Battle Of The Math Nerds: Two Number Crunchers Square Off Over Health Care

July 27, 2009 11:28 a.m.

On Saturday, for about the third time since the health care debate really picked up steam on Capitol Hill, the Congressional Budget Office released an analysis that triggered bad headlines for health care reformers and big head aches for the White House.

According to CBO Director Doug Elmendorf, a proposal widely touted by the White House to give an external panel the authority to reform Medicare and Medicaid would save a mere $2 billion over a 10 year time horizon–less than one percent of the overall cost of the legislation.

“CBO deals new blow to health plan” blared a headline at Politico–conventional wisdom that threatened to provide new momentum to reform opponents on the Hill and within the greater Republican machine.

There are a number of analytical problems with this framing–sort of what you’d expect when cool kids (like, ahem, the Politico team) stop tormenting their favorite dweebs and start trying to understand their science projects. But as if to underscore just how seriously the administration took the political threat, the White House quickly blasted out a response from Peter Orszag, director of the Office of Management and Budget, which called the CBO’s work–and by proxy its director–into question.

As a former CBO director, I can attest that CBO is sometimes accused of a bias toward exaggerating costs and underestimating savings. Unfortunately, parts of today’s analysis from CBO could feed that perception. For example, and without specifying precisely how the various modifications would work, CBO somehow concluded that the council could “eventually achieve annual savings equal to several percent of Medicare spending…[which] would amount to tens of billions of dollars per year after 2019.” Such savings are welcome (and rare!), but 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.

A predictably nerdy response to a particularly nerdy insult. But that’s also polite Washington-ese for, “Step off!”

And it’s easy to see why Orszag, 40, might be frustrated. As you might expect from somebody who makes a career out of churning budget numbers and hoping everything adds up to zero, Orszag, like Elmendorf, 47, places a premium on minimizing the federal deficit. You can imagine the two men joining the same chess club, or castigating a posse of tie dyed progressives for not appreciating the elegance and importance of a balanced federal budget. Though Orszag was mentored by liberal luminary Joseph Stiglitz and Elmendorf studied under conservative Martin Feldstein, Orszag eventually found himself under the spell of progressive bete noir Robert Rubin, many of whose views he appears to share. During the Bush era, he directed the Brookings Institution’s decidedly middle of the road Hamilton Project–a Rubin initiative, which Elmendorf himself briefly ran in 2008.

But over the last several weeks, at the requests of members of Congress, Elmendorf has crossed his natural ally, repeatedly zinging the budget king, and fueling the efforts of health care reform’s most entrenched opponents.

Herewith, a rundown of the perceived slights:

Analyzing an incomplete version of Senate HELP Committee legislation, CBO found last month that the panel–the more liberal of the two Senate panels with jurisdiction over the issue–would cost a trillion dollars while leaving more than half of the uninsured without insurance.

That was the first blow–and though the analysis was soon superseded by a more thorough and promising one, it nonetheless became the source of GOP talking points repeated to this day.

Then, two weeks ago, after the House unveiled its own draft bill, Elmendorf told the Senate Budget Committee that none of the legislation he’d seen would do anything to address the inflation of health care costs over time.

Now the CBO’s at it again, and Orszag’s seemingly had enough. Unfortunately for him, though, there’s little else he can do aside from writing testy blog posts. The CBO is a congressional agency, hailed by pols and observers alike for its cautiousness, and ability to eschew partisanship whether Republicans or Democrats are running the show. And if Orszag did more than simply register disappointment, he would likely invite yet another political headache for the White House–the charge that the President is trying to influence what should ultimately be an unbiased and statistical, rather than political, project.

But with so much on the line, it’s easy to see why the administration is losing its patience. This is ultimately a familiar story. During the budget wars of the early 1990s, it was a CBO report that many Democrats claim dealt Clinton Care its fatal blow. Like Orszag now, Clinton’s then OMB-chief, Alice Rivlin (a one-time CBO director herself) was furious with her successor, Robert D. Reischauer, for running the numbers the way he did.

What she couldn’t have known at the time, though, is that one of the analysts who contributed to that report would later bedevil health care reform efforts in a more public role. His name: Doug Elmendorf.

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