AN ANALYSIS OF THE PRESIDENT’S

MID-SESSION REVIEW

OF THE BUDGET FOR FISCAL YEAR 2001

Corrected

September 6, 2000

Prepared by the

Congressional Budget Office

at the request of the

House and Senate Committees on the Budget
ERRATA

This document supersedes the previous version of this report, dated July 28,

2000, which incorrectly estimated surpluses in Medicare's Hospital Insurance

trust fund under the proposals in the Mid-Session Review. The corrections

included here produce slightly lower on-budget surpluses and slightly higher

off-budget surpluses but have no effect on total surpluses.
1. See Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2001 (April

2000), for a discussion of the proposals included in the February budget.

The President is required by law to submit a budget by early February of each year,

as well as a supplemental update before July 16. The update, in general, has contained revised estimates of the budget surplus, receipts, outlays, and other summary

information, with only minor changes, if any, in legislative proposals. However,

both last year and this year, the Mid-Session Review has also contained significant

new policy proposals. Therefore, as requested by the House and Senate Committees

on the Budget, the Congressional Budget Office (CBO) has analyzed the Administration’s Mid-Session Review of the fiscal year 2001 budget.

CBO estimates that the policies reflected in the Mid-Session Review would

result in cumulative total budget surpluses of $1.4 trillion over the 2001-2005 period

and $3.2 trillion over the 2001-2010 period (see Tables 1 and 2). Those estimates

exceed the corresponding projections by the Administration by $0.2 trillion and $0.3

trillion, respectively, mostly because CBO projects slightly higher revenues over

those periods. On-budget surpluses over the five-year and 10-year periods would

reach $159 billion and $349 billion, respectively. (Revenues and spending for Social

Security and the Postal Service are currently excluded from the on-budget totals; the

Administration would do the same for Medicare's Hospital Insurance program.)

For the most part, the policies reported in the Mid-Session Review are the

same as those proposed in the Administration's budget that was released in February.1

 However, some new policies have been added—mostly in the health area.

Those new policies include:

• Expanding the proposed prescription drug benefit to include catastrophic coverage and starting the benefit in 2002 rather than 2003,

• Eliminating provisions in the February budget that would have reduced Medicare's payment rates and increasing other payment rates,

• Transferring amounts from the general fund of the Treasury to

Medicare's Hospital Insurance (HI) trust fund and reclassifying the

fund's receipts and outlays as off-budget,

• Boosting spending on discretionary programs, and

• Allocating $500 billion over the 2001-2010 period for unspecified

"national priorities."
2. As it did in previous reports this year, CBO has produced three variations of its baseline projections, which differ only

in their treatment of discretionary spending (and the corresponding effect on net interest). The "inflated" variation

assumes that budget authority for discretionary programs grows at the rate of inflation each year after 2000. The

"freeze" variation assumes that discretionary budget authority each year equals the level enacted for 2000, plus the

amount already enacted for 2001. The "capped" variation assumes that discretionary spending adheres to the statutory

caps on such spending that are in effect through 2002 and increases at the rate of inflation thereafter.

2

Besides examining changes in the Administration's policy proposals, this

analysis incorporates CBO's updated baseline estimates, as reported in The Budget

and Economic Outlook: An Update (July 2000). Compared with the estimates that

CBO issued in April, when it analyzed the President's initial budget, the projections

of the cumulative total surplus for 2001 through 2010 for the three baseline variations have risen by between $1.4 trillion and $1.5 trillion.2

 Most of that increase

occurred on the revenue side of the budget, and those higher revenue estimates have

added to the surplus under the President's proposals as well (see Table 3).

Revenues under the policies contained in the Mid-Session Review are projected to be $93 billion higher in 2001 and nearly $1.3 trillion higher from 2001

through 2010 than CBO previously estimated for the February budget (see Table 4).

Overall, CBO's estimate of the cumulative total surplus in the Mid-Session Review is

$519 billion higher over the 2001-2010 period than that estimated for the February

budget. That figure represents an increase in projected baseline surpluses totaling

around $1.5 trillion over the 10 years, offset by new policy proposals that would

reduce the surplus by about $1 trillion over the period.

THE PRESIDENT'S BUDGETARY POLICIES

The policy proposals contained in the Administration's Mid-Session Review would

use the projected on-budget surpluses for various purposes: increased spending

(mostly for health care), tax reductions, an unspecified "Reserve for America's Future," and debt reduction. The Administration proposes to devote to debt reduction

those surpluses that are off-budget and to broaden the number of programs designated as such.

CBO estimates that the proposals in the Mid-Session Review would reduce

the projected total surplus by $302 billion between 2001 and 2005 and $1.3 trillion

between 2001 and 2010 relative to the inflated variation of the baseline (see Table

5). Relative to the freeze variation of the baseline, the corresponding reductions

would be $577 billion and $2.5 trillion, respectively (see Table 6). Reductions under

the capped baseline would be similar to those under the freeze baseline.

The net reduction in revenues under the Mid-Session Review would be negligible over the first five years and would total $147 billion over 10 years. On the

spending side of the budget, proposals for health care would have the largest effect.
3. For a more detailed discussion of those changes, see the attachment, CBO's Analysis of the Health Insurance Initiatives

in the Mid-Session Review (July 2000).

4. CBO's estimate of the February budget proposals reflects the estimate of the Medicare prescription drug benefit as

revised in testimony before the Subcommittee on Health of the House Committee on Ways and Means on May 11,

2000.

3

Over 10 years, the Administration's health care initiatives would increase Medicare

spending by $310 billion (net of premiums). Spending for Medicaid and the State

Children's Health Insurance Program would rise by an additional $116 billion. Much

of the added spending for Medicare and Medicaid results from the President's proposals for coverage of prescription drugs—such proposals are estimated to cost

$338 billion over 10 years. Debt service on policies specified by the Administration

would add $133 billion to outlays between 2001 and 2010 under the inflated variant

and $347 billion under the freeze variant.

In addition to the policies detailed by the Administration in the Mid-Session

Review, $500 billion would be set aside through 2010 for a "Reserve for America's

Future." The Administration has not specified whether that reserve would be used

for tax cuts, spending increases, or some combination of the two. CBO has included

the $500 billion in its analysis of the Mid-Session Review and estimates that such a

reduction in the surplus would lead to additional debt-service costs of $118 billion

between 2001 and 2010.

The Administration's policies would reduce on-budget surpluses by $300

billion over the 2001-2005 period and $1.3 trillion over the 2001-2010 period relative to the inflated variation of the baseline (see Table 7). Reductions relative to the

freeze and capped variants would total $2.5 trillion over 10 years. In addition,

shifting the HI trust fund off-budget would decrease the cumulative on-budget

surplus (and increase the off-budget surplus) by $515 billion between 2001 and

2010.

Health Care Initiatives

The Mid-Session Review contains several changes to the health insurance package

that was included in the budget released in February.3 Of the changes, those with

the largest impact include proposals to add catastrophic coverage to the prescription

drug benefit for Medicare, to begin the benefit in 2002 rather than 2003, to maintain

some of Medicare's payment rates that were previously targeted for reduction, and

to increase other payments to Medicare providers.

CBO estimated that the health insurance initiatives in the President's initial

budget for fiscal year 2001 would increase mandatory spending by $168 billion from

2001 to 2010.4 The modifications in the Mid-Session Review would increase such
5. Because the Administration did not request additional budget authority to cover the costs of administering the

prescription drug program in its proposals for discretionary spending, CBO has not included that spending in its

estimates of the surplus.

4

spending by an additional $261 billion, CBO estimates (see Table 8). Changing the

prescription drug benefit would account for $182 billion of the increase, maintaining

some payment rates for providers and increasing others would account for another

$75 billion, and various other changes would make up the remaining increase.

In total, CBO estimates that the President's health insurance initiatives would

cost $444 billion between 2001 and 2010—an increase in direct spending of $429

billion, a decrease in revenues of $9 billion, and additional appropriations of nearly

$6 billion to administer the prescription drug benefit.5

 The Administration, by contrast, projects a $356 billion reduction in the total surplus—a difference of $88 billion—owing mostly to different cost estimates for the prescription drug benefit.

Accounting Changes and Intrabudgetary Transactions

The Administration proposes to assign an extra $115 billion in general government

funds to the HI trust fund over the next 10 years. Adding to the trust fund balance

may make the program appear more financially sound, but the fund’s balance is not

a good indicator of the government's ability to meet its future obligations to

Medicare beneficiaries. That ability will depend on the government's overall fiscal

condition rather than on the size of the balance.

The Administration would also change the budget categorization of the fund

so that its receipts and outlays were considered off-budget (like those of the Social

Security trust funds). Placing the HI trust fund off-budget would also, by itself,

have no effect on the economy or on the resources available to meet future needs.

But if lawmakers chose to adopt a goal of preserving off-budget surpluses for debt

reduction, the proposed accounting change might make the amount of the HI surpluses (and transfers from the general fund) less vulnerable to proposals to increase

spending or reduce taxes, thus enhancing the prospects for long-term economic

growth.

