The Need for CBO Reform

Published January 14, 2015

Consumer Power Report #449

During the past week, the House voted to direct the Congressional Budget Office (CBO) to use “dynamic scoring” of legislation. I’ll wait while you yawn, but this is actually an important development.

CBO has used dynamic scoring in the past on multiple pieces of legislation – it’s an attempt to score not just the obvious impact of a piece of legislation but also what will happen to the economy because of the changes that are made. This is a logical thing to do, from my perspective and the perspective of many analysts who are serious about reforming government, because government policy has such a massive impact on today’s economy. People respond to incentives and to penalties, and to pretend otherwise is foolish and ignores the impact of tax cuts and tax hikes, as well as myriad other policies.

But dynamic scoring is also a liberal bogeyman, particularly for Jonathan Chait, who claimed the CBO reform was a “war on math”.

CBO is a 40-year-old institution that has acquired enormous clout within Washington, DC by virtue of its reputation for ideological neutrality. It furnishes Congress and the public with budgetary estimates that, if necessarily imperfect (as all predictions must be), are arrived at fairly. It is also a perfect modern expression of an old Progressive Era–ideal: that policymakers should be informed by the work of impartial experts. That the conservative majority has set out to corrupt this institution as one of its first major acts is, therefore, perfectly fitting.

Unbiased. Unprejudiced. Fair. The “perfect modern expression of a Progressive Era ideal.” Wait, what? See, that’s the problem with CBO as currently constructed: It’s an entity built on the progressive idea that an “impartial expert” can actually exist when it comes to assessing the impacts of policy. How can the unbiased, impartial experts possibly act as if tax changes don’t affect people’s behavior, and therefore the broader economy, when every bit of practical evidence indicates people respond to such impacts? The whole basis of Obamacare was dependent on an assumption. That’s how the notion new health care tax laws should be passed so people will behave differently transforms into, “Ugh, these idiots want to pretend new tax laws make people behave differently!”

There are all sorts of detail-based critiques one can lodge against dynamic scoring, challenging the assumptions involved or making the case that it reaches the wrong conclusions. But revulsion at the basic concept just doesn’t make sense.

Reform of CBO shouldn’t stop at dynamic scoring. The revelation someone like Jonathan Gruber played a critical role in both the creation and scoring of Obamacare revealed a long-running problem: a serious lack of transparency on the part of CBO. Consider this report from The Morning Consult:

Unlike most federal and congressional agencies, Congress’ nonpartisan budget scorekeeper appears to have no policy on conflicts of interest for their outside advisers. CBO has two groups of external consultants – the Panel of Health Advisers and the Panel of Economic Advisers – made up of more than three dozen people, mostly economists with Ph.D.’s, who operate as a sounding board for CBO. While their functions and purpose differ, both are influential in their own right, and it appears that neither panel is required to let CBO know about other projects they may be working on, either on behalf of private industries that could have a financial interest in how CBO views federal spending or the executive branch, which CBO was set up to act as a counterweight against.

When asked if the agency has ethics requirements for advisers related to potential conflicts of interest, a CBO spokesperson said she was unable to comment on the record. She was also unable to comment on whether CBO’s counsel reviews the activities of panel members to determine if any conflicts of interest exist, or if there are any policies that require members to notify CBO should conflicts arise during their time on the panels.

Senator Chuck Grassley (R) is following up on this subject. As Chris Jacobs notes, the lack of transparency has led to a number of problems, including the multi-billion-dollar mistakes associated with the CLASS program.

Regardless of what comes from the requirement to deploy dynamic scoring, the real issue with CBO is the black-box nature of many of its assumptions. Employing a more open source method, as Yuval Levin and others have argued, would ensure more accountability and help ensure the conclusions the experts reach go through a more diligent process of assessment. It might be a Progressive Era ideal to have impartial experts hand a number down from the mountaintop, but in the days of open source, the people should have more access to information in order to understand where that number came from.

— Benjamin Domenech



The American health insurance system comes as a nasty shock to many British expatriates working and living in the United States. … Health insurance in America has its own vocabulary, its own culture, and the British have to learn the hard way.

Trying to explain the American health insurance system to friends and family in the UK is often futile.

They wince when you talk of friends who pay $11,000 a year for health insurance for themselves and their three kids. And to many Americans, $11,000 a year for a family health insurance plan is cheap.

Brits find it hard to believe that many Americans stay in a job they hate for 20 or 30 years mainly because it provides health insurance for them and their families.

That strikes Brits as a kind of serfdom in the “Land of the Free.”

Where Americans see “choice” in their private health insurance plans, Brits see wasted time and confusion. Where Americans say “I get to choose my doctor,” Brits ask “why on Earth would you want to choose a doctor?” Where Americans talk about “out-of-pocket,” “deductibles,” and “co-pays,” Brits say “what?” and get all of the above confused.

