Congressional Budget Office Consistently Wrong on Health Care Estimates

Lawmakers often cite CBO figures as holy writ and use them in arguments supporting or opposing proposed measures. But can the CBO estimate costs of complex programs down to the last billion dollars? Do CBO numbers present an accurate picture to legislators and to the American people?

“Everyone should know that any number will be either too high or too low,” Donald Marron, a former CBO deputy director told The Daily Caller...

Click to expand...

There are a number of problems associated with CBO’s estimates. Some have to do with the games Congress itself plays with numbers. In the case of highly complex programs like health care, a myriad of variables can throw estimates off. In fact, the government’s track record for estimating health-care program costs is poor.

Congress usually asks CBO to judge a bill’s budget impact over 10 years. In the case of health-care reform, Congress is seeking to fudge the budget impact of the program by starting the program in 2013. But the CBO’s 10-year estimates start with 2010, so that they actually include costs for seven program years...

Click to expand...

In other words, costs for the original Senate bill could run well over $2 trillion during the second decade of the program...

Click to expand...

There is evidence that governments chronically underestimate health-care program costs. A report released over the summer by Sen. Sam Brownback (R-Kansas) argues that “health care appears to be an area with great room for overly optimistic assumptions regarding” changes in the behavior of patients and providers, the impact of technology, future health cost inflation and the likely success of cost controls.

The report cites numerous instances of faulty health-care estimates from Medicare and Medicaid, the State Children’s Health Insurance Program (SCHIP), the Massachusetts universal-coverage plan and the United Kingdom’s National Health Service.

For example, the House Ways and Means Committee estimated that the original Medicare hospital insurance program would cost $9 billion annually by 1990. Actual spending that year was $67 billion...

Click to expand...

The same committee predicted in 1967 that the total Medicare

program would cost $12 billion in 1990. Actual spending was $110 billion...

Click to expand...

Zyroh said:

Kudos, yep, congress lied to us. hey while we're on the topic, did we ever get any CBO estimates on 'the war on terror' (or 'the war on individuality' to be more exact).

Click to expand...

Hicup said:

congress simply appropriates the money when it si asked for. Kinda like pay as you go.. Or pay as you kill..


Tim-

Click to expand...

Zyroh said:

you're more right than you realize since last senate vote was 100-0 on 'defense spending' being greater for our 5% of the population than the other 95% combined.

Click to expand...

The Congressional Budget Office challenged claims by health-care overhaul proponents that Medicare savings in Senate legislation would help finance expanded coverage and postpone the bankruptcy of the medical program for the elderly.

The nonpartisan agency said the $246 billion it projected the legislation would save Medicare can’t both finance new programs and help pay future expenses for elderly covered under the federal program.

Nor could those savings be used to extend the solvency of Medicare, set to run out of money in 2017, the budget office said in a letter to Senate Republicans.

The estimated Medicare savings in the legislation overstate “the improvement in the government’s fiscal position,” the CBO said in the letter.

“The true increase in the ability to pay for future Medicare benefits or other programs would be a good deal smaller,” the budget office said.

The budget office said that whenever the Medicare trust fund runs a surplus, the savings are turned over to the U.S. Treasury, which issues bonds to borrow for the future needs of participants in the health-care program for the elderly. The trust fund is currently running annual deficits.

North Dakota Democrat Kent Conrad, chairman of the Senate Budget Committee, has said that the Senate legislation would postpone the Medicare trust fund’s projected 2017 insolvency by several years.

To credit such projected savings as helping to extend Medicare’s solvency “ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund” to pay for future Medicare expenses, the budget office said.

Arguments that the Medicare savings would both extend Medicare’s solvency and help finance “new spending outside of Medicare would essentially double count a large share of those savings,” the CBO said.

Click to expand...

MrVicchio said:

USA > Rest of the world.

Click to expand...

MrVicchio said:

USA > Rest of the world.

Click to expand...

Wiseone said:

Until you present a better way of measuring a bill's cost in the future, I'm going to stick with the CBO estimates. "I don't like their numbers for political reasons" is not a good enough reason to devalue the value of the CBO.

I'm especially annoyed by your willingness to call something wrong when you don't know whats right.

Click to expand...

Whovian said:

Translation: I know the Democrats gave the CBO bogus numbers to crunch, making the results the CBO ended up with very suspect, but I don't care, I'll stick with the CBO's bogus numbers, TYVM.

