Monday, July 17, 2017

The CBO and its big lie

As the CBO studies the revised Senate healthcare reform bill, both sides of this debate await their prognostication regarding the economics and numbers of covered individuals.  Their analysis may provide cover for the difficult political decisions that the spineless Republicans will make regarding any reform legislation.  Already, the Washington Post is calling its analysis “fake news” as it fears its analysis will improve the prospects of passage of a revised Senate bill.
The CBO was created to allow Congress an analysis of legislative costs independent of the OMB analysis.  The OMB, which can be subject to the political whims of the president and the White House, has often missed the mark on costs and outcomes.  Duplication of these services has occasionally provided more accurate calculations.  By no means does duplication guarantee cost analysis that is accurate; most often their calculations (as the OMB’s) err on the low side.  
The Obama administration sought to use the CBO (which tends toward more progressive assumptions) to justify its Affordable Care Act via its guarantee of higher numbers of Americans covered via ObamaCare, as compared to the previous state-managed private insurance system.  At the time, the Democrats controlled both chambers of Congress and they believed that the CBO would favor the more liberal line on the ACA.  Unfortunately, their analysis is little better than dart-throwing contests.  This is because their assumptions fail to understand human behavior.

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