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CBO: Baucus Bill Reduces Deficit By $81 Billion, Costs $829 Billion Over A Decade

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WASHINGTON — Health care legislation drafted by a key Senate committee would expand coverage to 94 percent of all eligible Americans at a 10-year cost of $829 billion, congressional budget experts said Wednesday, a preliminary estimate trumpeted by the White House and likely to power the measure past a major hurdle within days.

The Congressional Budget Office added that the legislation would reduce federal deficits by $81 billion over a decade and probably lead to "continued reductions in federal" red ink in the years beyond.

The report paves the way for the Senate Finance Committee to vote as soon as early next week on the legislation, which is largely in line with President Barack Obama's call for the most sweeping overhaul of the nation's health care system in a half-century.

At the White House, spokesman Reid Cherlin said the analysis "confirms that we can provide stability and security for Americans with insurance and affordable options for uninsured Americans without adding a dime to the deficit and saving money over the long term."

Sen. Max Baucus, D-Mont., the committee chairman and principal architect of the measure, hailed the estimates within moments of receiving them.

"This legislation, I believe, is a smart investment on our federal balance sheet. It's an even smarter investment for American families, businesses and our economy," he said on the Senate floor.

Sen. Chuck Grassley of Iowa, the senior Republican on the panel, saw it differently. "A celebration of the deficit effects masks who pays the bills. This package includes hundreds of billions of dollars in new taxes and fees," he said in a statement.

The committee Baucus chairs is the fifth and last of the congressional panels to debate health care. The Senate Finance version has a decided middle-of-the-road flavor, shunning any provision for the government to sell insurance in competition with private industry. That provision, strongly favored by many Democrats and just as strongly opposed by Republicans, remains alive, though. It was included in legislation approved by another Senate committee, and is also expected to be included in the House bill.

The Finance Committee bill does not require businesses to offer coverage to their workers, either, although large firms that do not would be required to offset the cost of any government subsidies going to those employees.

While generally positive about the legislation's effects, the report contained important caveats.

One noted that the estimate does not include the costs of proposed payment increases for doctors serving Medicare patients, roughly $200 billion through 2019. Additionally, a so-called fail-safe mechanism to hold spending in line could result in cuts as large as 15 percent in federal subsidies designed to help the poor afford insurance, CBO said.

Beginning in 2013, the measure would require that millions of Americans purchase private insurance for the first time, and would set up a new marketplace where policies would be available. Failure to obey the requirement would result in penalties of up to $750 per family.

Federal subsidies would be available to millions of lower-income individuals and families to help defray the cost of coverage that would otherwise be out of their reach. The alternative to government-sold health care, a proposal for nonprofit co-ops that would compete with private companies, was judged largely ineffective by budget officials. Such arrangements "seem unlikely to establish a significant medical presence in many areas of the country," they wrote.

The legislation also would ban current insurance industry practices that deny coverage on the basis of pre-existing medical conditions, and restrict companies' ability to charge vastly higher premiums on the basis of age, gender or other factors.

The measure would be paid for through a variety of tax increases and spending cuts, including savings of hundreds of billions of dollars from Medicare, the federal health care program for seniors.

Democratic leaders are hoping to hold votes on health care on the floor of the House and Senate within a few weeks.

Anticipating approval by the Finance Committee this week, Majority Leader Harry Reid has already begun efforts to merge that bill with an alternative approved by the Senate Committee on Health, Education, Labor and Pensions.

Reid is subject to intense cross-pressures, not only from the members of the two committees, but also from the Obama administration and rank-and-file senators seeking to mold the legislation to their liking.

Reid also must take into account the likely need to amass 60 votes behind any legislation, the majority needed to overcome any Republican filibuster.

The Senate Republican leader, Sen. Mitch McConnell of Kentucky, dismissed the draft bill as a partisan blueprint and predicted Reid would replace it with "another 1,000-page, trillion-dollar experiment that slashes a half-trillion dollars from seniors' Medicare, raises taxes on American families by $400 billion, increases health care premiums and vastly expands the role of the federal government in the personal health care decisions of every American."

Baucus has expressed confidence he has the votes for his measure inside the Finance Committee, and the major lingering question there is whether Sen. Olympia Snowe, R-Maine, will break ranks with fellow Republicans and vote for it. She urged Baucus not to force a vote before next week, and remained noncommittal.

"On the positive side, just in looking at the number, $829 (billion) that's less than what we started with," Snowe said. But we have a lot to review."

Wednesday's report to Baucus from CBO's director, Dr. Douglas Elmendorf, stressed that the estimates were preliminary.

It said that by 2019, "the number of nonelderly people who are uninsured would be reduced by about 29 million," either through private insurance or by enrolling in federal programs. That would leave an additional 25 million uninsured, about one-third of them illegal immigrants who are not eligible for coverage under the bill.

"Under the proposal, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent," Elmendorf said. Elderly Americans are eligible for coverage under the federal Medicare program.

The report was released as House Democrats met privately to consider ways to hold the cost of their version of the legislation to the $900 billion 10-year limit that Obama has set.

Officials said one of the options under review would add as many as 7 million lower-income individuals to Medicaid, the federal-state health care program for the poor. It would be cheaper for the government to cover costs under that program than to pay subsidies designed to make private insurance affordable for the same group. Aides put the savings at about $25 billion over 10 years.

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Associated Press writers Ricardo Alonso-Zaldivar, Julie Hirschfeld Davis and Erica Werner contributed to this report.

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