we hope to work out many more.

Today, we are circulating language for two remaining portions of the bill: a strong public insurance option to offer consumers a reliable and affordable alternative, and a provision for the shared responsibility of employers.

The Congressional Budget Office has carefully reviewed our complete bill, and we are pleased to report that the CBO has scored it at $611.4 billion over 10 years, with the new coverage provisions scored at $597 billion - a significant reduction from earlier estimates.

The completed bill virtually eliminates the dropping of currently covered employees from employer-sponsored health plans. In addition, our bill, combined with the work being done by our colleagues in the Finance Committee, will dramatically reduce the number of uninsured - fully 97 percent of Americans will have coverage, a major achievement.

A strong public option

Like the President and a strong majority of Americans, we believe that a strong public option is an important component of any health reform bill that keeps costs down, expands coverage, and offers American families a wide variety of affordable options. Backed by the government for the public good, not private profit, our public option - called the Community Health Insurance Option - will be a strong, effective national plan that provides Americans with a real alternative to traditional, for-profit insurance.

Here's how it works:
• Our public option will be a national plan, available in each state and territory and administered by the U.S. Department of Health and Human Services, which will negotiate rates and premiums.
• Like private insurance plans, it will be available through the Health Insurance Gateway.
Enrollees will be entitled to the same tax credits as those enrolled in the private plans available through the Gateway.
• And, of course, participation in the public option will be just that - an option for American consumers who will be able to decide what plan is best for their families.

For the 47 million Americans currently living without health insurance, a public option will represent an opportunity to access quality, affordable care. For those who have insurance but stilt struggle to get the care they and their families need, the healthy competition provided by our proposal will offer a wider variety of options while keeping costs down.

And for the many Americans who have good coverage, nothing will change. They will still be able to keep their doctor, their hospital, and their insurance plan. What our proposal offers these families is stability - no longer will Americans with good health care have to worry about losing everything if they lose or change their job, or if someone in their family becomes sick or injured.

Even in the face of scare tactics and false claims that a public option would destroy consumer choice or the insurance industry, a vigorous public option is what Americans want. According to two recent public polls, three out of four Americans support the establishment of a public option to compete with private insurance plans and offer families better choices when making health care decisions.

Moreover, a strong public option isn't just what Americans want - it 's what America needs. All of us understand the importance of the work we're doing. The health of our economy and our families rely on it. But if it's worth doing, it's worth doing right. The Senate must not, and the HELP Committee will not, shy away from this challenge. We must not settle for legislation that merely gestures at reform.

We must deliver on the promise of true change.

Enhanced employer responsibility

A core value of our bill is shared responsibility. To solve the nation's health care crisis, everyone must be part of the solution, including insurance companies, medical providers, the government, individual Americans - and employers. Most employers offer quality health insurance to their workers and their families. These employers, especially smaller ones, need support to continue meeting this responsibility, and our legislation will provide that support.

Americans whose employer chooses not to provide adequate coverage will now have an opportunity to get the care they need through private insurance plans or the public option. But those employers should still share in the responsibility for ensuring that everyone is covered. So those employers (excluding small firms with fewer than 25 employees) that do not offer health insurance would be assessed a modest annual fee of $750 per full-time worker, or $375 per part-time workers, to help pay for their employees' health insurance coverage.

We look forward to discussing this legislation as the HELP Committee continues its historic and long-overdue effort to implement comprehensive health care reform.

Sincerely,

Edward M. Kennedy
Chairman

Christopher J. Dodd
U.S. Senator