[Congressional Record Volume 147, Number 148 (Wednesday, October 31, 2001)]
[Senate]
[Pages S11281-S11283]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           CBO COST ESTIMATE

  Mr. KENNEDY. Madam President, on October 11, 2001, I filed Report No. 
107-83 to accompany S. 1533, a bill to amend the Public Health Service 
Act to reauthorize and strengthen the health centers program and the 
National Health Service Corps, and to establish the Healthy Communities 
Access Program, which will help coordinate services for the uninsured 
and underinsured, and for other purposes. At the time the report was 
filed, the estimate by the Congressional Budget Office was not 
available. I ask unanimous consent that a copy of the CBO estimate be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               Congressional Budget Office Cost Estimate


          S. 1533.--Health Care Safety Net Amendments of 2001

       Summary: S. 1533 would extend expiring provisions and 
     authorizations for appropriations in title III of the Public 
     Health Service Act (PHSA). The bill would reauthorize and 
     expand the Health Centers and National Health Service Corps 
     programs, and establish the Community Access Program in 
     statute. It also would create several new grant programs and 
     demonstrations. The provisions in this bill would be 
     administered by the Health Resources and Services 
     Administration (HRSA).
       Assuming the appropriation of the necessary amounts, CBO 
     estimates that implementing S. 1533 would cost about $1 
     billion in 2002 and between $8 billion and $9 billion over 
     the 2002-2006 period.
       The bill would increase spending by the Medicare program 
     for rural health clinic services, and reduce Medicaid 
     spending for certain beneficiaries who use those clinics. In 
     total, direct spending would increase by $146 million over 
     the 2002-2011 period. Because enacting S. 1533 would affect 
     direct spending, pay-as-you-go procedures would apply.
       S. 1533 contains an intergovernmental mandate as defined in 
     the Unfunded Mandates Reform Act (UMRA), but CBO estimates 
     that the mandate would not affect the budgets of state, 
     local, or tribal governments. Those governments may also 
     benefit either directly or indirectly from some of the grant 
     programs authorized in the bill, but their participation in 
     those programs would be voluntary. S. 1533 contains no 
     private-sector mandates as defined in UMRA.
       Estimated cost to the Federal Government: The estimated 
     budgetary impact of S. 1533 is shown in the following table. 
     For the purposes of this estimate, CBO assumes that the bill 
     will be enacted this fall and that the necessary 
     appropriations will be provided for each fiscal year. The 
     table summarizes the budgetary impact on discretionary 
     spending of the legislation under two different sets of 
     assumptions. In cases where the bill would authorize the 
     appropriation of such sums as may be necessary, the first set 
     of figures provides the estimated levels of authorizations 
     assuming annual adjustments for anticipated inflation after 
     fiscal year 2002. The second set of assumptions does not 
     include any such inflation adjustments. The costs of this 
     legislation would fall within budget functions 550 (health) 
     and 570 (Medicare).

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars
                                   -----------------------------------------------------------------------------
                                        2001         2002         2003         2004         2005         2006
----------------------------------------------------------------------------------------------------------------
 
                                        SPENDING SUBJECT TO APPROPRIATION
 
                                         With Adjustments for Inflation
 
Spending Under Current Law:
    Budget Authority a............        1,513            0            0            0            0            0
    Estimated Outlays.............        1,368          662           60            7            0            0
Proposed Changes:
    Estimated Authorization Level.            0        1,887        1,878        1,914        1,953        1,989
    Estimated Outlays.............            0        1,004        1,776        1,886        1,923        1,961
Spending Under S. 1533:
    Estimated Authorization Level.        1,513        1,887        1,878        1,914        1,953        1,989
    Estimated Outlays.............        1,368        1,665        1,835        1,893        1,923        1,961
 
                                        Without Adjustments for Inflation
 
Spending Under Current Law:
    Budget Authority a............        1,513            0            0            0            0            0
    Estimated Outlays.............        1,368          662           60            7            0            0
Proposed Changes:
    Estimated Authorization Level.            0        1,887        1,836        1,834        1,833        1,833
    Estimated Outlays.............            0        1,003        1,753        1,826        1,824        1,825

[[Page S11282]]

 
Spending Under S. 1533:
    Estimated Authorization Level.        1,513        1,887        1,836        1,834        1,833        1,833
    Estimated Outlays.............        1,368        1,665        1,813        1,832        1,824        1,825
 
 
                                           CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority a......            0            9           15           15           15           15
Estimated Outlays.................            0            9           15           15           15          15
----------------------------------------------------------------------------------------------------------------
a The 2001 level includes the amount appropriated for that year for the programs.

