OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 546
Date: 01/15/01

1. LAW NUMBER: P.L.106-554 (H.R. 4577)
2. BILL TITLE: Consolidated Appropriations Act, FY 2001
3. BILL PURPOSE: To provide appropriations for four of the 13 regular appropriation bills and other miscellaneous appropriations. The Act also includes several authorization bills.
4. OMB ESTIMATE:

	(Fiscal years; in millions of dollars)
	2000	2001	2002	2003	2004	2005
Direct spending:
Medicare........................................	0	5,080	7,935	6,460	7,250	8,360
Medicaid, SCHIP and other health.	0	995	1,520	690	390	220
Other..............................................	0	399	261	266	236	222
Receipts:
Community renewal tax relief.......	0	-248	-1,074	-1,815	-1,930	-2,235
Civil service retirement roll back..	0	-427	-619	-160	0	0
Other.............................................	0	-21	-101	-160	-189	-200
Net costs............................................	0	7,170	11,510	9,551	9,995	11,237
Not subject to pay-as-you-go:
Off-budget outlays.......................	0	691	409	412	414	411
Off-budget receipts.......................	0	0	0	0	0	0
Net costs..................................	0	691	409	412	414	411

Although P.L. 106-554 is an appropriations Act, it includes language directing OMB to score certain sections as subject to pay-as-you-go requirements, rather than as discretionary. It also directs OMB to change the pay-as-you-go scorecard for FY 2001 to zero in the final sequestration report. The table above shows the costs that are subject to pay-as-you-go pursuant to this Act and the off-budget costs that are exempt from pay-as-you-go procedures.

OMB estimates that P.L. 106-554 will increase net pay-as-you-go costs by $49.5 billion over the 2001-2005 period. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act is estimated to increase net direct spending by $38.9 billion over the five-year period. In addition, community revitalization and other provisions in the Community Renewal Tax Relief Act are estimated to result in revenue losses of $7.3 billion over the five years. The remaining net costs result largely from roll back of Federal employee retirement contributions, increased benefits to compensate for an error in the Consumer Price Index, and increases in maximum percentage contribution limitations to the Federal Thrift Savings program.

5. CBO ESTIMATE:

	(Fiscal years; in millions of dollars)
	2000	2001	2002	2003	2004	2005
Direct spending:
Medicare........................................	0	3,908	7,981	6,331	6,639	7,414
Medicaid, SCHIP and other health.	0	31	-755	-3,327	-5,069	-6,181
Other..............................................	0	541	347	292	318	332
Receipts:
Community renewal tax relief.......	0	-120	-999	-1,949	-2,104	-2,365
Civil service retirement roll back..	0	0	0	0	0	0
Other.............................................	0	-16	-78	-129	-170	-208
Net costs............................................	0	4,616	8,650	5,374	4,162	4,138
Not subject to pay-as-you-go:
Off-budget outlays.......................	0	720	410	400	390	380
Off-budget receipts.......................	0	1	1	1	-2	0
Net costs..................................	0	719	409	399	392	380

6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

 

Over the 2001-2005 period, CBO scores net costs of $26.9 billion, while OMB scores net costs of $49.5 billion. The difference of $22.5 billion is primarily the result of scoring differences for the Medicaid and Medicare provisions. CBO's scoring of net impact for the Medicaid, SCHIP, and other health provisions is $19.1 billion below OMB, largely due to different estimates for the provision requiring the Department of Health and Human Services (HHS) to publish a regulation curbing States' inappropriate use of provider upper payment limits (UPL) under the Medicaid program. CBO assumes higher State UPL spending in its baseline than OMB does. As a result, CBO estimates higher savings from the provision directing HHS to issue a regulation that would curb the inappropriate State practices. For the Medicare provisions, CBO scores $2.8 billion lower net costs than OMB due to different baseline assumptions and different technical estimates for several provisions. In addition, CBO scored costs of $1.3 billion for roll back of Federal employee retirement contributions to the Transportation Appropriations Act. OMB scores costs of $1.2 billion for that provision to this Act as directed.

7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:

	(Fiscal years; in millions of dollars)
	2000	2001	2002	2003	2004	2005
Outlay effect..............	34	7,874	12,193	14,547	15,742	16,858
Receipt effect............	-8	-1,778	-2,987	-3,413	-3,453	-3,789
Net costs....................	42	9,652	15,180	17,960	19,195	20,647

NOTE: Pursuant to P.L. 106-554, the pay-as-you-go balances that would result in a sequester for FY 2001 will be set to zero in OMB's final sequestration report.