November 20, 2003

Honorable Ted Stevens
Chairman
Committee on Appropriations
United States Senate
Washington, DC 20510

Dear Mr. Chairman,

The Congressional Budget Office has just completed its cost estimate for the conference agreement on H.R. 1, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. CBO estimates that enacting this legislation would result in direct spending outlays totaling $395 billion over the 2004-2013 period. It would also lead to an increase in federal revenues totaling $0.5 billion over that 10-year period. The enclosed tables provide additional detail on these estimates.

CBO has not had an opportunity to review the final legislative language, and this estimate could change upon completion of that review. Also, the estimate does not include any amounts of additional discretionary spending that might be necessary to implement the programs established by the legislation.

You asked whether the act would take offsets from discretionary accounts or unobligated balances that have previously been appropriated. In reviewing the legislative language that has been provided to us, we have found no such offsets.

You also asked whether the measure would provide direct spending for grants, studies, or other programs unrelated to Medicare benefits. We have identified three provisions that might fall in that category:

• Section 101 would appropriate a total of $125 million for fiscal years 2005 and 2006 for grants to state pharmacy assistance programs for outreach activities and technical assistance in coordinating their programs with the new Medicare drug benefit.
  
  
• Section 1015 would appropriate, from the Medicare trust funds, $1.0 billion to the Department of Health and Human Services and $0.5 billion to the Social Security Administration for administrative costs associated with the new prescription drug program.
  
  
• Section 1016 would appropriate $200 million for loans to hospitals for capital improvements.

We regret that CBO cannot provide guidance as to how the Senate Parliamentarian might view points of order that might be raised under the Budget Act with respect to this legislation.

I hope this information is helpful to you. If you wish further details on this estimate, we would be pleased to provide them. The CBO staff contact is Tom Bradley.

Sincerely,

Douglas Holtz-Eakin
Director
 

cc:	Honorable Robert C. Byrd Ranking Minority Member
	Honorable William "Bill" M. Thomas Chairman Committee on Ways and Means
	Honorable Charles B. Rangel Ranking Member
	Honorable Charles E. Grassley Chairman Committee on Finance
	Honorable Max Baucus Ranking Democratic Member
	Honorable W. J. "Billy" Tauzin Chairman Committee on Energy and Commerce
	Honorable John D. Dingell Ranking Member

Tables available in PDF.