       Basis of Estimate:


                   spending subject to appropriations

     Title I: Consolidated Health Center Program
       S. 1533 would reauthorize and expand the scope of the 
     consolidated health centers program, which provides grants to 
     entities that provide health care and other services to 
     uninsured and underinsured populations. S. 1533 contains two 
     new provisions: It would authorize the use of up to 5 percent 
     of authorized funds for grants to health centers or networks 
     for the construction and modernization of buildings, and it 
     would permit HRSA to guarantee the refinancing of non-federal 
     loans by health centers. The costs of these additional 
     activities would be subsumed in the general authorization of 
     appropriations for the health center program, which is $1,379 
     million in 2002 and such sums as necessary for 2003-2006. The 
     bill also would establish a linguistic grant program, which 
     would award grants to health centers for the provision of 
     translation and interpretation services for clients for whom 
     English is a second language. The bill would authorize the 
     appropriation of $10 million for that grant program in 2002, 
     and then such sums as necessary each year until 2006. CBO 
     estimates that outlays for these programs would be $745 
     million in 2002 and $6.4 billion during the 2002-2006 period, 
     assuming appropriation of the necessary funds.
     Title II: Rural health
       Rural Health Grants. S. 1533 would reauthorize several 
     grant programs administered through the Office of Rural 
     Health Policy within HRSA: health care services outreach, 
     health network development, and small provider quality 
     improvement grants. The bill would not substantially change 
     the activities of the existing program. The bill would 
     authorize $40 million in 2002 and such sums as necessary in 
     subsequent years through 2006. (The 2002 authorization level 
     is less than the 2001 appropriation level, which included a 
     one-time appropriation of $18 million for a special project.) 
     Based on past spending for these activities, CBO estimates 
     that this provision would cost $12 million in 2002 and $164 
     million during the 2002-2006 period.
       Telehealth Grant Consolidation. S. 1533 would create a new 
     section in the Public Health Service Act for this established 
     program. The bill would authorize appropriations for 
     telehealth network grants as well as for telehealth resource 
     centers grants. Telehealth refers to health information and 
     services that are communicated via telecommunications 
     technologies. Telehealth network grants are provided to 
     entities to expand access to services, to train providers, 
     and to improve access to health care information. Grants to 
     telehealth centers may fund projects that demonstrate the 
     uses of telehealth technologies. The bill stipulates that not 
     less than 50 percent of funds for grants for networks shall 
     be awarded to entities in rural areas, and that the total 
     funds awarded for network grants in 2002 may not be less than 
     the total awarded for such grants in fiscal year 2001. S. 
     1533 would authorize the appropriation of $60 million in 2002 
     (compared to the $36 million appropriated in 2001) and then 
     such sums as necessary through 2006. CBO estimates that 
     outlays for this program would be $19 million in 2002 and 
     $245 million over the 2002-2006 period, assuming 
     appropriation of the necessary funds.

    TABLE 2.--APPROPRIATIONS FOR FISCAL YEAR 2001 AND AMOUNTS AUTHORIZED IN S. 1533 ASSUMING ADJUSTMENTS FOR
                                                    INFLATION
----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars
                                   -----------------------------------------------------------------------------
                                       2001 a        2002         2003         2004         2005         2006
----------------------------------------------------------------------------------------------------------------
Title I: Health Centers...........        1,164        1,379        1,410        1,440        1,469        1,496
Title II:
    Rural Health Grants...........           58           40           41           42           43           43
    Telehealth Grants.............           36           60           61           63           64           65
    Telehomecare Demonstration....            0            4            2            b            b            b
    Emergency Medical Services                0            1            1            1            1            1
     Grants.......................
    Mental Health Services                    0           20           20           21           21           22
     Demonstration................
    School-Based Health Networks..            0            5            5            5            5            5
Title III:
    National Health Service Corps.          130          202          207          211          216          220
    Chiropractor and Pharmacist               0            1            1            1            0            0
     Demonstration................
Title IV:
    Community Access Program......          125          125          128          130          133          136
    Primary Dental Programs.......            0           50            0            0            0            0
                                   -----------------------------------------------------------------------------
        Title b...................        1,513        1,887        1,878        1,914        1,953        1,989
----------------------------------------------------------------------------------------------------------------
a The 2001 level includes the amount appropriated for that year for the programs.
b Total includes Title VI study, with budget authority estimated at less than $500,000.

