n total, CBO and the staff of the Joint Committee on Taxation (JCT) estimate that
enacting the legislation would not have any budgetary effect in fiscal year 2012, and would reduce deficits by $0.1 billion over the 2012-2013 period, $13.6 billion over the 2012-2017 period, and $48.6 billion over the 2012-2022 period. (About $1.9 billion of that $48.6 billion total would be off-budget because of effects on revenues from Social Security payroll taxes).
CBO expects that those changes would, on balance, lower costs for health care both directly and indirectly: directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of health care services prescribed by providers when faced with less pressure from potential malpractice suits. Those reductions in costs would, in turn, lead to lower spending in federal health programs and to lower private health insurance premiums.
Because employers would pay less for health insurance for employees, more of their employees' compensation would be in the form of taxable wages and other fringe benefits. As discussed below, the bill would also increase revenues because it would result in lower subsidies for health insurance. In total, CBO and JCT estimate that enacting the legislation would increase federal revenues by about $7 billion over the 2012-2022 period.
Enacting the legislation also would reduce direct spending for Medicare, Medicaid, the government's share of premiums for annuitants under the Federal Employees Health Benefits (FEHB) program, subsidies for individuals enrolled in health insurance through health insurance exchanges, and other federal health benefits programs. CBO and JCT estimate that direct spending would decline by about $41 billion over the 2012-2022 period.
Federal spending for active workers participating in the FEHB program is included in the appropriations for federal agencies, and is therefore discretionary.
The legislation would also affect discretionary spending for health care services paid by the Departments of Defense (DoD) and Veterans Affairs (VA). CBO estimates that implementing the legislation would reduce discretionary costs by about $1 billion over the 2012-2022 period, assuming appropriation actions consistent with the legislation.