As millions of previously uninsured Americans sign up for different levels of health care under the Affordable Care Act, British expats are impressed at this development.

But many Brits remain confused and bewildered by the health insurance system in the United States – and appalled at the cost.

An informal survey of a dozen or so educated and successful Brits living and working in the United States found different levels of bamboozlement, resentment, and grim acceptance of the American healthcare system.

How else are Brits accustomed to the free National Health Service supposed to react to the new “marketplace” for health insurance? A “marketplace” for something as holy as health care?

The website advises there are five categories of marketplace health insurance plans: bronze, silver, gold, platinum – and a final category called “catastrophic.”

The Brit expat reaction to this array of choices is bafflement: What are we buying here? Health care or American Express cards?”

“Plans in these categories differ based on how you and the plan share the costs of your care,” says the site advice.

Then, just to reassure you, the site adds: “The categories have nothing to do with the amount of care you get.”

Confused? You will be.

SOURCE: Mark McSherry, The Guardian


It’s been almost five years since Obamacare was passed, and the law remains as unpopular as ever – public support hit a record low of 37 percent in November. Opposing Obamacare is a no-brainer for Republicans politically, though the question of what to do about the law remains something that divides the right. And finding the right legislative remedy has become an especially acute challenge now that Republicans control the House and Senate.

The Washington Examiner‘s Phil Klein has justly earned a reputation as one of the best reporters covering Obamacare, and the timing of his new book, Overcoming Obamacare: Three Approaches to Reversing the Government Takeover of Health Care, could not be better. Here Klein takes a look at three major schools of thought on the right about how to [fix] the law, or what he calls the reform school, the replace school, and the restart school. If you want to know what the future holds in store for Obamacare, Klein’s book is essential reading – and the Kindle version is just $2.99. Find it here.

SOURCE: Mark Hemingway, Weekly Standard


Grace Brewer says she never thought she would be without health insurance at this stage of her life. “I’m a casualty of Obamacare,” says Brewer, 60, a self-employed chiropractor in the Kansas City, Kansas, area.

She wanted to keep the catastrophic health insurance plan she once had, which she says fit her needs. But under the Affordable Care Act, the government’s health care reform law, the plan was discontinued because it did not comply with the law’s requirements, and her bills doubled to more than $400 a month. “I wanted a minimal plan and I’m not allowed to have it,” she says. “That seems like an encroachment on my freedom.”

The Affordable Care Act requires everyone to buy insurance or pay a penalty. Government subsidies can reduce costs for low- and middle-income Americans and without them, many say they could not afford insurance. Americans qualify for subsidies if they are under the age of 65 and have an annual income of up to $46,680 as an individual, or up to $95,400 for a family of four.

Though Brewer could pay less for a plan if she were to accept a subsidy from the federal government, she refuses. “I want to pay my own way,” she says. “I will not take a handout.”

Her sentiment is unusual, but brokers say they do hear from clients who are eligible for subsidies – which are based on household income and not assets – but want no part of them. Health officials have been boasting that 6.6 million people have enrolled in health coverage through state or federal marketplaces created under the Affordable Care Act, but in sharp contrast stands a small group of Americans who say they want nothing to do with the plans, even if they would save money. Their reasons vary: Some are protesting Obamacare, while others simply feel it’s unethical to accept taxpayer dollars to pay for health insurance.

SOURCE: Kimberly Leonard, U.S. News & World Report


Utah Governor Gary Herbert (R) and North Carolina Governor Pat McCrory (R) have asked President Obama to allow them to include work requirements in their Medicaid programs. Work requirements were critical to the success of welfare reform in 1996, and would also change Medicaid from a dependency-trap to a true safety net. The best way to achieve it would be through legislation, not relying on executive action.

According to a new study released by the National Center for Policy Analysis, including Medicaid and the State Children’s Health Insurance Plan (CHIP) as part and parcel of reforming the safety net, instead of keeping health care in its own silo, would greatly improve the federal welfare state for both recipients and taxpayers. Fortunately, House Ways and Means Committee Chairman Paul Ryan has proposed reforms to the federal safety net that could include Medicaid and CHIP.

Mr. Ryan’s proposal, Expanding Opportunity in America, focuses on the Earned Income Tax Credit (EITC), housing and home-energy assistance, education assistance, food stamps (SNAP) and criminal sentencing reform. Ryan’s proposal hinges on the Opportunity Grant (OG). States would apply for OGs that would roll some or all of the federal spending on individuals and families in poverty into one lump sum for distribution to the states. States, civil society organizations and recipients themselves would all be responsible for transitioning recipients out of dependency and into self-reliance.