       Telehomecare Demonstration Project. S. 1533 would authorize 
     a demonstration project for the provision of telehomecare 
     services for residents of rural areas. Telehomecare means the 
     provision of health services by providers at a distant site 
     to patients in the home via telemedicine technology. The bill 
     would limit the number of grants to five entities and would 
     fund grantees for no more than three years. The Office for 
     the Advancement of Telehealth within HRSA currently funds a 
     dozen grants to home health agencies, so this demonstration 
     would not represent a substantially new activity for the 
     administration. The bill also would require HRSA to submit an 
     interim and final report to the Congress describing the 
     results of the demonstration. Based on historical patterns of 
     spending for similar activities, CBO estimates the cost of 
     this demonstration would be $4 million in 2002 and $7 million 
     over the 2002-2006 period.
       Rural Emergency Medical Services Program. S. 1533 would 
     establish a program of grants, primarily to state and local 
     entities, to pay up to 75 percent of the cost of recruiting 
     and training emergency medical service (EMS) personnel in 
     rural areas. It would authorize the appropriation of such 
     sums as may be necessary for 2002 through 2006. The bill also 
     would authorize grants for the acquisition of emergency 
     medical equipment and for EMS training programs for the 
     public. Based on information from HRSA staff about 
     participation in similar programs, CBO assumes that about 20 
     states would participate in any given year. CBO estimates the 
     cost of implementing this program would be about $1 million 
     in 2002 and $6 million during the 2002-2006 period, assuming 
     appropriation of the necessary funds.
       Mental Health Services via Telehealth Grants. The bill 
     would create a demonstration program to award grants to 
     entities for the development of telehealth networks for the 
     provision of mental health education and services in areas 
     designated as mental health underserved areas. The grants 
     would be directed to nursing homes and schools, with grants 
     to be used for education about mental health issues, for the 
     provision of mental health services, and for collaborative 
     and other purposes. HRSA currently oversees more than 25 such 
     grants. Appropriations at the authorized levels, which are 
     $20 million in 2002 and such sums as necessary through 2006, 
     would allow for 50 to 60 grants of similar size. Assuming 
     appropriation of the authorized amounts, CBO estimates that 
     outlays for this demonstration project would be about $7 
     million in 2002 and $93 million over the 2002-2006 period.
       School-based Health Center Networks. S. 1523 would 
     establish a new program to award grants to nonprofit 
     organizations for the creation of state-wide technical 
     assistance centers and for other purposes. The bill would 
     authorize the appropriation of $5 million in 2002 and such 
     sums as may be necessary for 2003-2006. Based on historical 
     spending patterns for similar activities, CBO estimates this 
     program would cost $2 million in 2002 and $23 million over 
     the 2002-2006 period.
     Title III: National Health Service Corps
       S. 1533 would reauthorize the National Health Service Corps 
     (NHSC) field, recruitment, and state loan repayment programs. 
     The field and recruitment programs support activities to 
     identify the health professional

[[Page S11283]]

     needs of underserved communities and to recruit and support 
     providers in those communities. The state loan repayment 
     program provides federal matching funds to state programs 
     that repay the educational debts of health care providers 
     practicing in underserved communities.
       The bill would add new authority to the field program to 
     establish a demonstration project to create a program of 
     part-time corps members. The bill would allow the Secretary 
     to change both the methodology and process of designating 
     health professional shortage areas (HPSAs) and would instruct 
     the Secretary to develop a plan to increase participation by 
     dental health providers in the scholarship and loan repayment 
     programs.
       S. 1533 would authorize such sums as necessary for 2002-
     2006 for the field program, $146 million in 2002 and such 
     sums as necessary through 2006 for the recruitment program, 
     and $12 million in 2002 and such sums as may be necessary 
     through 2006 for the state loan repayment program. While the 
     authorization of appropriations for the recruitment program 
     is substantially larger than the appropriation for fiscal 
     year 2001, the demand for corps members in the community is 
     strong. CBO assumes that the NHSC will be able to spend the 
     proposed appropriations at current rates. The authorizations 
     for the field and state loan repayment programs are not 
     substantially larger than 2001 appropriation levels, and we 
     therefore assume that the programs will spend funds at 
     current rates. CBO estimates spending to implement all three 
     programs would total $109 million in 2002 and $941 million 
     during the 2002-2006 period, assuming appropriation of the 
     necessary funds.
       The bill would also establish a demonstration project that 
     would allow chiropractors and pharmacists to participate in 
     the NHSC loan repayment program. The determination of a HPSA 
     would not be affected by the inclusion of these providers. 
     The demonstration would be authorized for three years at such 
     sums as may be necessary. Based on information from experts 
     at HRSA and spending for similar activities within the NHSC 
     loan repayment program, CBO estimates the demonstration would 
     cost less than $500,000 in 2002 and about $3 million over the 
     2002-2004 period.
     Title IV: Healthy Communities Access Program
       Community Access Program. S. 1533 would establish in 
     statute the community access program (CAP), which has been 
     funded since 1999. The program awards grants to consortiums 
     to improve the efficiency, effectiveness, and the 
     coordination of health services to uninsured and underinsured 
     in their community. The bill would authorize the 
     appropriation of $125 million for fiscal year 2002, and such 
     sums as may be necessary for the subsequent four years. CBO 
     estimates this provision would result in outlays of $94 
     million in 2002 and $613 million over the 2002-2006 period, 
     assuming appropriation of the necessary funds.
       Primary Dental Programs. S. 1533 would authorize the 
     appropriation of $50 million in 2002 to be available for five 
     years, for the development of a grant program to be 
     administered by HRSA to respond to states' dental workforce 
     needs. The grants would provide federal matching funds to 
     state programs for loan forgiveness, recruitment, practice 
     expansion, dental residency programs, and for other purposes. 
     The estimated cost of implementing this program is $10 
     million in 2002 and $50 million over the 2002-2006 period.
     Title VI: Study
       S. 1533 would require the Secretary of Health and Human 
     Services to conduct a study to determine the ability of the 
     department to provide for solvency for managed care networks 
     whose member organizations are health centers receiving funds 
     from the Consolidated Health Centers Program. The bill would 
     direct the Secretary to submit a report to the Congress 
     detailing the results of the study. CBO estimates the cost of 
     implementing this provision would be less than $500,000 in 
     2002 and 2003.


