A rare bipartisan measure to eliminate a flawed Medicare payment formula will increase the federal budget deficit by $141 billion over the next decade, according to an estimate from the Congressional Budget Office.
More troubling to supporters of the $200 billion plan is that it will raise federal costs compared to the current law during the decade after 2025, the nonpartisan agency said Wednesday. Supporters have said that while the law might be painful in the short term, it will result in savings over the long run.
The CBO declined to give an exact estimate on how it will raise federal costs after 2025, as the way healthcare is paid for can change by then.
The agency did say that the legislation would amount to a “small net savings” compared to freezing Medicare payments at current levels.
The estimate released Wednesday noted that the legislation will increase direct spending by about $145 billion from 2015 to 2025 but bring in only $4 billion in revenues, mainly through having wealthy Medicare beneficiaries pay more.
Those revenues are expected to increase rapidly from 2025 to 2035, but not enough to offset the additional federal costs, the agency said.
Part B premiums will slightly rise as a result of the measure, increasing by $10 in 2025, compared to an increase of about $7.50 at the current rate for Medicare payments.
The analysis comes at a precarious time for the legislative package introduced earlier this week by House leaders. Conservative groups such as the Heritage Foundation oppose the package because it will add to the deficit.
The Senate is largely waiting to see what the House will do before taking up the measure. Senate Majority Leader Harry Reid said Wednesday that he is no longer opposed to language in the bill that prevents federal funds from being used to pay for abortions.
In addition to fixing the outdated formula, the legislation will reauthorize funding for a program that gives health insurance to children.
If a decision isn’t made by March 31, doctors’ payments from Medicare will decrease by more than 20 percent. In addition, more than 10 million children will lose health insurance coverage.
The question of how to pay for any permanent fix to the formula derailed prior bipartisan efforts, most notably last year, when Congress opted for a yearlong patch instead of a permanent solution.
This story initially published at 1:57 p.m. and has been updated since then.
