By Tom Curry National affairs writer
msnbc.com
updated 11/23/2009 10:29:34 AM ET 2009-11-23T15:29:34

Claim: The Senate bill includes an accounting mechanism that cuts the projected deficits by $72 billion.

A central focus of the debate over health insurance legislation is its effect on future budget deficits. The deficit in fiscal year 2009 was $1.4 trillion, or 9.9 percent of Gross Domestic Product, the highest deficit as a share of GDP since 1945. Is health insurance legislation likely to make budget deficits in the years ahead bigger than they would otherwise be, or smaller?

Fact or fiction?
Fact. The Congressional Budget Office estimates that the cumulative deficits for fiscal years 2010 to 2019 will amount to more than $7 trillion. The CBO estimates that the Senate insurance reform bill would reduce those cumulative deficits by only 1.8 percent, or $130 billion. More than half of that deficit cutting, $72 billion, would come from revenues that would flow into a new voluntary long-term care insurance plan. Workers would purchase coverage by paying premiums which would go into the federal Treasury. The CBO explained that the long-term care program "would pay out far less in benefits than it would receive in premiums over the 10-year budget window" (from 2010 to 2019), thus producing the $72 billion deficit reduction. The Committee for a Responsible Federal Budget said that $72 billion in revenue was not "an authentic offset" to the new spending in the Senate bill because it's essentially a short-term windfall.

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