However, there is a possible downside to making those two accounting

changes. Pumping up balances to extend the trust fund's solvency on paper and

moving the fund off-budget could provide lawmakers and the public with a false

sense of security and deter needed reform.
6. See Congressional Budget Office, The Budget and Economic Outlook: An Update (July 2000), Chapter 1, for a

comparison with the Administration's current-services estimates.

5

Discretionary Spending

As a key component of its budget, the Administration proposes to increase and

extend the statutory limits on discretionary spending that are in effect through 2002.

(The Administration also proposes to extend the current pay-as-you-go requirements for mandatory spending and revenues.) It advocates setting caps on budget

authority and outlays after 2001 at or slightly below levels that would allow future

discretionary spending to keep pace with inflation through 2010. For 2001, CBO

estimates that the Administration’s proposed level of budget authority would be $13

billion above a level consistent with inflation and $83 billion above the current cap

(see Table 9).

Under the policies of the Mid-Session Review, discretionary budget authority

would grow from $624 billion in 2001 to $763 billion in 2010—an average rate of

growth of 2.3 percent. Those levels are slightly higher than the ones proposed in

February's budget; however, the effect on outlays is an additional $5 billion or less

each year and totals about $30 billion over the 2001-2010 period (see Table 4).

COMPARISON OF CBO’S AND THE ADMINISTRATION’S ESTIMATES

Most of the differences between CBO's and the Administration's estimates of the

proposals in the Mid-Session Review stem from differences in spending and revenues

estimated under current policies. For the 2001-2010 period, CBO projects $259

billion more in revenues and $128 billion less in mandatory spending (excluding net

interest) in its baseline than does the Administration in its current-services estimates.6

 Although such discrepancies may seem large, they represent differences of

just 1 percent in both the total revenues and the mandatory spending projected for

that period.

Overall, CBO's estimate of the cumulative surplus between 2001 and 2010

under the Mid-Session Review is $334 billion higher than that of the Administration.

CBO's baseline surpluses (using the inflated variation) are $368 billion higher than

those projected using the Administration's current-services baseline; however, CBO

estimates that the policies in the Mid-Session Review will cost $33 billion more than

the Administration calculates.

Differences in economic assumptions contribute little to those relatively

small differences in budget estimates. The Administration's economic outlook is

broadly similar to that of CBO (see Table 10). CBO assumes slightly slower growth
6

of real (inflation-adjusted) gross domestic product (GDP) after 2000 and similar

rates of inflation. Unemployment rates are lower in CBO's projections than in the

Administration's until the second half of the decade, when the two estimates both

average 5.1 percent. CBO forecasts higher interest rates than does the Administration for calendar years 2000 and 2001, but after that, the Administration assumes

that short-term interest rates will average almost a percentage point more than CBO

does.
7

TABLE 1. COMPARISON OF CBO’S AND THE ADMINISTRATION’S ESTIMATES OF THE PRESIDENT’S

MID-SESSION REVIEW (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

CBO’s Estimate of the Administration’s Mid-Session Review

Revenues 2,008 2,119 2,203 2,285 2,379 2,477 2,571 2,680 2,798 2,929 3,067 11,462 25,508

Outlays 1,788 1,845 1,924 1,979 2,057 2,140 2,195 2,264 2,357 2,450 2,549 9,946 21,761

Reserve for 

America's Future n.a. 20 25 25 26 27 49 75 83 85 85 123 500

Surplus 221 254 254 280 296 309 328 341 358 393 433 1,394 3,246

On-budget 47 27 18 37 40 38 35 37 31 40 47 159 349

Off-budgeta 174 227 237 244 256 272 293 305 327 353 385 1,235 2,898

Administration’s Estimate of the Mid-Session Review

Revenues 2,013 2,096 2,168 2,245 2,339 2,440 2,537 2,661 2,790 2,916 3,065 11,288 25,256

Outlays 1,802 1,848 1,919 1,984 2,059 2,145 2,202 2,282 2,375 2,467 2,563 9,955 21,844

Reserve for

America's Future n.a. 20 25 25 26 27 49 75 83 85 85 123 500

Surplus 211 228 224 236 255 268 286 304 332 364 416 1,210 2,912

On-budget 39 9 1 6 10 1 1 1 2 4 14 27 49

Off-budgeta 172 219 223 230 245 267 285 302 330 360 402 1,183 2,863

Difference (CBO minus Administration)

Revenues -5 23 35 40 40 37 34 20 9 13 2 174 252

Outlays -14 -3 5 -5 -2 -5 -7 -17 -18 -16 -14 -10 -82

Reserve for

America's Future n.a. 0 0 0 0 0 0 0 0 0 0 0 0

Surplus 9 26 30 45 42 42 42 37 26 29 16 184 334

On-budget 7 18 16 31 30 37 34 35 29 36 33 132 300

Off-budgeta 2 8 14 14 12 5 7 2 -3 -7 -17 52 35

SOURCE: Congressional Budget Office.

NOTE: n.a. = not applicable.

a. Includes Medicare’s Hospital Insurance program.
8

TABLE 2. CBO'S ESTIMATE OF THE PRESIDENT’S MID-SESSION REVIEW (By fiscal year)

Actual

1999a 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

In Billions of Dollars

Revenues 1,827 2,008 2,119 2,203 2,285 2,379 2,477 2,571 2,680 2,798 2,929 3,067

On-budget 1,251 1,395 1,463 1,511 1,561 1,625 1,686 1,747 1,821 1,903 1,992 2,088

Off-budget 577 613 656 692 724 754 790 824 859 896 936 979

Outlays

Discretionary spending 575 616 637 657 672 688 707 718 732 754 773 791

Mandatory spending 978 1,028 1,080 1,178 1,254 1,342 1,434 1,506 1,593 1,696 1,805 1,924

Offsetting receipts -80 -80 -90 -117 -128 -134 -143 -152 -163 -175 -188 -203

Net interest 230 224 219 205 181 162 142 122 102 82 67 59

Proceeds from investing excess cash n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. -6 -22

Total 1,703 1,788 1,845 1,924 1,979 2,057 2,140 2,195 2,264 2,357 2,450 2,549

On-budget 1,272 1,349 1,416 1,469 1,493 1,555 1,619 1,654 1,702 1,781 1,858 1,945

Off-budget 432 439 429 455 486 502 521 541 562 577 592 604

Reserve for America’s Future n.a. n.a. 20 25 25 26 27 49 75 83 85 85

Deficit (-) or Surplus 124 221 254 254 280 296 309 328 341 358 393 433

On-budget -21 47 27 18 37 40 38 35 37 31 40 47

Off-budget 145 174 227 237 244 256 272 293 305 327 353 385

Debt Held by the Public 3,633 3,421 3,184 2,938 2,670 2,386 2,088 1,769 1,436 1,084 887 830

Accumulated Excess Cash n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 189 558

As a Percentage of GDP

Revenues 20.0 20.6 20.6 20.4 20.2 20.1 20.0 19.9 19.8 19.8 19.8 19.8

On-budget 13.7 14.3 14.2 14.0 13.8 13.7 13.6 13.5 13.5 13.5 13.5 13.5

Off-budget 6.3 6.3 6.4 6.4 6.4 6.4 6.4 6.4 6.4 6.3 6.3 6.3

Outlays

Discretionary spending 6.3 6.3 6.2 6.1 5.9 5.8 5.7 5.6 5.4 5.3 5.2 5.1

Mandatory spending 10.7 10.5 10.5 10.9 11.1 11.3 11.6 11.6 11.8 12.0 12.2 12.4

Offsetting receipts -0.9 -0.8 -0.9 -1.1 -1.1 -1.1 -1.2 -1.2 -1.2 -1.2 -1.3 -1.3

Net interest 2.5 2.3 2.1 1.9 1.6 1.4 1.1 0.9 0.8 0.6 0.5 0.4

Proceeds from investing excess cash n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. * -0.1

Total 18.7 18.3 17.9 17.8 17.5 17.4 17.3 17.0 16.7 16.7 16.6 16.5

On-budget 13.9 13.8 13.7 13.6 13.2 13.1 13.1 12.8 12.6 12.6 12.6 12.6

Off-budget 4.7 4.5 4.2 4.2 4.3 4.2 4.2 4.2 4.2 4.1 4.0 3.9

Reserve for America's Future n.a. n.a. 0.2 0.2 0.2 0.2 0.2 0.4 0.6 0.6 0.6 0.5

Deficit (-) or Surplus 1.4 2.3 2.5 2.4 2.5 2.5 2.5 2.5 2.5 2.5 2.7 2.8

On-budget -0.2 0.5 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3

Off-budget 1.6 1.8 2.2 2.2 2.2 2.2 2.2 2.3 2.3 2.3 2.4 2.5

Debt Held by the Public 39.9 35.1 30.9 27.2 23.6 20.2 16.9 13.7 10.6 7.7 6.0 5.4

Accumulated Excess Cash n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1.3 3.6

Memorandum:

Gross Domestic Product

(Billions of dollars) 9,116 9,758 10,303 10,814 11,322 11,834 12,370 12,933 13,521 14,137 14,797 15,495

SOURCE: Congressional Budget Office.

NOTES: Medicare’s Hospital Insurance trust fund is considered off-budget, as proposed by the President.

