Daily Archives: July 27, 2009

Lessons in Spin: The CBO Health-Care Report

White House: CBO ‘overstepped’ in its analysis makes for an interesting study in crowd behavior. Those against adding a public option for health-care ( Not a free ride by the way. Those that are eligible will have to pay.) all seem to stop at this partial sentence,

The CBO’s review of the proposal found that “the probability is high that no savings would be realized …(emphasis mine)

Even taken at face value, savings are always in comparison to the cost of something else. In this case the other is health-care industry costs and private health insurance . The insurance your employer might be providing if you’re lucky. That private insurance that you’re lucky to get may not keep you from having medical bills that drive you into bankruptcy. Work hard, play by the rules, have insurance and still go bankrupt. If our current heath-care system was a patient it would be on artificial life support. The CBO also said,

..but there is also a chance that substantial savings might be realized,” Elmendorf wrote.

Republicans would have us believe we’re all in some kind of special world where the first partial sentence exists, but the second does not. The White House is not at war with the CBO, the CBO is not right or wrong. There seems to some honest disagreement.

“As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception,” Orszag said.

“In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.”

The CBO is a great concept and is right more often then not especially when dealing with hard figures. In the case of health-care costs and the public option they’re working with estimates supplied by Congress. The Congressional Budget Office vs. The White House

It’s easy to understand why: The potential savings from IMAC aren’t something you can plug into a formula. After all, the point of IMAC is not that it would implement the best ideas we have in 2009, but that it will give a body of experts the ability to implement the best ideas they have in 2022, and 2034, and 2019, and every other year. CBO can’t guess at what those ideas will be any more than I can. We don’t have the data they’ll be using, we don’t know the technology they’ll be able to employ, and it’s impossible to estimate the political climate. May as well ask what the top-rated NBC show will be in 2029.

Which makes it a bit strange that the CBO attached any numbers to its long-term predictions at all. The agency is usually quite conservative in its estimates: When faced with an unknown, it generally admits that it doesn’t know. In this case, it confronted the unknown and came back with a pretty specific set of predictions, albeit predictions qualified by a lot of caveats.

Ezra Klein has an advantage over most oof us being a health-care wonk so I found an example of the kind of thing that Ezra, the White House and Peter Orszag (the former director of the CBO – Congressional Budget Office) are talking about in terms of unknowns in the future, that will supply savings that are diffcult for the current CBO to estimate, thus the caveats. OMB Director Questions Insurance Giant’s Approach to Reform

The report, describing an experiment conducted in 2001, found that the software reduced consumption of medical services by 6.1 percent. Almost all of the savings were in the hospital setting.

[  ]…What the study means for the debate over a government-run health insurance option isn’t clear.

Aetna had nothing to do with developing the software. It began using it in 2002 and bought the company that developed it in 2005. Aetna has already brought the software to bear on 19.2 million people — members of its own health plans and others.

If a government-run health plan developed the proper infrastructure, it could use the software, too, Reisman said.

Between innovations like the software which analyzes patients’ medical records and the downward pressure brought about with the public option it is difficult for the CBO to accurately gauge the depth of savings. If trying to insure more Americans, save Americans from medical related bankruptices and putting preesure on the health-care  and health insurance industry to be more cost effective is socialism, then the word has lost all meaning. Everyone can safely ignore anyone that uses the S word in the health-care debate since they do not have a clue what they’re talking about. In the case of elected officials, Republican or Democrat, they usually get a fair sum of money from big health insurers and big pharma.

That Republicans are taking a report on health-care riddled with cautions as gospel is absurd in face of other CBO reports that used much more solid numbers to make projections. The CBO praised the stimulus package (Recovery Act) passed by Democrats which Republicans are still whining about – Congressional Budget Office compares downturn to Great Depression. Some of those funds are not being used wisely, but that is another issue. Previously Republicans claimed that CBO figures for the costs of Iraq were off. Which gives them a perfect score on Iraq – they also claimed we’d be greeted as liberators, mission accomplished and it would only cost a few billionGOP Scoffed At CBO Score For Iraq That Was Twice The Cost Of Health Care

When the CBO predicted in 2004 that Bush’s new tax and spending proposals would produce deficits of $2.75 trillion over ten years, a spokesman for the White House Office of Management and Budget declared that ”even CBO would admit we don’t honestly know what these numbers will look like 10 years from now.” ( that 2.8 trillion figure is actually low)

That same year, the Bush administration pushed forward with its plans for Medicare Part D despite the fact that its internal cost estimates were $139 billion more than those offered by the CBO. Republicans on the House Ways and Means Committee had worked diligently to defeat the attempts of their Democratic colleagues to make those estimates public.

In a similar vein, conservatives were beside themselves when the CBO refused to run the 2004 Bush tax cuts through various economic models to see if the government could, in the end, make money by stimulating spending. Rather, the CBO used a “static” method and found $1.2 trillion worth of deficits through the next decade. Republicans, naturally, largely ignored the findings.

The numbers for the nation’s taxes and expenditures, as well as the projected costs of occupying Iraq are easier to tackle then a new program and changes to an old one like Medicare. When Bush and Republicans rejected those CBO numbers they knew that were spinning. Bush and conservatives knew they were on the way out. Thinking only of the future of the Republican party and knowing that only getting their fiscal house in order would have meant rising some revenue, they left the mess for Democrats to clean up. To some degree history repeats its self. Reagan and Bush 41 left the economy in tatters, and while it took almost two terms Bill Clinton cleaned up the mess as best he could.