Click to expand...

Wiseone said:

I trust the CBO to have some standards even if it isn't always perfect, besides YOU OFFER NO ALTERNATIVE. If there was an alternative with math and data to back it up, I'd listen.

Click to expand...

Wiseone said:

I trust the CBO to have some standards even if it isn't always perfect, besides YOU OFFER NO ALTERNATIVE. If there was an alternative with math and data to back it up, I'd listen.

Click to expand...

Wiseone said:

I trust the CBO to have some standards even if it isn't always perfect, besides YOU OFFER NO ALTERNATIVE. If there was an alternative with math and data to back it up, I'd listen.

Click to expand...

Conservative said:

Why don't you research the accuracy of the CBO especially on projections beyond two years? The Democrats are claiming that this will increase the debt by 143 billion over 10 years or 14 billion a year. They estimate that tax increases and Medicare cuts will generate those savings. There is no evidence that there will be that kind of tax revenue increase or that the politicians have the stomach to cut Medicare costs yet you buy the rhetoric. What happens if you are wrong?

Click to expand...

Wiseone said:

I trust the CBO to have some standards even if it isn't always perfect, besides YOU OFFER NO ALTERNATIVE. If there was an alternative with math and data to back it up, I'd listen.

Click to expand...

WASHINGTON — The nonpartisan budget scorekeepers in Congress said on Thursday that the Republican plan to repeal President Obama’s health care law would add $230 billion to federal budget deficits over the next decade, intensifying the first legislative fight of the new session and highlighting the challenge Republicans face in pursuing their agenda.

The new House speaker, John A. Boehner, flatly rejected the report, saying it was based largely on chicanery by Democrats.

Mr. Boehner’s dismissal of the report by the Congressional Budget Office, at his first formal news conference as speaker, was the latest salvo in the battle over the health care law. White House officials on Thursday said they were stepping up efforts to defend the law, with a new rapid-response operation to rebut Republican claims and to deploy supporters to talk about the benefits of the law.

But Mr. Boehner’s remarks held wider implications, effectively putting him on a war footing with the independent analysts whose calculations generally guide discussions about the projected cost or savings of any legislation.

“I do not believe that repealing the job-killing health care law will increase the deficit,” he said.

“C.B.O. is entitled to their opinion,” he said, but he said Democrats had manipulated the rules established for determining the cost of a program under the 1974 Budget Act.

“C.B.O. can only provide a score based on the assumptions that are given to them,” Mr. Boehner said. “And if you go back and look at the health care bill and the assumptions that were given to them, you see all of the double-counting that went on.”

But the analysis released by the budget office on Thursday was based on the health care repeal bill that House Republicans introduced on Wednesday. And it highlighted the difficult position that Republicans are in as they try to address what they insist are the top two priorities of voters who elected them in November: cutting the deficit and undoing the health care law.

According to the budget office, those goals are contradictory.

The budget office estimated that the health care law, including education provisions, would reduce deficits over 10 years by $143 billion. Tax increases and cuts in projected Medicare spending would more than offset the cost of extending health insurance to millions of Americans. The budget office projected that the law would result in even bigger savings beyond 2019.

Republicans have said they do not believe that many of the Medicare cuts will ever take hold. They say that government subsidies to help people buy health insurance will prove far costlier than the budget office has predicted, and that the Democrats wrote the law to mask the steep future costs of some provisions, like a new long-term-care insurance program.

The budget office did not comment on Mr. Boehner’s remarks. Douglas W. Elmendorf, its director, has frequently said his office applies the longstanding budget rules. He says it uses its own professional expertise, as well as consulting with outside experts, to derive its projections, which represent the “middle of the distribution of likely outcomes.”

Click to expand...

Conservative said:

Why don't you research the accuracy of the CBO especially on projections beyond two years? The Democrats are claiming that this will increase the debt by 143 billion over 10 years or 14 billion a year. They estimate that tax increases and Medicare cuts will generate those savings. There is no evidence that there will be that kind of tax revenue increase or that the politicians have the stomach to cut Medicare costs yet you buy the rhetoric. What happens if you are wrong?

Click to expand...

