The CBO and Health Care


With health care reform so dependent on Congressional Budget Office scores, there's a lot of coverage of the office and how it works today. Let's start with the Washington Post, which has a smart piece on the high levels of uncertainty involved in health care scoring:

If all the pieces move exactly as planned, everything will work just fine. Maybe!

The latest estimate of what health-care reform would mean for the government's finances was such a hot document Thursday that at times the Congressional Budget Office's Web site couldn't handle the traffic.

But as much as the 25-page "score" of the legislation was treated as holy writ in Washington—Democrats eagerly flagged its conclusion that the package they aim to pass this weekend would cut the deficit by $138 billion over the coming decade—the reality is considerably messier.

Budget experts generally have high praise for the work of CBO analysts, the non-ideological technocrats who crunch the numbers to estimate the fiscal impact of legislation. But their work is often more art than science, and although the forecasts that accompany legislation are always filled with uncertainty, this one contains more than most.

One major reason is the sheer complexity of the legislation. If Congress were considering, say, a 20-cent increase in the gasoline tax, the CBO could easily analyze how that would affect gas consumption and do some simple math to calculate how much money it would raise. The same goes for figuring out the cost of legislation that offers a new benefit, such as an expansion of food stamps.

This strikes me as just the right way to look at it: The majority of the time, the CBO does a very good job within the constraints they have. But there's a lot of uncertainty in their projections—uncertainty which the CBO is the usually first to acknowledge—and in general, the press and interested partisans don't recognize. (How many times have House Speaker Nancy Pelosi and President Obama claimed simply that health reform "will cut the deficit," as if it's a guaranteed outcome?)

There's also significant political risk involved in the CBO's projections. A legislative plan might work if enacted to the letter, but the CBO can't really factor in the possibility that a future Congress might just decide to do something else entirely (though it can acknowledge this possibility in its reports). From the Post piece:

"The risk is that you've put in these things to create higher savings over time, but then when you get there, people say, 'We can't do that,' " said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "The huge risk is that the constituencies that didn't win their lobbying effort to stop the bill will be there every single day between now and when these things hit, trying to reduce their impact."

But for Democrats, creating those savings—real or not—was something of a necessity; health reform was sold in large part on the dubious notion that it is "fiscally responsible." And achieving that label meant hitting certain predetermined targets—a process that, as the New York Times explains, Democrats spent quite a bit of time perfecting:

How did the numbers come out just right? Not by accident.

Congressional Democrats have spent more than a year working with the nonpartisan budget office on the health care legislation, and as they fine-tuned many of the bill's various provisions in recent weeks, they consulted repeatedly with its number-crunchers and the bipartisan staff of the Joint Committee on Taxation.

In other words, the overall numbers were never going to miss the mark. Whenever the budget office judged that some element or elements of the bill would cause a problem meeting the cost and deficit-reduction targets, Democrats just adjusted the underlying legislation to make sure it would hit their goal.

And then, as Slate's Chris Beam explains, there are the various legislative budget gimmicks, which we've noted repeatedly here at Hit & Run. I'm not sure I'd say the scoring system is broken, exactly, but it's certainly been expertly gamed. 

I looked at the CBO's history and influence on the health care debate here and examined its hedges and uncertainties here.