Concept_Budget

Budget Offsets Bank

The federal debt is at a post-war record high, deficits are set to exceed the trillion-dollar mark this year, and new initiatives are being proposed regularly.

In order to help policymakers offset the cost of new spending programs and tax cuts and slow the growth of the national debt, the Committee for a Responsible Federal Budget is publishing a Budget Offsets Bank of options to raise revenue and reduce spending.

Our Budget Offsets Bank shows ranges of potential saving for types of policy changes – readers can contact us to learn more about understanding and designing specific policy changes. These estimates are largely based on those from the Congressional Budget Office and other reputable sources, with adjustments from our staff as needed to account for the passage of time or subsequent legislation.

Our first installment focused on health care policies that reduce the cost of Medicare, Medicaid, or other federal health spending or increase health-related revenue. The second installment focuses on infrastructure-related policies that would reduce federal spending on infrastructure or increase revenue related to infrastructure. We will be publishing additional options in the coming weeks and months. Prior options lists are available here or in the list below. View the full Budget Offsets Bank at crfb.org/Offsets.

    Health-Related Offset Options

    Health Policy Ten-Year Savings
    Medicare Provider Payments  
    Reduce excessive payments for post-acute care Up to $85 billion
    Equalize hospital and physician payments regardless of site of service $15 to $90 billion
    Expand use of bundled payments $10 to $50 billion
    Reduce Medicare's coverage of bad debt $10 to $50 billion
    Reduce and reform payments for Graduate Medical Education $5 to $50 billion
    Reduce and reform payments for uncompensated care (DSH) $5 to $100 billion
    Replace sequester with rebased Medicare payments Long-term savings
    Reduce and reform payments to rural hospitals $5 to $30 billion
    Reduce payments growth to hospitals by 1% $20 billion
    Reform Medicare hospice payments $10 billion
    Expand penalties for preventable readmissions and unnecessary complications Up to $10 billion
    Expand competitive bidding for medical equipment and labs Up to $10 billion
    Reform and tighten "Stark rule" to limit self-referrals $5 billion
       
    Prescription Drugs  
    Allow HHS to negotiate Part D drug prices, but not exclude drugs from coverage less than $10 billion
    Require HHS to negotiate Part D drug prices with a cap based on international prices and a large penalty for manufacturers who walk away from negotiations $350 billion
    Redesign Medicare Part D benefit, including by adding a catastrophic cap, eliminating the donut hole coverage gap, and reducing government re-insurance for high-cost drugs $35 to $75 billion
    Require drug companies to pay “rebates” to reduce costs in Medicare Part D $50 to $200 billion
    Restrict drug price increases in excess of inflation in Part B and Part D $70 billion
    Tighten Medicaid drug rebates $5 to $20 billion
    Allow for drug re-importation Up to $25 billion
    Encourage use of generics by low-income Medicare beneficiaries Up to $20 billion
    Modify Part B physician administered drug payments that promote high-cost drugs Up to $10 billion
    Increase flexibility of the Part D drug formulary $10 billion
    Encourage entry of generic drugs and biosimilars $10 billion
    Prohibit pharmacy benefit manager spread pricing $5 billion
       
    Medicare Beneficiary Responsibility  
    Restrict Medigap plans from offering generous wrap-around coverage $100 billion
    Restrict TRICARE for life from offering generous wrap-around coverage $35 billion
    Restrict employer and other wrap-around coverage Up to $100 billion1
    Reform Medicare benefit design to establish unified Part A and B deductible, co-insurance, and a catastrophic cap $0 to $70 billion
    Establish cost sharing for home health $5 to $20 billion
    Increase Medicare Part B deductible $10 to $20 billion
    Increase base Medicare premiums by 10 percent of costs $450 billion
    Increase Medicare premiums for high earners $50 to $100 billion
    Increase the Medicare eligibility age $20 to $30 billion
       
    Medicare Advantage and Private Medicare Plans  
    Allow private plans to compete with Medicare, set subsidy based on average bid $50 to $350 billion
    Allow private plans to compete with Medicare, set subsidy based on 2nd lowest bid $150 to $800 billion
    Set Medicare Advantage payments using competitive bidding $30 to $100 billion
    Modify risk adjustment payments to Medicare Advantage plans $50 to $80 billion
    Reduce excessive quality bonus payments to Medicare Advantage plans $20 to $110 billion
       
    Affordable Care Act  
    Reduce Medicaid match in expansion population to match ordinary FMAP $400 billion
    Restore Cost Sharing Reduction subsidies $100 billion2
    Phase out ACA exchange subsidies above 300 percent of poverty up to $50 billion
    Recapture excessive premium subsidies $50 billion
    Establish a public option for health exchanges $100 billion
    Repeal the Prevention Fund $10 billion
    Allow states to apply Medicaid asset tests to expansion population $5 billion
       
    Medicaid  
    Establish Medicaid spending cap and/or block grant Medicaid $200 to 900 billion
    Limit states from inflating the federal Medicaid match through “provider taxes” $5 to $400 billion
    Reduce the Federal Medical Assistance Percentage (FMAP) floor Up to $450 billion
    Reduce federal Medicaid matching rates for base Medicaid program $50 billion/pp
    Match all administrative costs at 50% $65 billion
    Establish work and “community engagement” requirement in Medicaid $25 to $100 billion
    Encourage states to re-determine Medicaid eligibility more frequently $50 billion
    Subject Medicaid managed care plans to medical loss ratio rules $10 billion
    Require states to deny personal care payments for duplicative/inappropriate services Up to $10 billion
       