Wiseone said:

I'm not advocating any policy, or one political party over the other. I'm simply saying that the CBO is a non-partisan professional agency and since they work for Congress they do their studies as estimates based on Congress' direction. The CBO, although it has a broader directive to conduct studies on things its professionals think will be relevant, it cannot conduct a study on every single possible future Congressional action. There's just too many variables.

I agree that the CBO should in this case conduct an additional study of the same question while assuming there are no medicare cuts or tax increases. But remember the CBO works for Congress, although they have some discretion when they have the time to conduct studies their professionals think are relevant they are also required to drop everything if Congress comes to them and says "We are doing X, Y, and Z conduct a study on the impact of the repeal with those variables." Of course Congress has no obligation to do X, Y, and Z.

And no I don't see much prospect of medicare cuts or tax increases in the near either.

The ONLY point I am trying to make is that for its potential flaws the CBO study is a far more accurate picture of the future than simply nothing, BY DEFAULT. Its like if two shooters were aiming at a bulls-eye and while one hits high and to the left of the target, the other doesn't even fire. Yes the first shooter missed since the other guy didn't even fire the first one could have missed by a mile and his performance was still better. The Republicans in this case are simply saying "No its wrong, I don't believe that." While offering no better answer, no better numbers, no better data, and in fact are offering no answer, no numbers, and no data to address the question of "How much will this cost." How can you criticize a study as being inaccurate WHEN YOU CONDUCT NO STUDY OF YOUR OWN, just what are you comparing it to?

While the CBO's study could be better, and address more variables, at least it is a platform to stand on. Unlike the Reps in this case which are attempting to stand on air and the ridiculous premise of "Well they aren't perfect therefore we must be right by default and without even playing the game."

Click to expand...

Conservative said:

The Republicans are standing on history and actual results of CBO accuracy which you and other continue to ignore. The CBO reports its own performance over a 10 year history as being very poor. You even acknowledged that it is unlikely that the cuts and tax increase will happen so what does that do to the estimates? It isn't the CBO fault because they can only use the assumptions given them. If the assumptions are wrong then the projections are wrong. History shows that the CBO has never been right on their 10 projections and that is the point. Using the 230 billion as fact is nothing more than partisan rhetoric that deceives the American people.

Click to expand...

haymarket said:

So can we expect a GOP led effort to defund the CBO for poor performance? Or is this just smoke and mirrors with "we listen to them when they agree with us and ignore them when they don't" type of thing?

So where are your numbers?

Click to expand...

Conservative said:

You seem to have a comprehension problem, as stated it isn't the CBO's fault, it is the fault of very poor assumptions to sell the partisan liberal position, something you want to continue to ignore. Nothing wrong with the CBO but predictions 10 years out can never be construed as factual. Garbage in, Garbage out yet you buy the garbage in.

Click to expand...

haymarket said:

I love it when you True Believers quote each others opinion as if it were holy writ and agreed upon fact.

So is the GOP going to defund the CBO? Or do they pick and chose what they want only if it agrees with their self imposed belief system?

Paul Simon in THE BOXER "a man hears what he wants to hear and disregards the rest"

Looks like The Boner has come out with his own version.

Click to expand...

haymarket said:

This from the NY Times today

http://www.nytimes.com/2011/01/07/us/politics/07cong.html?_r=1&partner=rss&emc=rss



This presents quite a different picture than the article in the previously cited source.

Notice that Boehner gives away the basis of his entire argument : the CBO figures are simply contrary to his self imposed belief system.

“I do not believe that repealing the job-killing health care law will increase the deficit,” he said.

So Boehner is willing to risk increasing the deficit by hundreds of billions of dollars and cutting over 30 millions off of health care simply because of what HE BELIEVES. A belief system has supplanted the study from the very office that Congress depends on for its facts and figures. Somehow a belief system based on narrow partisan ideology has supplanted everything else and is the trump card to be played when all else fails. And because some here worship before the same altar as the Boner does, you too are willing to ignore the non-partisan CBO and roll the dice to the tune of $230 billion dollars. And at the same time you are willing to bitch and moan about other programs adding to the deficit.

The hypocrisy is amazing.

Click to expand...

“C.B.O. can only provide a score based on the assumptions that are given to them,” Mr. Boehner said. “And if you go back and look at the health care bill and the assumptions that were given to them, you see all of the double-counting that went on.”

Click to expand...