Ryan is looking back to the success of the 1996 welfare reform, signed by a reluctant President Clinton after a successful campaign by House Speaker Newt Gingrich. Ten years after the reform, it was widely recognized as a significant success, even by the mainstream media. Medicaid, unfortunately, was never reformed in 1996.

SOURCE: John Graham, Forbes


One reason your insurance premiums have skyrocketed during the past year is that Obamacare requires all health plans to provide “free” annual wellness visits and 15 associated preventive services for which they cannot charge the patient a copayment. According to a key architect of [the Patient Protection and Affordable Care Act (PPACA)], however, “the annual physical exam is basically worthless.” Dr. Ezekiel Emanuel, last heard from claiming that he wants to die at 75 in order to avoid becoming a burden on society, writes in the New York Times that “screening healthy people who have no complaints is a pretty ineffective way to improve people’s health.”

The good doctor says he’ll forego his annual exam pursuant to a desire to “make the world a better place.” But, as with his professed willingness to depart this vale of tears after three-quarters of a century, he makes it clear that all men and women of good will should follow his example “to ensure there is no doctor shortage as more Americans get health insurance.” This is where the rubber glove hits the road. Emanuel wants you to voluntarily give up a much-ballyhooed feature of Obamacare for which the “reform” law itself compels you to pay via new taxes and inflated health insurance premiums.

This is entirely consistent with Dr. Emanuel’s unique code of ethics. He is, for example, a long-time proponent of medical rationing for the elderly. Consequently, he probably doesn’t experience much cognitive dissonance when suggesting that, in order to forestall the physician shortage caused by a program he helped design, right-minded people should forego a “benefit” they were coerced to purchase. For him, this call for you to restrict your consumption of medical care is just another expression of his passion for rationing. The only thing new here is the exhortation for you to impose it on yourself.

All of which raises a question: If annual physicals are worthless, why did Dr. Emanuel and his accomplices build them into PPACA?

SOURCE: David Catron, American Spectator


The American health care system may finally be catching up to the rest of the 21st-century economy, in which convenience is not only expected, but demanded – and massive retailers are driving the change.

Patients suffering everyday complaints like chest colds or ankle sprains have long faced the lamentable choice between waiting days to see their family doctors or enduring time-sucking, unpleasant and expensive visits to hospital emergency rooms, especially at night and on weekends when physicians typically aren’t open for business. It’s one of the most annoying aspects of the way medical care is provided in the United States.

Big chains like CVS, Walgreens, and Walmart are stepping in to try to correct this market failure. These and other retailers are opening hundreds of new walk-in clinics, staffed by medical professionals such as nurse practitioners and physician assistants. They’re betting that Americans craving speed, convenience and easy-to-understand prices will be willing to break their habit of expecting a doctor to handle all of their medical issues.

“People are demanding health care to react similarly to other service industries, where people have a need and they want it relatively easy,” said Nancy Gagliano, a primary care physician and chief medical officer for CVS Health’s MinuteClinic. “The traditional health care system really is not adequate to support the need.”

Although still vastly outnumbered by doctors’ offices and hospitals, retail clinics are spreading rapidly: There currently are almost 1,900 across the U.S., up more than sevenfold since 2007, according to data compiled by Merchant Medicine, a consulting firm that tracks the sector.

SOURCE: Jeffrey Young, Huffington Post


Potentially life-saving drugs spend years undergoing [Food and Drug Administration (FDA)] review, limiting ill patients’ ability to access what might be miracle treatments. In a new report, Lindsay Boyd of the Beacon Center of Tennessee explains what FDA regulation has done to drug access.

The [FDA] was created in 1938. While the agency could require drug safety testing before drugs could get on the market, it wasn’t until 1962 that its power over the drug market became even more significant. That year, new federal laws required FDA drug testing for efficacy, and the agency – and expenses – exploded in size. According to Boyd:

  • In 1951, there were just 1,000 staffers working for the FDA. Twenty years later, the agency had 6,500 employees.
  • It now costs from $500 million to a whopping $2 billion to get a drug to market.
  • There is less drug development today than there was in 1962.

Since 1970, patients have had to wait more than 10 years for new, and potentially life-saving, drugs.

According to Boyd, 40 percent of the increase in American life expectancy is owed to the development of new drugs from 1986 to 2000. However, more could be done: the FDA approval process is incredibly slow, requiring several stages of review:

  • Phase I of FDA approval consists of safety trials, costing an average of $15.2 million and generally taking 22 months.
  • Phase II evaluates safety and dosage, costing companies $23.4 million and taking an average of 26 months.
  • Phase III involves drug testing on a larger group of individuals to gather more data on safety and efficacy. Not only does it cost a staggering $86.5 million on average and take 30 months, but it can still take up to two years before the drug is available to patients.

SOURCE: National Center for Policy Analysis