* = between -0.05 percent and 0.05 percent; n.a. = not applicable.

a. Adjusted to place Medicare’s Hospital Insurance revenues and outlays off-budget.
9

TABLE 3. ESTIMATES OF SURPLUSES UNDER THE ADMINISTRATION’S MID-SESSION REVIEW

AND CBO’S BASELINE PROJECTIONS (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

CBO’s Estimate of the Administration’s Mid-Session Review

On-Budget Surplus 47 27 18 37 40 38 35 37 31 40 47 159 349

Off-Budget Surplusa 174 227 237 244 256 272 293 305 327 353 385 1,235 2,898

Total Surplus 221 254 254 280 296 309 328 341 358 393 433 1,394 3,246

CBO's Baseline Projections

Discretionary Spending Grows at the Rate of Inflation After 2000b

On-Budget Surplus 84 102 126 143 154 169 222 260 288 332 377 695 2,173

Off-Budget Surplusa 149 165 186 202 215 232 247 263 278 293 307 1,001 2,388

Total Surplus 232 268 312 345 369 402 469 523 565 625 685 1,696 4,561

Discretionary Spending Is Frozen at the Level Enacted for 2000b

On-Budget Surplus 84 116 157 195 231 270 346 410 466 541 618 969 3,349

Off-Budget Surplusa 149 166 187 202 216 233 248 263 279 294 309 1,003 2,395

Total Surplus 232 281 344 397 447 503 594 673 745 834 927 1,971 5,744

Discretionary Spending Equals CBO’s Estimates of the Statutory Caps Through 2002

 and Grows at the Rate of Inflation Thereafter

On-Budget Surplus 84 163 219 245 263 290 348 393 433 488 545 1,179 3,387

Off-Budget Surplusa 149 165 186 202 215 232 247 263 278 293 307 1,001 2,388

Total Surplus 232 329 405 446 478 522 595 655 711 781 853 2,180 5,774

Memorandum:

CBO’s Estimate of the Administration’s Mid-Session Review

Assuming that Medicare’s Hospital Insurance Remains On-Budget

On-Budget Surplus 72 89 68 79 82 78 81 79 81 101 126 395 863

Off-Budget Surplus 149 165 186 201 215 232 246 262 277 292 307 998 2,383

Total Surplus 221 254 254 280 296 309 328 341 358 393 433 1,394 3,246

SOURCE: Congressional Budget Office.

a. Includes Medicare’s Hospital Insurance program.

b. After adjustment for advance appropriations.
10

TABLE 4. COMPARISON OF CBO’S APRIL 2000 ESTIMATE OF THE PRESIDENT’S BUDGETARY PROPOSALS

WITH CBO’S ESTIMATE OF THE MID-SESSION REVIEW (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CBO’s Estimate of the Mid-Session Review

Revenues 2,008 2,119 2,203 2,285 2,379 2,477 2,571 2,680 2,798 2,929 3,067

Outlays

Discretionary 616 637 657 672 688 707 718 732 754 773 791

Mandatory 948 989 1,062 1,126 1,207 1,292 1,354 1,430 1,521 1,617 1,722

Net interest and excess cash 224 219 205 181 162 142 122 102 82 60 37

Subtotal 1,788 1,845 1,924 1,979 2,057 2,140 2,195 2,264 2,357 2,450 2,549

Reserve for America’s Future n.a. 20 25 25 26 27 49 75 83 85 85

Total Surplus 221 254 254 280 296 309 328 341 358 393 433

CBO’s April 2000 Estimate of the President’s Budgetary Proposals

Revenues 1,946 2,026 2,097 2,171 2,262 2,352 2,443 2,547 2,659 2,781 2,912

Outlays

Discretionary 611 635 656 670 684 701 714 729 752 770 788

Mandatory 942 983 1,037 1,094 1,171 1,251 1,309 1,382 1,469 1,561 1,659

Net interest and excess cash 225 218 209 194 179 162 146 129 111 91 70

Subtotal 1,778 1,836 1,902 1,958 2,033 2,114 2,170 2,240 2,331 2,422 2,516

Reserve for America’s Future n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Total Surplus 168 190 196 213 228 238 273 307 328 360 395

Difference (Mid-Session minus April Estimate)

Revenues 63 93 106 114 117 124 128 133 139 147 155

Outlays

Discretionary 5 2 1 2 4 5 4 3 3 3 3

Mandatory 6 7 25 32 37 41 45 48 52 56 63

Net interest and excess cash * 1 -4 -13 -17 -21 -24 -27 -29 -31 -33

Subtotal 10 9 22 22 24 26 24 24 26 29 33

Reserve for America’s Future n.a. 20 25 25 26 27 49 75 83 85 85

Total Surplus 53 64 59 67 68 71 55 34 30 34 37

Memorandum:

Change in Baseline 58 90 108 125 133 146 158 171 187 205 223

Change in Policies -5 -26 -50 -57 -65 -74 -103 -137 -156 -171 -185

SOURCE: Congressional Budget Office.

NOTE: * = between -$500 million and $500 million; n.a. = not applicable.
11

TABLE 5. CBO’S ESTIMATE OF THE PRESIDENT’S MID-SESSION REVIEW PROPOSALS RELATIVE TO CBO’S

BASELINE PROJECTIONS ASSUMING INFLATED APPROPRIATIONS (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

CBO's Estimate of the Total Budget

Surplus Under the Inflated Variation

of the Baselinea 232 268 312 345 369 402 469 523 565 625 685 1,696 4,561

Impact of the President’s Proposals

Revenues

Reductions * -5 -14 -21 -25 -35 -44 -47 -50 -54 -57 -100 -352

Increases 1 15 15 15 25 26 22 22 22 22 22 95 205

Total Impact on Revenues 1 10 1 -6 -1 -9 -23 -25 -28 -32 -35 -5 -147

Outlays

Discretionary spending

Defense 5 -2 -1 -3 -3 -4 -6 -6 -4 -4 -4 -14 -37

Nondefense 3 2 2 -1 -2 -2 -4 -6 -6 -8 -10 -1 -35

Subtotal 8 -1 1 -4 -5 -6 -10 -11 -10 -12 -14 -15 -72

Mandatory spendingb

Medicare outlays 0 6 30 32 40 43 47 52 58 65 72 150 443

Medicare premiums 0 -1 -10 -12 -14 -13 -14 -14 -16 -18 -20 -51 -133

Medicaid 0 1 1 3 5 7 * 4 9 10 12 17 52

State Children's Health Insurance

Program 0 * 1 2 3 5 18 13 7 8 7 11 64

Supplemental Security Income 2 -2 * * * 1 1 1 1 2 2 -1 6

Earned income tax credit * 2 2 2 2 2 2 2 2 2 2 11 22

Child and dependent care tax

credit 0 0 0 1 2 2 3 3 3 3 4 4 20

Other 2 -1 5 2 1 2 1 1 1 1 1 9 14

Subtotal 4 3 29 30 40 47 58 62 66 73 80 150 489

Net interestc * * 1 3 5 8 12 17 22 28 35 19 133

Total Impact on Outlays 12 3 32 30 41 49 60 67 77 90 101 154 550

Reserve for America’s Future

Revenues or outlays 0 20 25 25 26 27 49 75 83 85 85 123 500

Debt service 0 1 2 4 5 7 10 14 19 25 31 20 118

Subtotal 0 21 27 29 31 34 59 89 102 110 116 143 618

Net Impact of the President's Proposals

on the Total Budget Surplus -12 -14 -58 -64 -73 -92 -141 -181 -207 -231 -252 -302 -1,315

CBO’s Estimate of the Total Budget Surplus

Under the President’s Proposals 221 254 254 280 296 309 328 341 358 393 433 1,394 3,246

SOURCES: Congressional Budget Office; Joint Committee on Taxation.

NOTE: * = between -$500 million and $500 million.

a. Assumes that discretionary spending grows at the rate of inflation after 2000.

b. Includes offsetting receipts.

