Do These Numbers Add Up?

For days, Democrats have nervously awaited the Congressional Budget Office’s score on their final piece of legislation, postponing any vote until after the agency weighed in. Now the numbers are here and they’re quite encouraging for supporters of reform: According to the CBO, the bill would reduce the deficit by $138 billion in its first 10 years and more than $1 trillion in the following decade. But are the CBO’s numbers accurate?

Well, no. Even the CBO would (and frequently does) acknowledge that its scores represent only an educated guess.

“There’s an enormous uncertainty in almost any estimate they do,” Rudy Penner, a former CBO director, said in an interview. “It’s a very difficult process.”

“There’s an enormous uncertainty in almost any estimate they do,” Rudy Penner, a former CBO director, said in an interview. “It’s a very difficult process.”

Nonetheless, when it comes to projecting the effects of federal legislation, the CBO is the only game in town, trusted by Republicans and Democrats alike across a vast ideological range. The CBO’s estimate is considered indispensable by both sides because it is a reliably nonpartisan estimate, with a reputation for producing honest, unbiased assessments regardless of the shifting political winds.

“So many of the other estimates you could compare the CBO’s to are either those who want to blow up health care or push health care forward, and the CBO is completely impartial an arbiter,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget and a former adviser to John McCain, told The Daily Beast.

Even while GOP leaders have gone after health care from every possible angle, the CBO has largely stayed sacrosanct. For example, Rep. Paul Ryan (R-WI), considered perhaps the most radical anti-spending lawmaker in Washington and a strong opponent of health-care reform, told Democrats at the bipartisan health-care summit that “ you know I believe” the CBO scores are impartial. On Thursday, he went after Democrats over the latest CBO scores—not because he claimed they were inaccurate, but because Democrats touted them ahead of their official release. After the CBO put out their projections, he left their assumptions alone, attacking the Democratic bill over policy differences, not the math.

• Eric Alterman: The ‘Delusional Left’ Wins on Health CareNonetheless, experts cite a number of factors that could affect CBO’s scores on health-care legislation in either direction. Jon Gabel, a senior fellow at the National Opinion Research Center at the University of Chicago, told The Daily Beast that the CBO has struggled to accurately assess projected savings on a number of health-care bills in recent decades—often overestimating their costs. The most recent example: Medicare Part D, which overestimated spending on the new prescription drug benefit by more than a third of its actual cost. Proponents of the latest push for reform have argued that a number of measures designed to reduce the growth of health-care spending, such as comparative effectiveness studies of medical procedures and changes to Medicare payments, may be difficult to predict.

One factor the CBO cannot include in their estimates that some observers say might skew their numbers: politics. Critics of a health-care overhaul have expressed skepticism that lawmakers will actually manage to pass some of the tax increases and spending cuts used to finance reform when the time comes, opting instead to block them with later legislation. Penner suggested this could be a factor with the current legislation.

“A lot of people think Congress will not ultimately go through with a Cadillac tax on high-value health plans, but it’s written into this law that they will impose them and therefore the CBO has to assume that they will,” Penner said. “CBO cannot get into the business of forecasting legislation or they’d be in huge trouble.”

Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities, said the CBO’s assessment of health care was as reliable—or unreliable—as it was for any piece of legislation. He likened it to CBO estimates of farm subsidies, where global weather patterns can greatly influence costs but are impossible to predict.

“Just as there’s a great deal of uncertainty and whatever they do is going to be wrong because they can’t predict the weather, they can’t predict how precisely people will respond to incentives in health care,” said Horney, who once headed the CBO’s budget projections unit. “So this bill is complicated, there’s a lot of uncertainty, but it’s hardly unique to this legislation at all.”

Horney added the CBO was very successful at avoiding statistical bias, with errors as likely to cut in one direction as another, a crucial factor in evaluating its projections.

In the end, even grading the CBO’s track record on previous legislation is difficult, meaning the final result of health-care reform could be murky 10 or 20 years from now. Bills assessed by the CBO are often amended multiple times after their initial projections or influenced by outside factors such as the broader health of the economy.

Benjamin Sarlin is Washington correspondent for The Daily Beast. He previously covered New York City politics for The New York Sun and has worked for talkingpointsmemo.com.