How numbers crunchers shape health reform

Tom Curry National affairs writer • Profile • E-mail

Whether President Barack Obama and congressional Democrats succeed in crafting health insurance legislation may depend as much on faceless analysts in the Congressional Budget Office as it does on the political calculus of the situation.

That’s because the CBO’s determination whether a specific proposal’s revenue and cost projections add up will go a long way toward determining if it will fly.

If CBO concludes the legislation will cost more than expected, support for the bill might erode and it could go down to defeat.  On the other hand, if the CBO estimates that a particular provision will save many billions of dollars, that could help build critical mass for the legislation.

“It's not too much of an overstatement to say CBO can make or break health care reform … because we've got to go by your numbers,” Sen. Max Baucus, chairman of the Senate Finance Committee and a leader of efforts to craft the health insurance legislation, told CBO Director Douglas Elmendorf during a hearing earlier this year. “I cannot think of anything that depends so much on CBO as this.”

Why 'CBO is God'
Sen. Charles Grassley, R-Iowa, put it more simply when he was chairman of the Finance Committee in 2003, saying, “CBO is God.”

Video   Gregg on costs June 10: Sen. Judd Gregg, R-N.H., joins the Morning Joe gang to discuss inflation in medical care. Morning Joe

Supporters of the health insurance overhaul are concerned that it could stall if voters doubt that Obama’s plan will curb costs while maintaining current levels of care. They are pressuring the CBO to include long-term — and somewhat speculative — savings in its estimate of the health care bill.

An early test of the CBO’s willingness to venture into such territory could come as early as next week.

Senate Budget Committee chairman Kent Conrad, D-N.D., and the committee’s senior Republican, Sen. Judd Gregg, R-N.H., have requested a CBO analysis of specific policies that “have potential to transform the health care system in ways that reduce spending growth and improve quality, but may be difficult to score.”

To “score” in CBO jargon means to estimate the effect of a bill on the federal budget. That’s the job Congress gave CBO when it created the agency.

Will a policy save money?
The agency also is charged with determining whether particular proposals are “scoreable” — that is, specific and measurable enough that CBO can come up with an estimate of their effect on federal spending. 

Video   Obama: Health care status quo 'unsustainable' June 11: President Obama tells a Green Bay, Wis. audience that unless health care costs are curbed, everyone's care will be jeopardized. MSNBC

Another group of analysts at the congressional Joint Committee on Taxation estimates whether changes in tax law will raise or decrease revenue.

Together, the CBO and the Joint Tax Committee staffs wield enormous influence.

Their power comes from their expertise, but also from the peculiar politics of budget-making: Congress created these agencies in part to serve as a scapegoat if a particular tax proposal or spending decision proves unpopular or must be abandoned for some other reason.

In the case of health care, the political maneuvering has begun months before Congress will vote on a final bill.

In a speech in Green Bay, Wis., on Thursday, Obama said that the planned overhaul of the nation's health insurance system “can’t add to our deficit over the next 10 years.”

Obama’s budget chief Peter Orszag, himself a former CBO director, told reporters at the White House on Tuesday that to pay or the overhaul, Obama will propose “hard, scoreable savings” in the Medicare and Medicaid programs, savings that the CBO will be able to certify.

The CBO issues its official cost estimate when a bill is approved by a congressional committee, such as the Senate Finance Committee. But its analysts often work informally with congressional staffers as legislation is being designed, to help estimate the cost of specific provisions in bills, or revenue gained from them.

Some proposed changes in the health insurance overhaul are likely to be straightforward revenue raisers. For instance, if Congress decided that people who didn’t buy insurance would have to pay a penalty, CBO would count those penalty payments as revenue in its budget projections.

How to calculate future costs and savings
Far more difficult is estimating the effect on the budget if Congress, for example, requires that insurers and medical providers use “comparative effectiveness” research to control costs.

“Comparative effectiveness” research examines the relative cost and efficacy of treating patients in different hospitals or regions of the country.

For example, over nearly 15 years, the Dartmouth Atlas of Health Care, a project of the Dartmouth Institute for Health Policy and Clinical Practice, found that higher per-patient spending on Medicare patients did not necessarily result in better care.

For example, its study found that spending per patient in Shreveport, La., for example, was far higher than the national average, while spending in Des Moines, Iowa, which was below average, resulted in better care.

In his speech in Wisconsin, Obama endorsed the comparative effectiveness approach, saying, "Right here in Green Bay you get more quality out of fewer health care dollars than many other communities across this country.

“We need to identify the best practices across the country, learn from the successes, and then duplicate those successes everywhere else.”

But putting numbers to such a concept is easier said than done.

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