c. Includes proceeds from investing excess cash.
12

TABLE 6. CBO’S ESTIMATE OF THE PRESIDENT’S MID-SESSION REVIEW PROPOSALS RELATIVE TO CBO’S

BASELINE PROJECTIONS ASSUMING FROZEN APPROPRIATIONS (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010

CBO's Estimate of the Total Budget

Surplus Under the Freeze Variation

of the Baselinea 232 281 344 397 447 503 594 673 745 834 927 1,971 5,744

Impact of the President’s Proposals

Revenues

Reductions * -5 -14 -21 -25 -35 -44 -47 -50 -54 -57 -100 -352

Increases 1 15 15 15 25 26 22 22 22 22 22 95 205

Total Impact on Revenues 1 10 1 -6 -1 -9 -23 -25 -28 -32 -35 -5 -147

Outlays

Discretionary spending

Defense 5 5 15 21 30 37 44 52 63 73 83 108 424

Nondefense 3 7 15 22 35 45 52 60 70 79 87 125 473

Subtotal 8 12 30 44 65 82 96 113 133 152 170 232 896

Mandatory spendingb

 Medicare outlays 0 6 30 32 40 43 47 52 58 65 72 150 443

Medicare premiums 0 -1 -10 -12 -14 -13 -14 -14 -16 -18 -20 -51 -133

Medicaid 0 1 1 3 5 7 * 4 9 10 12 17 52

State Children's Health Insurance

Program 0 * 1 2 3 5 18 13 7 8 7 11 64

Supplemental Security Income 2 -2 * * * 1 1 1 1 2 2 -1 6

Earned income tax credit * 2 2 2 2 2 2 2 2 2 2 11 22

Child and dependent care tax

credit 0 0 0 1 2 2 3 3 3 3 4 4 20

Other 2 -1 5 2 1 2 1 1 1 1 1 9 14

Subtotal 4 3 29 30 40 47 58 62 66 73 80 150 489

Net interestc * 1 4 8 13 21 31 43 58 75 94 47 347

Total Impact on Outlays 12 16 63 82 119 150 185 218 257 300 344 430 1,732

Reserve for America’s Future

Revenues or outlays 0 20 25 25 26 27 49 75 83 85 85 123 500

Debt service 0 1 2 4 5 7 10 14 19 25 31 20 118

Subtotal 0 21 27 29 31 34 59 89 102 110 116 143 618

Net Impact of the President's Proposals

on the Total Budget Surplus -12 -28 -89 -116 -151 -193 -266 -332 -386 -441 -495 -577 -2,497

CBO’s Estimate of the Total Budget Surplus

Under the President’s Proposals 221 254 254 280 296 309 328 341 358 393 433 1,394 3,246

SOURCES: Congressional Budget Office; Joint Committee on Taxation.

NOTE: * = between -$500 million and $500 million.

a. Assumes that discretionary spending each year equals the level enacted for 2000, plus the amount already enacted for 2001.

b. Includes offsetting receipts.

c. Includes proceeds from investing excess cash.
13

TABLE 7. IMPACT OF THE PRESIDENT’S BUDGETARY PROPOSALS IN THE MID-SESSION REVIEW 

ON CUMULATIVE ON-BUDGET SURPLUSES (In billions of dollars)

Inflated

Appropriations

Frozen

Appropriations

Capped

Appropriations

2001-2005 2001-2010 2001-2005 2001-2010 2001-2005 2001-2010

Cumulative On-Budget Surpluses 

Under CBO’s Baseline 695 2,173 969 3,349 1,179 3,387

Impact of the President’s Proposals

on the Surplus

Changes in taxes -5 -147 -5 -147 -5 -147

Changes in discretionary spending 15 71 -231 -891 -405 -850

Coverage of prescription drugs -98 -338 -98 -338 -98 -338

Other health care -30 -91 -30 -91 -30 -91

Reserve for America’s Future -123 -500 -123 -500 -123 -500

Debt servicea -38 -250 -66 -464 -103 -543

Other -19 -55 -19 -55 -19 -55

Subtotal -300 -1,310 -573 -2,486 -784 -2,524

Moving Hospital Insurance Off-Budget -237 -515 -237 -515 -237 -515

Total Adjustments -536 -1,825 -810 -3,001 -1,021 -3,038

CBO’s Estimate of the On-Budget

Surpluses Under the Mid-Session Review 159 349 159 349 159 349

SOURCE: Congressional Budget Office.

a. Includes proceeds from investing excess cash.
14

TABLE 8. COMPARISON OF CBO’S ESTIMATE OF THE PRESIDENT’S HEALTH INSURANCE INITIATIVES 

IN THE FEBRUARY BUDGET WITH CBO’S ESTIMATE OF THE HEALTH INSURANCE INITIATIVES 

IN THE MID-SESSION REVIEW (By fiscal year, in billions of dollars)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

CBO’s Estimate of the President’s February Health Initiativesa

Mandatory Spending

Family Care * 1 2 3 5 10 9 8 9 9 11 56

Prescription drug coverage

Medicare 0 0 7 11 13 15 17 19 22 25 31 129

Medicaid 0 * 1 2 3 3 4 4 4 5 6 26

Other * 3 -6 -4 -5 -6 -6 -6 -7 -7 -12 -44

Subtotal * 5 4 12 16 23 25 25 28 31 36 168

Revenues 0 * -1 -1 -1 -1 -1 -1 -1 -2 -2 -8

Administrative Costsb 000000000000

Total Effect on Surplus * -5 -5 -13 -17 -24 -26 -26 -30 -32 -38 -176

Modifications to February Proposals

Mandatory Spending

Family care 0 0 0 0 0 0 0 0 0 0 0 0

Prescription drug coverage

Medicare 0 13 14 14 15 17 19 22 25 29 56 168

Medicaid * * 1 2 2 2 2 2 2 2 6 15

Other 5 5 6 7 8 9 9 10 10 11 31 79

Subtotal 5 18 21 23 25 28 30 33 37 41 92 261

Revenues 0 * * * * * * * * * * -1

Administrative Costsb 11111***1136

Total Effect on Surplus -6 -19 -22 -23 -26 -28 -31 -34 -37 -42 -96 -268

CBO’s Estimate of the President’s Mid-Session Review Health Initiatives

Mandatory Spending

Family care * 1 2 3 5 10 9 8 9 9 11 56

Prescription drug coverage

Medicare 0 13 21 24 28 32 37 41 47 53 86 297

Medicaid * 1 2 4 5 5 5 6 6 6 12 41

Other 5 8 * 3 3 3 3 3 3 3 19 35

Subtotal 5 23 25 35 41 51 55 58 65 71 129 429

Revenues 0 * -1 -1 -1 -1 -1 -1 -2 -2 -2 -9

Administrative Costsb 11111***1136

Total Effect on Surplus -6 -24 -26 -36 -42 -52 -56 -60 -67 -74 -134 -444

Memorandum:

May 2000 Reestimate of the Prescription

Drug Benefita 0*1111111126

SOURCE: Congressional Budget Office.

NOTE: * = between -$500 million and $500 million.

a. CBO’s estimate of the February budget proposals reflects the estimate of the Medicare prescription drug benefit as revised in testimony presented before the

Subcommittee on Health of the House Committee on Ways and Means on May 11, 2000.

b. Although CBO did not estimate additional administrative costs in February, the proposed drug benefit would necessitate additional administrative costs that

would be subject to appropriations. Because the Administration did not request such additional appropriations as part of its discretionary totals, those costs are

not included in CBO’s calculation of surpluses under the policies of the Mid-Session Review.
15

TABLE 9. ESTIMATE OF DISCRETIONARY SPENDING UNDER THE MID-SESSION REVIEW

AND CBO’S BASELINE PROJECTIONS (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CBO’s Estimate of Total Discretionary Spending in the President’s Budget

Budget Authority

Defense 292 306 310 316 324 332 341 350 359 368 378

Nondefense 282 317 320 326 334 343 348 357 366 376 385

Total 575 624 630 642 658 676 689 707 725 744 763

Outlays

Defense 293 295 303 310 318 329 333 339 352 362 372

Nondefense 322 342 354 362 370 378 385 393 402 411 419

Total 616 637 657 672 688 707 718 732 754 773 791

CBO’s Baseline Projections Assuming That Discretionary Spending Grows at the Rate of Inflation After 2000

Budget Authority

Defense 290 300 309 318 327 335 344 353 362 372 381

Nondefense 280 310 320 330 339 348 357 366 376 386 396

Total 570 611 629 648 666 683 701 719 738 757 777

Outlays

Defense 288 297 304 313 322 333 339 345 357 366 376

Nondefense 320 340 352 363 371 380 390 399 408 418 429

Total 608 638 656 676 693 713 728 744 765 785 804

CBO’s Baseline Projections Assuming That Discretionary Spending Is Frozen at the Level Enacted for 2000

Budget Authority

Defense 290 290 290 290 290 290 290 290 290 290 290

Nondefense 280 296 296 296 296 296 296 296 296 296 296

Total 570 586 586 586 586 586 586 586 586 586 586

Outlays

Defense 288 290 288 289 289 291 289 287 289 289 289

Nondefense 320 335 339 339 334 334 333 333 332 332 332

Total 608 625 627 628 623 625 622 620 621 621 621

CBO’s Estimate of the Current Caps on Discretionary Spendinga

Budget Authority 572 541 550 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Outlays 600 579 571 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

SOURCE: Congressional Budget Office.

