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CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 July 26, 2009 Honorable Dave Camp Ranking Member Committee on Ways and Means U.S. House of Representatives Washington, DC 20515 Dear Congressman: The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) recently completed a preliminary analysis of the specifications related to health insurance coverage that are reflected in the America’s Affordable Health Choices Act, which was released by the House Committee on Ways and Means on July 14, 2009. Among other things, those specifications would establish a mandate for most legal residents to obtain health insurance, significantly expand eligibility for Medicaid, regulate the pricing and terms of private health insurance policies, set up insurance “exchanges” through which certain individuals and families could receive federal subsidies to reduce the cost of purchasing insurance, and offer a “public plan” option similar to Medicare through those exchanges. For reasons outlined in CBO’s July 14 letter summarizing that analysis—and in our letter of July 17, which took into account the other parts of the legislation that would raise taxes or reduce other spending—our analysis to date does not represent a formal or complete cost estimate for the draft legislation. The attached analysis responds to your request for additional information about the effects of the specifications regarding health insurance coverage. In particular, you asked about the effects on enrollment in private coverage, in the new public plan, and in Medicaid; the effects on private-sector insurance premiums and the labor market; the longer-term cost of the plan; and the allocation of its net budget impact between outlays and revenues. Because of the complexity of the changes that have been proposed and their potential effects, we are unable to address all aspects of every question that you raised. www.cbo.gov