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July 28 2017

Morning After Reflections on the Role of the CBO

by Charlotte Hays

The Congressional Budget Office's "scoring" of health-care legislation is important to legislators in deciding how to vote. Never mind that the estimates often turn out to be wrong.  The CBO rules!

Democrats were canny enough to know this  and act accordingly in the lead-up to the passage of the Affordable Care Act, health-care expert Avik Roy writes this morning, the day after the collapse of the "skinny" reform.

Like the Republicans now, the Democrats on the eve of passage of the Affordable Care Act had two wings, one ideological and one pragmatic. To pass the ACA, both wings had to unite. Here, as described by Roy, is what they did:

Democrats recognized the central importance of the Congressional Budget Office in bringing their two wings together. When Democrats retook Congress in 2006, they appointed Peter Orszag to head the CBO, as part of a deliberate strategy to stack the CBO in favor of their health care agenda. Orszag proceeded to build out the entire health policy wing of the CBO—representing dozens of staffers—with like-minded individuals.

After Obama won the 2008 election, Orszag captained the health-reform effort at the White House’s Office of Management and Budget. It would be more fair to call Obamacare “CBOcare” given how much the Affordable Care Act reflects the CBO’s worldview.

While Senator Obama opposed the individual mandate, the CBO believed it would add 16 million covered lives to the ACA’s ledger. While the Romneycare model involved covering the uninsured solely with private coverage, the CBO believed that expanding coverage through Medicaid would be cheaper.

The Republicans had an opportunity tore shape the CBO but did not seize it:

 When Republicans had the opportunity to appoint a CBO director in 2015, they chose not to hire someone with deep health care expertise, such as the University of Minnesota’s Stephen Parente, and instead hired Keith Hall, a labor economist.

There was no comparable strategy, either by Hall or by Congress, to rebalance the CBO’s center-left tilt with individuals more knowledgeable about how health insurance markets actually work. Hence, because any GOP bill would need to repeal Obamacare’s individual mandate, the CBO was poised to make any GOP bill look bad.

CBO compounded this, at critical points, by refusing to disclose key aspects of its estimates. CBO refused to break out the proportion of GOP Medicaid savings that were driven by long-term entitlement reform (per capita caps) vs. the repeal of Obamacare’s Medicaid expansion.

The CBO’s deliberate opacity allowed journalists at the New York Times, the Washington Post, and every Democrat to dishonestly claim that per-capita caps would “cut $800 billion from Medicaid,” even though nearly all of the Medicaid savings were from repealing and replacing the Obamacare expansion.

Similarly, CBO refused to break out—until the very end, after it had leaked—the fact that nearly three-fourths of the “coverage losses” under the GOP bill would come from people voluntarily choosing to forego coverage due to the repeal of the individual mandate.

The failure to reform the CBO put Republicans at a huge disadvantage when it came to uniting moderate and conservative senators. Moderates wanted a bill that preserved coverage for the uninsured. On the flip side, many conservatives wanted a bill that repealed Obamacare, full stop, with relatively less interest in the replacement part.

 

We've already talked about how, no matter what plan the GOP proposed, the CBO presented almost identical numbers of people who would be uninsured. This was based, as indicated above, on a false appreciation of how the individual mandate would work.

Roy has an interesting idea on a way forward that would allow the GOP a path forward: reform the CBO and repeal the individual mandate, which is so influential in the thinking of the CBO as currently constituted. As long as the individual mandate is in place, Roy says, no GOP bill will be competitivewith a Democratic plan.

Roy notes that Democrats failed many times before they realized a five-decades-old dream of health care reform.  That should give the GOP some hope after last night's setback. But Republicans can't abandon the effort: health care is the driver of our deficit and, as Roy says, to give up on this would be to give up on what it means to believe in conservative ideals.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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