Cost of Reform Unclear Until Benefits Are Defined

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The cost of the healthcare reform law will remain fuzzy until the administration decides what benefits must be covered by the state health insurance exchanges that start in 2014, according to a report by Politico.

Services required in the "essential health benefits package" will be federally subsidized to make coverage more affordable. If the package is generous, Congressional Budget Office projections of the total cost of healthcare reform would likely be too low. The CBO currently estimates the reform law would reduce the deficit by $143 billion over 10 years.

The law stipulates that required benefits should be roughly equal to the coverage in "a typical employer plan," but there is scant data on what such a plan includes. The law also requires the package to include mental health services, which are often uncovered or limited in private plans.

The administration is asking the Institute of Medicine to recommend a benefits package. An IOM committee made up of healthcare experts and consumer advocates held a conference call on March 21 to gather information and will deliver its final report in September.

An MIT economist told the committee that for every 10 percent increase in the cost of the essential benefits package, the cost of the government subsidies would rise by 14.5 percent, but the rise would also reduce the number of insured by 1.5 million.

Read the Politico report on healthcare reform.

Read more coverage on the cost of healthcare reform:

- Repeal Would Cost $230B Over Next Decade, Congressional Budget Office Says


- Revision of Official Estimate Puts Health Reform Cost Over $1 Trillion


- Healthcare Reform: A Dangerous Financial Gamble – 9 Observations


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