NOTE: n.a. = not applicable.

a. The current statutory limits do not divide discretionary spending into defense and nondefense costs.
16

TABLE 10. COMPARISON OF CBO'S AND THE ADMINISTRATION'S ECONOMIC PROJECTIONS 

FOR CALENDAR YEARS 2000-2010

Actual Forecast Projected Annual Average

1999 2000 2001 2001-2005 2006-2010

Nominal GDP (Billions of dollars)

CBO 9,256 9,907 10,433 12,508a 15,675b

Administration 9,886 10,407 12,660a 16,079b

Nominal GDP (Percentage change)

CBO 5.7 7.0 5.3 4.8 4.6

Administration 6.8 5.3 5.1 4.9

Real GDPc

 (Percentage change)

CBO 4.2 4.9 3.1 2.7 2.7

Administration 4.8 3.2 3.0 2.8

GDP Price Indexd

 (Percentage change)

CBO 1.4 2.1 2.1 2.0 1.8

Administration 1.9 2.0 2.0 2.0

Consumer Price Indexe (Percentage change)

CBO 2.2 3.1 2.7 2.7 2.5

Administration 3.3 2.6 2.6 2.6

Unemployment Rate (Percent)

CBO 4.2 3.8 3.7 4.3 5.1

Administration 4.1 4.1 4.5 5.1

Three-Month Treasury Bill Rate (Percent)

CBO 4.6 5.9 6.7 5.3 4.8

Administration 5.8 6.3 5.9 5.8

Ten-Year Treasury Note Rate (Percent)

CBO 5.6 6.5 6.8 6.0 5.7

Administration 6.3 6.3 6.3 6.3

Tax Bases (Percentage of GDP)

Corporate profitsf

 CBO 9.2 9.2 8.4 7.6 7.0

 Administration 8.9 8.2 8.1 7.5

Wages and salaries

 CBO 48.3 48.1 48.5 48.6 48.3

 Administration 48.2 48.4 48.1 47.8

SOURCES: Congressional Budget Office; Office of Management and Budget, Mid-Session Review: Budget of the United States Government, Fiscal Year

2001 (June 26, 2000).

NOTE: Percentage changes are year over year.

a. Level of GDP in 2005.

b. Level of GDP in 2010.

c. Based on chained 1996 dollars.

d. The GDP price index is virtually the same as the implicit GDP deflator.

e. The consumer price index for all urban consumers.

f. Corporate profits are book profits.
ATTACHMENT

7. For details of the original initiatives and their cost, see Congressional Budget Office, An Analysis of the President’s

Budgetary Proposals for Fiscal Year 2001 (April 2000), and A CBO Analysis of the Administration's Prescription

Drug Proposal, statement of Dan L. Crippen, Director, before the Subcommittee on Health, Committee on Ways and

Means, May 11, 2000 (available at www.cbo.gov).

8. These estimates reflect the specifications of the President’s proposals that underlie the estimates in the Mid-Session

Review. On July 11, the Office of Management and Budget informed CBO that some of the drug spending for certain

low-income beneficiaries that was assumed to be subsidized in the Administration’s estimate would not, in fact, be

subsidized. That difference would reduce the cost of the proposals by $17 billion over 10 years. CBO estimates that

without those subsidies, direct spending would total $123 billion over the 2001-2005 period and $412 billion over the

2001-2010 period.

CBO’s Analysis of the Health Insurance Initiatives in the Mid-Session Review

July 18, 2000

The President’s Mid-Session Review of the budget incorporates modifications to the

health insurance initiatives that were included in the budget submitted in February.7

The Congressional Budget Office (CBO) estimates that those initiatives, as modified, would increase direct spending by $4.7 billion in 2001, $129 billion over the

2001-2005 period, and $429 billion over the 2001-2010 period (see Table 1).8 The

modified proposals would also reduce revenues by $9 billion through 2010. Because the proposals would affect direct spending and revenues, pay-as-you-go procedures would apply to them.

The President’s budget does not include a request for appropriations to

cover the administrative cost of establishing and operating the prescription drug

benefit proposed for Medicare. Assuming that the necessary amounts are appropriated, CBO estimates that administrative spending for the prescription drug benefit

would total $0.9 billion in 2001, $3 billion through 2005, and $6 billion through

2010.

POLICY CHANGES IN THE MID-SESSION REVIEW

The Mid-Session Review modifies the Administration’s previous proposals for

Medicare by:

• Expanding the proposed Medicare prescription drug benefit to include catastrophic coverage and starting the benefit in 2002 rather

than 2003;

• Eliminating provisions in the February budget that would have reduced Medicare’s payment rates for certain services (compared with

baseline projections);
20

TABLE 1. TEN-YEAR ESTIMATES OF CHANGES IN SPENDING AND REVENUES IN THE PRESIDENT'S

HEALTH INSURANCE PROPOSALS (In billions of dollars)

Administration's

Estimate

CBO's

Estimate

Direct Spending

Medicaid and SCHIP (Federal payments)

FamilyCare 76.0 56.2

Other Medicaid/SCHIP proposals 14.4 18.1

Effect of Medicare prescription drug benefit 20.3 40.7

Effect of higher drug prices on Medicaid 0 1.4

Subtotal 110.7 116.4

Medicare

Prescription drug benefit 232.4 297.0

Changes to traditional Medicare 17.9 26.8

Expanded eligibility for Medicare 2.9 0.2

Medicare competitive defined benefit -11.9 -13.7

Subtotal 241.4 310.4

Other Federal Programs

Diabetes research 0.3 0.3

Ricky Ray Hemophilia Relief Trust Fund 0.5 0.5

Effect of higher drug prices on FEHB program (For annuitants) 0 0.1

Subtotal 0.8 0.9

Social Security outlays for expanded eligibility for Medicare (Off-budget) 1.1 1.4

Total (Including off-budget) 354.0 429.1

Revenues

Tax Credits for Expanded Eligibility for Medicare -1.6 -8.4

Income Taxes and Medicare Payroll Taxes (On-budget) 0 -0.6

Social Security Payroll Taxes (Off-budget) 0 -0.3

Total (Including off-budget) -1.6 -9.2

Spending Subject to Appropriations

Medicare Administrative Costs for Prescription Drug Benefit 0 5.6

Total Budgetary Effect

Decrease in the Total Budget Surplus Over 10 Years 355.6 443.9

SOURCE: Congressional Budget Office.

NOTE: SCHIP = State Children's Health Insurance Program; FEHB = Federal Employees Health Benefits program.
21

• Increasing payment rates for services furnished by hospitals, skilled

nursing facilities, home health agencies, dialysis facilities, and

Medicare+Choice plans (including paying for certain drug benefits

offered by Medicare+Choice plans in 2001); and

• Earmarking about $20 billion over 10 years for unspecified policies

to increase payments to providers.

The Mid-Session Review also includes new proposals to:

• Freeze each state’s limit on Medicaid disproportionate share hospital

(DSH) funds in 2001 at the 2000 level;

• Reduce the amounts that some veterans enrolled in Medicaid must

pay for nursing home care; and

• Increase funds for diabetes research and the Ricky Ray Hemophilia

Relief Trust Fund, which gives relief payments to certain people infected with the human immunodeficiency virus (HIV).

Finally, the Mid-Session Review proposals do not include two provisions

from the President’s February budget that have become law:

• A demonstration project to pay for services furnished to Medicare

patients participating in clinical trials (the President issued an executive memorandum on June 7 requiring Medicare to pay for those

services) and 

• A school lunch initiative that will result in higher enrollment in

Medicaid and the State Children’s Health Insurance Program

(SCHIP) and that was enacted as part of Public Law 106-224, the

Agricultural Risk Protection Act of 2000.

Other health insurance provisions proposed in February (including

FamilyCare, expanded eligibility for Medicare, and the Medicare competitive defined

benefit) have not changed, and CBO has not reestimated their costs.

OVERALL ESTIMATES OF THE PRESIDENT’S INITIAL AND MID-SESSION

PROPOSALS FOR HEALTH INSURANCE INITIATIVES

CBO previously estimated that the health insurance initiatives in the February budget

would increase direct spending for Medicare, Medicaid, and SCHIP by about $166
9. CBO has made minor technical changes to its estimating methods since preparing estimates of the February budget

proposals. Those changes account for a very small portion of the $261 billion difference.

22

billion through 2010 (see Table 2). The policies in the Mid-Session Review would

cost an estimated $261 billion more, for a total of $427 billion.9 Changes in the

Mid-Session Review would also increase direct spending by other agencies by

$2 billion over 10 years. Outlays for Social Security, which are off-budget, account

for $1 billion of that 10-year total. (The President proposes to move Medicare’s

Hospital Insurance Trust Fund off-budget as well.)

Expanding the Medicare prescription drug benefit to include coverage of

catastrophic drug spending and beginning the benefit a year earlier account for

$182 billion of that increase. Those changes more than double the $160 billion

estimated cost of the original prescription drug proposal.

Most of the remaining cost increase from the proposals in the Mid-Session

Review results from dropping provisions that would have reduced payments to

Medicare providers and adding provisions that would increase Medicare payments.

The dropped policies would have saved an estimated $35 billion over 10 years, and

the added policies would increase program spending by $40 billion over the same

period. Thus, compared with the President’s February proposals, those changes

would increase Medicare spending over the coming decade by an estimated

$75 billion—with payments to providers rising by almost $84 billion and beneficiaries’ premiums growing by more than $8 billion. 

COMPARISON OF CBO'S AND THE ADMINISTRATION'S ESTIMATES

Taken together, and including effects on revenues and discretionary spending, the

President’s health insurance initiatives would reduce the total surplus by $444 billion

over the 2001-2010 period, CBO estimates (see Table 1). Of that amount, $116

billion would be spending for Medicaid and SCHIP, $310 billion for Medicare benefits, $2 billion for other federal programs, and $9 billion in forgone tax revenues. In

addition, CBO estimates that the Congress would have to appropriate enough

money for the Department of Health and Human Services to establish and administer

the prescription drug benefit; such costs would total $6 billion through 2010.

