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So much for the Holy CBO
Congressional Budget Office consistently wrong on health-care estimates | The Daily Caller - Breaking News, Opinion, Research, and Entertainment
Congressional Budget Office consistently wrong on health-care estimates | The Daily Caller - Breaking News, Opinion, Research, and Entertainment
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...
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...
In other words, costs for the original Senate bill could run well over $2 trillion during the second decade of the program...
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...
The same committee predicted in 1967 that the total Medicare
program would cost $12 billion in 1990. Actual spending was $110 billion...