             direct spending effects--rural Health clinics

       Under current law, Medicare beneficiaries must pay for the 
     first $100 of the Part B services before the Medicare program 
     will begin paying for such services. The bill would exempt 
     certain low-income beneficiaries from the requirement that 
     they satisfy that deductible before Medicare will pay for 
     services furnished by a rural health clinic (RHC) at which a 
     NHSC member is assigned. The proposal would affect Medicare 
     spending for eligible patients of rural health clinics who 
     receive nearly all of their Part B services from those 
     clinics. (Medicare spending would not be affected for those 
     beneficiaries who also receive at least $100 in Part B 
     services from other providers.) CBO estimates that this 
     provision would eliminate the deductible in calendar year 
     2002 for about 200,000 low-income beneficiaries who receive 
     nearly all of their Part B services from qualifying RHCs.
       Increasing Medicare spending to pay for the deductible for 
     those beneficiaries would also have other effects on spending 
     by the Medicare and Medicaid programs. Annual increases in 
     payment rates for Medicare+Choice plans are tied to increases 
     in per-capita spending in the fee-for-service sector, so this 
     provision would increase payments to Medicare+Choice plans. 
     Part B premiums would also rise, so about one-quarter of the 
     increase in Medicare spending would be offset by higher 
     premium receipts. Medicaid spending would be reduced because 
     Medicaid would not have to pay the Medicare deductible for 
     some patients at RHCs who are enrolled in both programs, 
     although some of those savings would be offset by higher 
     Medicaid spending for Part B premiums. Taking all those 
     interactions into account, CBO estimates the provision would 
     increase federal direct spending by $9 million in 2011 and by 
     $146 million over the 2002-2011 period.
       Pay-as-you-go considerations: The Balanced Budget and 
     Emergency Deficit Control Act sets up pay-as-you-go 
     procedures for legislation affecting direct spending or 
     receipts. The following table displays CBO's estimate of the 
     direct spending effects of S. 1533. For the purposes of 
     enforcing pay-as-you-go procedures, only the effects in the 
     budget year and the succeeding four years are counted.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             By fiscal year, in millions of dollars
                                                               ---------------------------------------------------------------------------------------------------------------------------------
                                                                    2002         2003         2004         2005         2006         2007         2008         2009         2010         2011
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Outlays.............................................            9           15           15           15           15           15           15           15           16           16
Change in Revenues                                                                                                       Not applicable
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

       Estimated impact on State, local, and tribal governments: 
     S. 1533 would preempt state laws governing statutes of 
     limitations for cases against individuals who have breeched 
     their contracts under the National Health Services Corps 
     program. This preemption would be an intergovernmental 
     mandate as defined in UMRA. However, CBO estimates that the 
     preemption would not affect the budgets of state, local, or 
     tribal governments because, while it would limit the 
     application of state law, it would impose no duty on states 
     that would result in additional spending.
       The bill also would authorize a number of grant programs 
     that could either directly or indirectly benefit state, 
     local, or tribal governments through increased assistance for 
     a variety of community and rural health programs. In some 
     cases, those governments may be required to provide matching 
     funds for the federal assistance, but their participation in 
     the programs would be voluntary.
       Estimated impact on the private sector: The bill contains 
     no private-sector mandates as defined in UMRA.
       Estimate prepared by: Federal Costs: Alexis Ahlstrom (226-
     9010). Impact on State, Local, and Tribal Governments: Leo 
     Lex (225-3220).
       Estimate approved by: Robert A. Sunshine, Assistant 
     Director for Budget Analysis.

                                                 October 17, 2001.
     Hon. Edward M. Kennedy;
     Chairman, Committee on Health, Education, Labor, and 
         Pensions, U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 1533, the Health 
     Care Safety Net Amendments of 2001.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contact is Alexis 
     Ahlstorm, who can be reached at 226-9010.
           Sincerely,
                                                   Dan L. Crippen.
       Enclosure.

                          ____________________