The Administration, by contrast, estimates that the health insurance initiatives would reduce the total budget surplus by $356 billion over the 2001-2010

period. That estimate is $88 billion lower than CBO’s figure, mainly because of

differences in the estimated cost of the prescription drug benefit (including CBO’s

assumption that sufficient funds would be appropriated to administer the benefit). 
23

TABLE 2. ESTIMATED EFFECT ON DIRECT SPENDING OF CHANGES IN THE PRESIDENT'S HEALTH 

INSURANCE PROPOSALS

Ten-Year Cost

(Billions of Dollars)

Medicare

CBO's Estimate of February Proposalsa 67.3

Changes in Mid-Session Review

Expand prescription drug benefitb 167.6

Drop policies to reduce payment rates 34.9

Add policies to increase payment rates 40.5

CBO's Estimate of Mid-Session Review Proposals 310.4

Medicaid and SCHIP

CBO's Estimate of February Proposalsa 98.2

Changes in Mid-Session Review

Expand prescription drug benefitb 14.6

Other changes and interactionsc 3.6

CBO's Estimate of Mid-Session Review Proposals 116.4

Total (Medicare, Medicaid, and SCHIP)

CBO's Estimate of February Proposalsa 165.6

Changes in Mid-Session Review

Expand prescription drug benefitb 182.2

All other changes 79.0

CBO's Estimate of Mid-Session Review Proposals 426.8

SOURCE: Congressional Budget Office.

NOTE: SCHIP = State Children's Health Insurance Program.

a. CBO's estimate of the February budget proposals reflects the estimate of the Medicare prescription drug benefit as revised in testimony presented before the

Subcommittee on Health of the House Committee on Ways and Means on May 11, 2000.

b. Consistent with the estimates in the Administration’s Mid-Session Review, this estimate assumes that subsidies for low-income beneficiaries will cover all of

their costs each year in excess of the initial coverage limit but less than the annual out-of-pocket cap. If the President’s proposal does not include coverage of

those costs, CBO estimates that the change in direct-spending outlays from expanding the prescription drug benefit would be $163.3 billion over 10 years for

Medicare, $1.5 billion for Medicaid, and $164.8 billion in total. CBO has made minor technical changes to its estimating methods since preparing estimates of

the February budget proposals. Those changes account for a very small portion of the estimated cost of expanding the prescription drug benefit.

c. Includes the effects of dropping the school lunch initiative (because it was enacted), freezing DSH allotments, and interactions with Medicare provisions and

with a proposal to change rules regarding the treatment of income for veterans in nursing homes.
10. See Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for Fiscal Year 2001.

24

Although CBO estimates a higher cost for the prescription drug benefit than the

Administration does, that difference is partially offset by CBO’s estimate that net

federal outlays under the FamilyCare proposal would be $20 billion lower over the

2001-2010 period than the Administration anticipates.10

CBO’S ESTIMATES OF THE COST OF THE MEDICARE 

PRESCRIPTION DRUG BENEFIT

In February, the President proposed to create a voluntary outpatient prescription

drug benefit under a new Part D of Medicare. As proposed in February, that benefit

would begin in 2003 and be fully phased in by 2009. It would pay half of the cost of

prescription drugs, up to a specified cap. The insured half of the benefit would be

financed equally by premium payments from enrollees and by general tax revenues.

After cost sharing and premiums are taken into account, enrollees would end up

paying 75 percent of the cost of covered drugs and the government would pay 25

percent, up to the cap.

The premiums and cost-sharing payments of certain low-income Medicare

beneficiaries would be subsidized through the Medicaid program. Subsidies would

be available to beneficiaries who were fully eligible for both Medicare and Medicaid

or had income below 150 percent of the poverty level. (People with income between 135 percent and 150 percent of the poverty level would receive only assistance with their premiums, on a sliding-scale basis.) The federal government would

pay for subsidies for people who were fully eligible for both programs and for other

beneficiaries with income below the poverty level at the normal Medicaid matching

rate (57 percent, on average), with states paying the rest. Subsidy costs for other

beneficiaries would be paid entirely by the federal government. The U.S. territories

would not receive any additional funding for those subsidies.

In the Mid-Session Review, the President proposed to begin offering the

prescription drug benefit in 2002 (so it would be fully phased in by 2008) and to add

catastrophic coverage that would pay all of the cost of prescription drugs above a

certain amount ($4,000 in out-of-pocket spending in 2002, increasing with inflation

in drug prices thereafter). The cost of the catastrophic coverage would be financed

entirely by general tax revenues. Consistent with the assumptions underlying the

Administration’s Mid-Session Review estimate, CBO’s analysis assumes that

Medicaid would subsidize drug spending between the initial coverage limit and the

annual out-of-pocket cap for participating beneficiaries with income below

135 percent of the poverty level.
25

Medicare and Medicaid Spending for the Prescription Drug Benefit

As proposed in the Mid-Session Review, the prescription drug benefit would increase direct spending for Medicare and Medicaid by $0.1 billion in 2001, $98 billion over the 2001-2005 period, and $338 billion over the 2001-2010 period, CBO

estimates (see Table 3). By contrast, the Administration estimates that the prescription drug benefit would increase federal spending by $253 billion through 2010.

The bulk of estimated spending for the prescription drug benefit over 10

years ($297 billion) would come from Medicare. Payments for drug benefits would

total an estimated $442 billion through 2010, but they would be partially offset by

$152 billion in premiums paid by beneficiaries. In addition, Medicare would pay

employers 67 percent of the premium-subsidy costs that it would have incurred if the

retirees for whom employers are providing drug coverage had enrolled in Part D

instead. CBO estimates that those subsidies would total $7 billion over the 2001-

2010 period.

The President’s prescription drug proposal would also increase net federal

spending for Medicaid: by $12 billion through 2005 and $41 billion through 2010,

CBO estimates. The premium and cost-sharing subsidies that Medicaid would pay

for low-income Medicare beneficiaries would cost the federal government $65 billion over 10 years, but that increase would be partly offset by savings in Medicaid,

because Medicare would replace Medicaid as the primary payer for drug spending

for people who were fully eligible for both programs. The federal share of those

Medicaid savings would total $50 billion through 2010, CBO estimates. In addition,

Medicaid spending would rise by $24 billion over 10 years because the new drug

benefit would induce more low-income Medicare beneficiaries to enroll in Medicaid

and would require Medicaid to continue paying the Part B premium (at a 100 percent federal matching rate) for certain people who under current law would become

ineligible after December 31, 2002. Finally, Medicaid’s administrative spending

would rise by $2 billion through 2010 because of the costs of administering subsidies

and handling claims for new Medicaid enrollees. 

In addition to direct spending for Medicare and Medicaid, the proposed drug

benefit would necessitate additional administrative costs. If the benefit was implemented promptly, Medicare’s administrative costs would amount to $0.9 billion in

2001, CBO estimates, to hire additional staff, promulgate regulations, contract with

pharmacy benefit managers, buy computer systems, notify beneficiaries, and prepare

the Social Security Administration to deal with millions of beneficiaries and the

additional premium offsets against their Social Security benefits. Those administrative costs would total about $6 billion through 2010 if sufficient funds to establish

and operate the benefit were appropriated.
26

TABLE 3. CBO'S ESTIMATE OF THE PRESIDENT'S MID-SESSION REVIEW PROPOSAL FOR A PRESCRIPTION

DRUG BENEFIT IN MEDICARE (Outlays, by fiscal year, in billions of dollars)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

Direct Spending

Medicare

Benefits 0 20.1 30.8 36.8 41.9 48.3 54.3 61.9 69.8 78.2 129.6 442.2

Part D premium receipts 0 -7.5 -10.4 -13.0 -14.4 -17.0 -18.6 -21.5 -23.9 -26.1 -45.2 -152.3

Subsidy to health plans for retirees 0 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 2.1 7.1

Subtotal 0 12.9 20.9 24.5 28.2 32.2 36.6 41.5 47.0 53.2 86.5 297.0

Medicaid (Federal)a

Part D benefits and premiums 0 2.3 4.1 5.8 6.7 7.5 8.3 9.2 10.2 11.3 18.9 65.4

Change to current-law drug spending 0 -2.4 -3.5 -4.1 -4.7 -5.5 -6.2 -7.1 -8.0 -9.0 -14.7 -50.4

Part A/B benefits and premiums 0 0.5 1.3 2.3 2.7 2.9 3.1 3.4 3.6 3.9 6.8 23.7

Administrative costs 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.9 2.0

Subtotal 0.1 0.6 2.2 4.1 4.9 5.1 5.4 5.7 6.1 6.4 11.9 40.7

Total 0.1 13.5 23.1 28.6 33.0 37.3 42.0 47.2 53.1 59.7 98.4 337.7

Spending Subject to Appropriations

Medicare Administrative Costs 0.9 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 3.0 5.6

SOURCE: Congressional Budget Office based on the March 2000 baseline.

a. Consistent with the estimates in the Administration’s Mid-Session Review, this estimate assumes that subsides for low-income beneficiaries will cover all of their

costs each year in excess of the initial coverage limit but less than the annual out-of-pocket cap. If the President’s proposal does not include coverage of those

costs, CBO estimates that direct-spending outlays for the prescription drug benefit would be as follows:

Medicare Outlays 0.0 12.8 20.7 24.1 27.7 31.7 36.1 40.8 46.3 52.5 85.3 292.7

Medicaid Outlays 0.1 -0.1 0.9 2.8 3.3 3.7 3.8 4.2 4.4 4.6 7.0 27.7

Total 0.1 12.7 21.6 26.9 31.0 35.4 39.9 45.0 50.8 57.0 92.3 320.4
27

Effect of the Prescription Drug Benefit on Other Federal Purchasers of Drugs

Medicare enrollees who spent enough on prescription drugs to trigger the catastrophic coverage would no longer have to be conscious of the price of drugs. As a

result, demand would grow and prices would increase for some drugs used heavily

by Medicare enrollees—particularly drugs with no close substitutes. CBO estimates

that after 10 years, the average price of drugs consumed by Medicare beneficiaries

would be 8 percent higher if the President’s proposal was enacted.

