One of the significant criticisms of the Senate Finance healthcare reform bill is the tab. According to the nonpartisan Congressional Budget Office (CBO), the bill will cost $829 billion, increase federal spending on healthcare by $85 billion over the next decade, and reduce the federal deficit by $81 billion over the next decade.

There is a balancing act that takes place when dealing with 1/7 of the federal budget, which is what the United States spends on healthcare. By spending money in ways that will reduce costs in the long-term, the budget deficit can be reduced. This is especially true when considering the costs of healthcare are increasing faster than inflation based on the Consumer Price Index, and many of the reforms reign that in.

The CBO projects the new House bill, which will cost $1.055 trillion, will increase federal spending on healthcare by almost $600 billion while reducing the deficit by $104 billion over the next decade.

Breaking down some of these numbers can get more complicated. The Senate Finance bill will cost $829 billion, but reducing spending on Medicare and Medicaid and creating a 40% tax on expensive, employer-based health insurance plans combine to reduce the total cost by over $600 billion.

According to the Washington Post, “Other tax changes that serve to reduce tax breaks for health care would produce another $138 billion.” And that is how the CBO reaches the $85 billion projection.

The House bill does not include taxes on high-cost, employer-based plans, which means it increases federal spending on healthcare by seven times as much as the Senate Finance bill at $598 billion versus $85 billion.