CBO Misses the Mark on IMAC

Let’s just say I’m not in a rush to have Doug Elmendorf pick my fantasy baseball team next year.

Earlier today, the Congressional Budget Office released an estimate on the proposal to make the Medicare Payment Advisory Committee an independent body (IMAC) capable of setting policy with regards to saving costs in Medicare. The CBO’s somewhat impossible job is to predict future costs and savings based on legislation that’s in process.  They’re seen as the umpire – when they call it a ball, it’s a ball; when they call it a strike, it’s a strike.  But you know what – sometimes the ump blows a call.

Every year, MedPAC releases a report that makes recommendations on what should be done with Medicare payment rates to lower costs and improve quality.  Because of the political process, every year those recommendations go unfounded.  Here’s the thing, though – we have MedPAC recommendations on file going back over eleven years, including whether the few recommendations that were implemented actually saved money.  But the CBO didn’t base its analysis on what MedPAC has proposed in the past to speculate on what kind of savings could be proposed in the future.  Instead, it’s based on – uh, you know, I have no idea.  There’s lots of questions about who gets to be on the board and how susceptible they’d be to political pressure from the President or the industry.  There’s speculation that if the board is mostly doctors, they won’t want to mess around with physician payment rates.  Somehow, all of this will translate to meager to no savings.

And I can’t quite shake the feeling I’m reading an analysis written in 2007 of what health care spending will look like in Hillary Clinton’s second term as President.

The CBO is attempting to determine what additional savings will be recommended by a board whose composition CBO cannot predict making determinations CBO cannot predict based on future circumstances that CBO also cannot predict.  They’re also trying to determine the chance that those recommendations will be passed along by a future President (whose identity is unknown) and whether those recommendations will be stopped by a future Congress whose composition is unknown. It’s one thing to say the chances of short-term savings is small, and the chances for long-term savings “could eventually achieve annual savings equal to several percent of Medicare spending.”  It’s another thing to actually assign that a numeric value.  Based on what, exactly?  The CBO letter gives no indication – no charts, no graphs, no proposals.

I’m totally with the CBO when it puts forth an unfavorable score, even to a proposal I like, when it shows the economic modeling behind it.  Of late, I often don’t like their end results – discounting savings for anything that’s outside their half-dozen proposals for savings, like instituting an automatic cap on Medicare spending.  But I at least respect how they came to their conclusions.  This I can’t respect.  This is pretty much the CBO coming with a number and justifying it by predicting future interpersonal relationships.

You know who else noticed?  White House OMB Director Peter Orszag, himself a former CBO director, who wrote of this analysis:  “it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals.  In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped.”

Um… you think?

Update: 07/26/09 at 8:05 pm PT -- For more on this topic, read GoozNews, "CBO Fears Providers Will Control 'MedPAC on Steroids'"

(Photo credit:  Seabamirum on Flickr.)