Those higher prices would also affect spending for prescription drugs by

other federal programs, such as Medicaid, the Federal Employees Health Benefits

(FEHB) program, and programs of the Department of Defense (DoD), the Department of Veterans Affairs (VA), the Public Health Service (PHS), and the Coast

Guard. CBO estimates that higher drug prices would add $1 billion over the

2001-2010 period to direct spending for Medicaid and for annuitants covered by the

FEHB program. CBO has not estimated the higher discretionary spending needed

by federal agencies (for current workers covered by FEHB) as well as by DoD, VA,

PHS, and the Coast Guard. The net impact for active and retired postal employees

over that period would be negligible. 

Effect on Revenues

Higher drug prices would also lead to a loss of federal revenues from income and

payroll taxes by raising the cost of employer-sponsored health insurance and correspondingly reducing the amount of taxable compensation. CBO estimates that the

decrease in revenues would amount to about $1 billion through 2010. Social Security payroll taxes, which are off-budget, account for $0.3 billion of that total. 

CBO’S ESTIMATES OF THE COSTS OF CHANGES IN MEDICARE’S

PAYMENT RATES

The Balanced Budget Act of 1997 holds the rate of increase in Medicare’s payments

for many services below the annual rate of inflation through 2002, with full adjustment for inflation resuming in 2003. In February, the President proposed to continue holding those payment increases below the rate of inflation through 2005. The

Mid-Session Review proposals, however, dropped those provisions. They also

eliminated provisions that would have reduced payments to compensate health care

facilities for bad debt, that would have set up preferred provider organizations, and

that would have modified the phase-in of improved methods of adjusting payments

to Medicare+Choice organizations to reflect differences in financial risk based on the

health status of their enrollees. Because those dropped provisions would have re-
28

duced Medicare spending by $35 billion through 2010, spending under the policies

of the Mid-Session Review would be higher by that amount. 

In addition, the new proposals would increase Medicare’s payment rates to

hospitals, skilled nursing facilities, home health agencies, dialysis providers, and

Medicare+Choice organizations in the following ways:

• Payment rates for hospital inpatient services would receive a full

adjustment for inflation in 2001;

• A scheduled reduction in rates paid to teaching hospitals in 2001

would be canceled;

• A scheduled reduction in rates paid to hospitals that serve a significant number of low-income patients in 2001 would be canceled;

• Rates paid to hospitals in Puerto Rico would be increased;

• Rates for home health services would receive a full adjustment for

inflation in 2001, and a 15 percent reduction in those rates would be

postponed from 2002 to 2003;

• Rates for skilled nursing facilities would receive a full adjustment for

inflation in 2001;

• Limits on payments to therapists would be postponed until 2002;

• Payment rates for dialysis services would be increased by 2.4 percent

in 2001; and

• Medicare would pay for qualifying drug benefits offered by

Medicare+Choice plans in 2001.

The proposal also earmarks about $20 billion over 10 years for unspecified policies

to increase payments to providers. The estimate assumes that the those policies

would, in fact, increase payments to providers by the earmarked amounts. CBO

estimates that those provisions would increase Medicare spending by $40 billion

over the 2001-2010 period.
29

ESTIMATES OF CHANGES AND INTERACTIONS 

IN MEDICAID AND SCHIP

Other effects of the Mid-Session Review proposals would increase Medicaid and

SCHIP spending by nearly $4 billion over the 2001-2010 period, compared with

CBO’s estimate of the President’s initial budget proposals. That increase reflects

the deletion of the school lunch initiative (because it was enacted in P.L. 106-224),

the addition of a proposal to change Medicaid’s DSH allotments, and interactions

with other policies. (The net effect of the school lunch initiative on Medicaid and

SCHIP was negligible.)

Medicaid DSH

The Balanced Budget Act limits total Medicaid spending on DSH payments to fixed

annual amounts that decline through 2002. The Mid-Session Review includes a

proposal that would freeze each state’s DSH allotment for 2001 at the 2000 level.

That proposal would increase federal Medicaid spending by $0.3 billion in 2001,

CBO estimates.

Veterans in Nursing Homes

The new proposals would also permanently extend a provision that allows people

who receive both a veteran’s pension and nursing home care from Medicaid to keep

$90 of their pension each month instead of using it to defray nursing home costs.

Under current law, that provision will expire at the end of 2002. CBO estimates

that making the provision permanent would increase federal Medicaid spending by

$0.9 billion over the 2001-2005 period and $2.5 billion through 2010.

Interactions with Medicare Provisions

Because Medicaid pays Medicare premiums and cost sharing for certain low-income

beneficiaries enrolled in both programs, the proposed changes in Medicare’s payment rates, which would affect premiums and cost sharing, would also have an

impact on Medicaid spending. CBO estimates that those changes, in combination

with the effect of higher prices for prescription drugs, would increase federal spending for Medicaid by $1 billion over 10 years (compared with CBO’s estimate of the

President’s initial budget proposals).
30

ESTIMATES OF OTHER PROVISIONS

In addition, the Mid-Session Review proposes to add $475 million in mandatory

funding to the Ricky Ray Hemophilia Relief Trust Fund in 2001 and to increase

mandatory funding of diabetes research by a total of $300 million from 2003

through 2007. Those provisions would boost direct spending by $774 million over

the 2001-2010 period, CBO estimates.

PROPOSED ACCOUNTING CHANGES AND

INTRABUDGETARY TRANSACTIONS

The Mid-Session Review also contains two proposals regarding the budgetary treatment of Medicare’s Hospital Insurance (HI) trust fund. One would transfer additional funds from the general fund of the Treasury to the HI trust fund; the other

would place the receipts and outlays of that fund off-budget.

Transfers to the HI Trust Fund

The Administration proposes to assign an extra $115 billion to the HI trust fund

over the next 10 years: $31 billion in 2001, $14 billion in 2002, and $70 billion

between 2008 and 2010, over and above the income the fund would ordinarily receive. (The President’s budget in February proposed larger transfers, totaling $299

billion over the 2001-2010 period.) These transfers are described as “interest savings resulting from devoting the Medicare surplus to debt reduction”—although,

under current law, the trust fund is already credited with interest earnings on the

surplus it generates.

Since the transferred amounts would not be needed immediately to pay

benefits, they would add to trust fund balances and make the HI program appear

more “solvent.” But the solvency of a trust fund is not a meaningful measure of the

government’s ability to meet its future obligations because the fund’s balances are

not assets of the government. Rather, the government’s ability to meet its long-term

obligations to Medicare beneficiaries will depend on its overall fiscal condition.

Under current policies, as the population ages, payroll tax collections will become

inadequate to finance Medicare, which will have to be funded through general revenues and, eventually, through proceeds from borrowing. That will be true whether

or not trust fund balances exist on paper.

The only way that today’s lawmakers can make a set of future obligations

more affordable for future generations is to take actions that enhance long-term

economic growth. By themselves, legislated changes in trust fund balances would
31

affect neither the size of the economy nor the resources available to the government

in the future. There is some risk, however, that larger trust fund balances could

obscure the long-term fiscal threat posed by the aging of the population and deter

needed reforms by giving lawmakers and the public a false sense of security.

Taking the HI Trust Fund Off-Budget

The Administration also proposes to change the budget categorization of the HI

trust fund so that its receipts and outlays would be considered off-budget, like those

of the Social Security trust funds. That change is intended to ensure that HI surpluses over the next 10 years “are not used for other purposes and therefore will be

used to reduce the debt,” according to the Mid-Session Review.

That proposed accounting change would have no effect on the economy. It

would reduce on-budget surpluses while correspondingly increasing off-budget

surpluses, but it would not, by itself, reduce the debt or change the government’s

financial position.

However, if the Congress and the President agreed to avoid on-budget deficits in future years, that accounting change might make the surpluses generated by

the HI program (and any additional transfers from the general fund) less vulnerable

to proposals to increase spending or reduce taxes. If taking the HI trust fund offbudget thereby increased the likelihood of maintaining projected budget surpluses

and paying down debt held by the public, it would enhance long-term economic

growth.

