Federal Administrative Costs Under HSA

Pursuant to a congressional request, GAO reviewed the administration's justifications for its administrative cost estimates under the proposed Health Security Act. GAO noted that: (1) the Office of Management and Budget (OMB) identified the federal functions required to implement the act and estimated the costs of starting and supporting those functions for 6 years; (2) OMB had difficulty in estimating federal administrative costs because it could not determine what federal entity would carry out certain functions and it had little time to develop the estimates; (3) OMB did not document the assumptions it used in formulating the estimates and would not discuss its methodology with GAO; (4) OMB excluded costs for providing health security cards, spread start-up costs over the first 2 years of the act's implementation, and assumed revenue from a tobacco tax would cover $1.279 billion in 1995 administrative costs; and (5) it could not reconstruct the OMB estimating methodology and did not attempt to create an independent estimate.