    Other Health Savings  
    Restrict out-of-network “surprise billing” $20 to $25 billion
    Reform medical malpractice law Up to $30 billion
    Replace the Federal Employees Health Benefits (FEHB) program with a voucher Up to $35 billion
    Introduce TRICARE for Life enrollment fee $15 billion
    Extend CHIP programs beyond 2027 $5 billion
       
    Health-Related Tax Preferences  
    Cap the employer sponsored insurance (ESI) income tax exclusion $100 to $700 billion
    Cap the ESI payroll tax exclusion (at median to 90th percentile) $30 to $250 billion
    Replace the ESI exclusion with a credit or deduction dialable
    Eliminate the ESI exclusion for the Medicare payroll tax   $250 billion
    Limit the ESI exclusion for higher income workers $50 to $200 billon
    Repeal Cadillac Tax (subtract from options above if replacing Cadillac Tax) -$200 billion
    Eliminate income tax deduction for health-related cafeteria plans contributions $400 billion
    Eliminate payroll tax deduction for health-related cafeteria plans contributions $200 billion
    Limit or end medical expense deduction Up to $75 billion
    Limit or repeal health Flexible Spending Accounts (FSAs) Up to $50 billion
    Limit or repeal Health Savings Accounts (HSAs) Up to $50 billion
    Limit or repeal private activity bonds for nonprofit hospitals $10 to $25 billion
    Eliminate orphan drug tax credit $20 billion
    Repeal small business tax credit for offering health benefits $10 billion
    Repeal Blue Cross/Blue Shield deduction $5 billion
       
    Health-Related Revenue  
    Raise Medicare payroll tax rate $900 billion/point
    Expand the 3.8% Medicare Tax to all passthrough income $200 billion
    Apply Medicare payroll tax to all business income from material participants $125 billion
    Equalize and increase alcohol taxes $20 to $100 billion
    Increase cigarette taxes $40 to $100 billion
    Expand cigarette taxes to include vaping $10 billion
    Impose tax on sugary drinks $50 to $200 billion
    Double employer mandate penalty $50 billion
    Establish a food safety user fee $10 billion

    Infrastructure-Related Offset Options

    Policy Ten-Year Savings
    Highway Trust Fund Revenue Sources
    Increase the gas and diesel fuel tax ~$14 billion per cent
    Increase fuel taxes by 15 cents and index to inflation $235 billion
    Increase fuel taxes by 35 cents and index to inflation $515 billion
    Raise gas tax to match diesel tax rate $65 billion
    Index gas and diesel fuel taxes for inflation $30 billion
    Increase truck and trailer tax from 12% to 20% $30 billion
    Repeal special gas and diesel tax rates on certain fuels $20 billion
    Double heavy vehicle use tax $15 billion
    Eliminate exemptions from gas tax $15 billion
       
    New Revenue Sources
    Impose a Vehicle Miles Traveled (VMT) tax on all vehicles ~$35 billion per 0.1 cent
    Impose a VMT tax on commercial trucks $25 billion per cent
    Impose a freight tax of 30 cents/mile for trucks and 12 cents/mile for rail $360 billion
    Impose a light-duty vehicle sales tax $40 billion per 1%
    Impose a per-barrel oil tax ~$30 billion per dollar
    Impose a vehicle registration fee of $10 on light vehicles and $20 on trucks $40 billion
    Impose a $10 driver's license surcharge $25 billion
    Impose a $10 tire tax $25 billion
    Impose a $20 fee on containers at U.S. ports $10 billion
    Establish new rail safety and inland waterways fees $10 billion
       
    Other Revenue Changes
    Repeal LIFO and LCM inventory accounting $60 billion
    Terminate new Private Activity Bonds $35 billion
    End Section 179 “SUV loophole” $10 billion
    Allow greater use of bridge and highway tolls varies
       
    Highway Trust Fund Spending
    Reduce all surface transportation spending $45 billion per 10% reduction
    Limit federal highway spending to Highway Trust Fund revenue (require states to cover difference) $140 billion
    Eliminate all spending in transit account $105 billion
    Eliminate one year of commitments $55 billion
    Freeze all surface transportation spending for ten years $35 billion
    Freeze all surface transportation spending for three years $15 billion
    Reduce funding to Highway Safety Improvement Program $10 billion
    Terminate funding for the Transportation Alternatives Program $10 billion
       
    Other Spending
    Eliminate the Community Development Block Grant $25 billion
    Eliminate Capital Investment Grants $25 billion
    End funding for Amtrak and Essential Air Service $20 billion
    Repeal Davis-Bacon Act $15 billion
    Sell various electricity transmission assets $10 billion
    Reform the National Flood Insurance Program $10 billion
    Eliminate grants to large and medium-sized airports $10 billion

    Previously Published Offset Options


     

    1 No official estimate is available for this option, and savings would vary substantially based on design.
    2 CBO scores restoring CSRs with no savings due to technical reasons, however they would reduce deficits by about $10 billion per year relative to CBO’s baseline.