The Rivlin-Domenici Plan contains government spending on health care by limiting the government’s payments for health insurance premiums to beneficiaries in the system; however, the plan does not address directly the growth in actual per-person health care costs. The Congressional Budget Office (CBO) summarizes this important distinction:
Some policies may reduce the level of costs but may not affect the long-term growth of costs (even though it may appear so in the first few years of implementation, as spending adjusts to the new, lower level). Such policies would yield a permanent reduction in the level of costs, but after adjusting to the lower level, costs would continue growing at the same rate as before. Policies that reduce both the level of costs and their rate of growth offer the greatest potential to contain costs in the long term.
Similarly, the Rivlin-Domenici Plan reduces the level of federal spending on health care, and the growth rate of federal subsidies to private insurers, but it does not impact the growth rate of health care costs.
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