May 29, 2017

MEGAN MCARDLE ON HEALTHCARE AND THE CBO: Republicans are on the right path with their health-care plan: Give so much authority to states that a federal agency can’t even forecast what will happen.

Forget the headline numbers from the Congressional Budget Office’s latest score for the Republican health-care bill. The score tells us something much more important, and much less remarked: Republicans have broken the CBO. They’ve passed a bill that, for all intents and purposes, cannot be scored by the normal CBO process. I don’t say that they’ve done this deliberately, mind you — in fact, I’m pretty sure they it wasn’t premeditated. But they’ve done it just the same.

Oh, the fine folks at the CBO have gone in and given it their best try, and that’s what produced the headline numbers you’ve read: 14 million fewer people insured by 2018, 23 million by 2026, and a net reduction in the deficit of $119 billion in the coming decade. But after that, it starts getting a little weird. Premiums will go up for a while, and then maybe down for some people but up for others, and it’s hard to get an average … this score has a whole lot of caveats, more “difficult to predict” and “estimate uncertain,” than longtime CBO watchers are primed to expect.

The CBO process has never been perfect, for there has always been an uneasy tension between realistically outlining uncertainties and providing enough precision to guide the policy process. This nonpartisan office has at times irked Democrats, other times Republicans. Its estimates are not necessarily accurate — as the saying goes, “predictions are hard, especially about the future” — but they are consistent, giving politicians and the public a single, if imperfect, framework for comparing policy choices.

CBO estimates prefer a single number to a range. They limit the term over which they project the costs, because projecting the policy environment 50 years out is a mug’s game. They have declined to consider some sort of uncertainties, such as “Will future congresses have the guts to see this thing through?” because however real those risks are, analyzing them would put the CBO in the position of political advocate rather than budget wonk.

Naturally politicians have long striven to exploit those tensions. For example, the Patient Protection and Affordable Care Act was stuffed with dodgy “pay-fors” of dubious political economic or viability. Many of these were clearly not ever going to take effect, but they allowed Democrats to claim tidy budget savings from passing the bill. The timeline of the program’s rollout was also set up so that a lot of the costs fell outside the budget window, while new revenue showed up pretty quickly. The CBO tried to make it clear that these things were problems, but ultimately, they were restrained by their principles from saying: “Guys. We’re going to make everyone in America start issuing 1099s to stores? Really?”

Jiggery pokery.

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