Favorable CBO score on healthcare cost: not the final word
The CBO score on the healthcare cost of the Democrats' plan may help it become law. But it is not the final word on costs. There's politics to account for.
The cost of healthcare – and of reforming it – is a huge concern to the public and many lawmakers. To hear from the Congressional Budget Office that the latest version of the Democratic healthcare plan will reduce the deficit by $138 billion over the first 10 years, and $1.2 trillion over the next 10, well, that counts for a lot.Skip to next paragraph
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The CBO, after all, is independent. It’s highly respected.
But it can only judge what’s laid before it, and in a matter as complex and political as this, that necessarily limits its real forecasting ability.
(For a Monitor blog on what could happen to the cost of insurance premiums, click here)
The office can’t factor in, for instance, political behavior. Right now, the legislation assumes Congress will go ahead and cut Medicare reimbursements to doctors by 21 percent the way it’s supposed to. But lawmakers keep putting off this cost-saving measure, and everyone knows it’s not going to happen.
The CBO probably knows that, too, but it can’t account for a political probability. It has to work with what’s before it.
Here’s another political calculation that must worry the CBO. Will a Congress of the future decide it’s too politically dangerous to tax “Cadillac” insurance plans when the time comes? The tax would raise revenue to help pay for the 32 million Americans expected to be covered under the revised plan.
A lot of union households have these expensive insurance plans, and they don’t like the tax idea. Democrats already caved to union demands by putting off a vote on imposing the tax until 2018. Will lawmakers capitulate again eight years from now? They do just that with such unpopular taxes as the alternative minimum tax, making adjustments year by year without really fixing the problem.
Yes, the CBO can only score what’s before it, including creative accounting. The healthcare plan starts raising revenue this year, but it won’t begin paying for most benefits until 2014. So the revenue side gets a four-year head start.
True to its reputation, the CBO did not pretend something was there when it wasn’t. Health economists believe there are significant cost savings in moving toward a different way of judging what’s medically necessary for patient care and how to bill that care. The healthcare plan includes these experiments, but they remain just that – pilot programs. Until they become proven and permanent, they shouldn’t be counted on for savings, and the CBO doesn’t count on them.
Remember, also, that this legislation is as complicated as the healthcare system itself, involving doctors, insurers, hospitals, employers, patients, and on and on. Scoring it is not as easy or sure as scoring a discreet change, such as asking how much the government saves by taking back the administration of student loans from banks and doing that job itself (CBO answer: $61 billion over 10 years).
It’s no wonder, then, that the CBO calls its score on healthcare preliminary. That’s how the country should think of it.
Expanding healthcare access without making sure real cost controls can be put in place isn’t the healthiest way to run government.