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THE FINANCE COMMITTEE MEETS THE CBO.
"CBO’s work will make or break this enterprise," said Max Baucus at this morning's hearing on the Congressional Budget Office's health care budget book. "It’s a pleasure to welcome CBO’s new Director, Doug Elmendorf, to the committee. We hope that this will be the beginning of a beautiful friendship."
CBO occupies a weird space in Washington. They decide what legislation costs. They may get it right or they may get it wrong, but the number they settle on is the number legislators agree to use. And so this morning's hearings featured powerful senators begging a small, bearded budget geek for favorable judgments as if he were the Oracle at Delphi.
Ranking Republican Chuck Grassley asked Elmendorf if prevention and comparative effectiveness review would really save money. "I think it's clear those changes will result in improved health," replied Elmendorf. "Cost is more complicated."
He used his next question to ask about a public plan. Do you believe, he asked, that over time, a public plan would crowd out private coverage?
"Designing a system where the public plan could compete on a level playing field with private plans is extremely difficult," said Elmendorf. "We are wrestling now with how we'd model proposals to do that. Provider payments are one issue. But there are others. Administrative costs. What sort of risk pooling happens? Does the public plan get sicker patients or does the private plan? It's true thatf a public plan pays lower provider payments than private plans, than that will be a leg up for the public plan. But that's not the only way."
It's an interesting admission: Elmendorf and his team doesn't even know how to model certain key issues in the debate. Pat Roberts dug into this during his time. "CBO does more than just estimate the cost of our policies," he says. "It guides policy. And insofar as it tries to predict people's reactions to our policy changes, it's almost impossible. I think we all appreciate that trying to the effects of policy changes in the complex world of health care is very challenging. And I'd like to suggest as fact that the enormous difficulty estimating the effects of our actions and the unintended consequences of our policies is just one of the many good reasons that we should act with tremendous restraint as we wade into these policies. I said wade, but I think we are in fact diving headlong into a foot deep pool."
Elmendorf agreed.
Related: The power of the CBO.
COMMENTS (4)
This is a little less than optimal, right? I mean, under the previous CBO guy, is the last line of the post "Orzsag shrugged. 'And if we do not dive, we will be devoured utterly by rising health care costs' he said" ?
Posted by: Neil the Ethical Werewolf | February 25, 2009 1:58 PM
Ranking Republican Chuck Grassley asked Elmendorf if prevention and comparative effectiveness review would really save money. "I think it's clear those changes will result in improved health," replied Elmendorf. "Cost is more complicated."
Yup.
After reading the CBO report a couple months back, if they're considered the scorekeeper, I'm pretty content with the process. They are a lot more skeptical about the happy talk around cost-savings-- they take a cold look at the evidence for cost-savings for various initiatives, which are questionable, at best. We should all be happy that we have competent, non-partisan analysts helping politicians really understand the challenges of health reform.
The same applies to the question on public vs. private market-- there are viable paths to seeing either side uptake more market share depending on a few key assumptions. CBO is doing a great job.
Posted by: wisewon | February 25, 2009 2:47 PM
He had no business agreeing. His opinion on whether Congress should "act with tremendous restraint" is the opinion of a private citizen. As head of CBO he should keep his mouth shut about whether Congress should or should not pass legislation.
Posted by: Bloix | February 25, 2009 4:32 PM
Elmendorf was great - it's wonderful to hear someone offer realistic estimates of cost, rather than this pie in the sky type of thinking trap that too many of us reform oriented folks fall into.
HC IT is great and necessary - but net net it's going to cost more money to the system.
Comparative Effectiveness is great - the most important thing this system lacks is transparency - but net net it's going to cost more money. Unless of course we use it to force doctors to ration health services, which not many have the stomach for.
Cover the Uninsured - going to cost a lot more money. The savings from over-utilization of emergency room is a fraction of the cost of utilization we can expect from the newly insured.
Folks who think we can "fix" the HC System on the cheap aren't helping the reform effort.
Posted by: PF | February 27, 2009 8:35 AM