ADDITIONAL TABLES

35

SUMMARY OF CBO'S ESTIMATE OF THE PRESIDENT'S MID-SESSION REVIEW PROPOSALS FOR MEDICARE

(By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

Gross Medicare Outlays (Direct Spending)

Prescription Drug Benefit 0 0 20.4 31.3 37.4 42.6 49.1 55.2 62.9 70.9 79.4 131.7 449.3

Changes to Traditional Medicare 0 5.5 8.1 -1.0 2.4 2.7 2.9 2.6 2.2 1.8 1.6 17.8 28.9

Expanded Eligibility for Medicare 0 0 1.8 3.3 4.0 5.0 5.8 6.5 7.1 7.9 9.1 14.1 50.4

Medicare Competitive Defined Benefit 0 0 0 -1.9 -4.2 -7.2 -11.0 -12.5 -14.2 -16.1 -18.1 -13.3 -85.2

Total 0 5.5 30.3 31.8 39.7 43.0 46.9 51.7 58.0 64.7 71.9 150.3 443.5

Offsetting Receipts (Premiums)a

Prescription Drug Benefit 0 0 -7.5 -10.4 -13.0 -14.4 -17.0 -18.6 -21.5 -23.9 -26.1 -45.2 -152.3

Changes to Traditional Medicare 0 -1.4 -0.6 -0.2 -0.1 -0.1 -0.1 * * 0.1 0.2 -2.4 -2.1

Expanded Eligibility for Medicare 0 0 -2.0 -3.2 -4.0 -5.0 -5.8 -6.4 -7.0 -7.9 -9.0 -14.2 -50.2

Medicare Competitive Defined Benefit 0 0 0 1.6 3.5 6.1 9.3 10.6 11.9 3.5 15.2 11.2 71.5

Total 0 -1.4 -10.1 -12.2 -13.5 -13.3 -13.5 -14.4 -16.5 -18.2 -19.9 -50.6 -133.1

Net Medicare Outlays (Direct Spending)

Prescription Drug Benefit 0 0 12.9 20.9 24.5 28.2 32.2 36.6 41.5 47.0 53.2 86.5 297.0

Changes to Traditional Medicare 0 4.1 7.5 -1.1 2.3 2.6 2.8 2.6 2.2 2.0 1.7 15.5 26.8

Expanded Eligibility for Medicare 0 0 -0.2 * * * 0.1 0.1 0.1 0.1 * -0.1 0.2

Medicare Competitive Defined Benefit 0 0 0 -0.3 -0.7 -1.1 -1.8 -2.0 -2.3 -2.6 -2.9 -2.1 -13.7

Total 0 4.1 20.2 19.6 26.2 29.7 33.3 37.3 41.5 46.5 52.1 99.7 310.4

Memorandum:

Administrative Costs for Prescription Drug

Benefit (Subject to appropriations) 0 0.9 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 3.0 5.6

SOURCE: Congressional Budget Office.

NOTE: * = between -$50 million and $50 million.

a. A reduction in offsetting receipts is equivalent to an increase in outlays.
36

DETAILS OF CBO'S ESTIMATE OF THE PRESIDENT'S MID-SESSION REVIEW PROPOSALS FOR MEDICARE:

TRADITIONAL BENEFITS FOR CURRENT-LAW ENROLLEES (By fiscal year, in billions of dollars)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

Fee-for-Service Updates

Prospective payment system update 0 0.6 0.6 0.6 0.7 0.9 1.1 1.1 1.1 1.2 1.2 3.3 9.1

Indirect medical education adjustment 0 0.1 * 0 0 0 0 0 0 0 0 0.1 0.1

Disproportionate share hospital adjustment 0 0.1 * 0 0 0 0 0 0 0 0 0.2 0.2

Puerto Rico prospective payment system 0 * * * * * * * * * * 0.1 0.3

Delay in therapy caps from 2001 to 2002 0 1.0 0.2 0.1 0 0 0 0 0 0 0 1.3 1.3

Home health adjustment 0 0 1.0 0.3 0.1 0.2 0.2 0.2 0.2 0.3 0.3 1.6 2.7

Skilled nursing facility adjustment 0 * 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.5 1.4

Dialysis adjustment 0 0 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.5 1.4

Fee-for-Service Modernization

Centers of excellence 0 0 * -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.3 -0.9

Disease management and primary care case management 0 0 * * * * * * * * * * *

Competitive acquisition 0 0 0 * -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.8

Contracting reform 0 0 0 0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.8

Cost-Sharing Changes

20 percent copayment for laboratory services 0 0 0 -0.5 -0.7 -0.7 -0.8 -0.8 -0.9 -1.0 -1.0 -1.9 -6.4

Index Part B deductible to consumer price index 0 0 0 * -0.1 -0.2 -0.3 -0.3 -0.4 -0.5 -0.6 -0.3 -2.4

Eliminate cost sharing for preventive services 0 0 0 0.6 0.8 0.8 0.8 0.9 0.9 0.9 1.0 2.1 6.6

Other Fee-for-Service Provisions

Reduce EPO payment rate 0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.5 -1.2

MSP reporting by insurers 0 * -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.2 -0.2 -0.5 -1.3

Restrictions on partial hospitalization 0 * * * * * * * * -0.1 -0.1 -0.1 -0.3

Clarify partial hospitalization benefit 0 * * * * * * * * * -0.1 -0.1 -0.3

Eliminate physicians' markup of outpatient drugs 0 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -1.0 -2.1

Reduce payments for bad debt 0 0 0 0 0 0 0 0 0 0 0 0 0

Reduce payment rates for four lab tests by 30 percent 0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.5 -1.2

National payment limit for prosthetics and orthotics 0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.5 -1.3

Eliminate certain HPSA bonus payments 0 * * * * * * * * * * -0.2 -0.4

Cover 48 months of immunosuppressive drugs 0 * * * * * * * * * * * 0.2

Medicare+Choice 

Eliminate BBRA slowdown of phase-in of risk adjustment 0000000000000

Shift timing of payment from October to September 2002 0 0 3.9 -3.9000000000

Interaction with changes in fee-for-service spending 0 0 0.3 0.1 * * * * * -0.1 -0.2 0.3 0.1

Unspecified Policies

Amount earmarked for increases in Part A spendinga 0 1.2 1.3 1.4 1.4 1.5 1.5 1.4 1.3 1.2 1.1 6.7 13.0

Amount earmarked for increases in Part B spendinga 0 0.7 0.7 1.0 1.0 1.1 1.1 1.0 0.9 0.8 0.8 4.4 9.0

Total (Gross mandatory Medicare outlays) 0 5.5 8.1 -1.0 2.4 2.7 2.9 2.6 2.2 1.8 1.6 17.8 28.9

Offsetting Receipts (Premiums)b 0 -1.4 -0.6 -0.2 -0.1 -0.1 -0.1 * * 0.1 0.2 -2.4 -2.1

Net Medicare Outlays 0 4.1 7.5 -1.1 2.3 2.6 2.8 2.6 2.2 2.0 1.7 15.5 26.8

SOURCE: Congressional Budget Office.

NOTE: * = between -$50 million and $50 million; EPO = erythropoietin; MSP = Medicare as secondary payer; HPSA = health professional shortage area;

BBRA = Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999.

a. After specifying the amounts earmarked for increases in Part A and Part B spending, the Administration added proposals to increase payment rates for hospitals

in Puerto Rico and to increase funding for Ricky Ray grants. The Administration stated that the earmarked amounts would be reduced to offset the cost of those

proposals. CBO adjusted the amounts earmarked for Part A and Part B to reflect its estimates of the Puerto Rico provision and the Ricky Ray provision,

respectively.

b. A reduction in offsetting receipts is equivalent to an increase in outlays.
37

CBO'S ESTIMATE OF THE PRESIDENT'S MID-SESSION REVIEW PROPOSALS FOR MEDICAID AND SCHIP

(Federal outlays by fiscal year, in billions of dollars)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total,

2001-

2005 

Total,

2001-

2010 

Medicaid

FamilyCare 0.2 -0.1 * * 0.2 -7.3 -3.6 0.7 1.0 1.5 0.3 -7.4

Medicare Prescription Drug Benefit 0.1 0.6 2.2 4.1 4.9 5.1 5.4 5.7 6.1 6.5 11.9 40.7

Restore Eligibility to Certain Legal Immigrants 0.0 0.1 0.3 0.5 0.8 1.0 1.3 1.7 2.0 2.4 1.7 10.2

Other Medicaid Proposals and Interactions 0.3 0.3 0.6 0.7 0.8 0.9 1.0 1.2 1.3 1.6 2.7 8.7

Total 0.7 1.0 3.1 5.3 6.6 -0.3 4.2 9.3 10.4 11.9 16.6 52.1

SCHIP

FamilyCare -0.3 1.4 2.4 3.1 4.4 17.5 13.0 7.3 7.7 7.2 10.9 63.7

Other SCHIP Proposals 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 0.6

Total -0.3 1.4 2.4 3.1 4.5 17.5 13.1 7.4 7.8 7.3 11.2 64.3

Total (Medicaid and SCHIP)

Total 0.4 2.4 5.5 8.5 11.1 17.2 17.2 16.7 18.2 19.2 27.8 116.4

SOURCE: Congressional Budget Office.

NOTE: * = between -$50 million and $50 million.