Kennedy's office sent out a press release. The New York Times ran a story. The Wonk Room wrote up the findings. This is not how Congressional Budget Office reports are usually greeted. But the release of their two books on health care -- Key Issues in Analyzing Major Health Insurance Proposals and Budget Options, Volume I: Health Care -- is a big deal. Indeed, the books are unprecedented. But the coverage thus far isn't quite getting at their import.To understand why these books matter, consider the first sentence of my profile of Peter Orszag, former head of the Congressional Budget Office and incoming director of the Office of Management and Budget. It's a quote from Senator Ron Wyden, one of Congress's most involved and aware reformers. "The history of health reform," he says, "is congressmen sending health legislation off to the Congressional Budget Office to die."This is not part of the normal history. The CBO's rulings don't make much news. But they can be decisive. To understand why, ask yourself this question: How do we decide how much a government program costs? It's an essential question. Programs need prices, because the government has to produce a budget. But pricing legislation in advance is impossible. Consider the challenges of a health-care plan that only exists on paper. What medical technologies will emerge in coming years? Will there be a recession that forces more Americans onto government subsidies? Will the next flu season be a bad one? No one knows.But you still need a number. So Washington operates amidst a tacitly agreed-upon imprecision. What the CBO says, goes. "In this town," says Henry Aaron, a senior economics fellow at the Brookings Institution, "it's not infrequent to hear people say it doesn't make any difference what it really costs. It only matters what CBO says it costs." The CBO's most famous -- or infamous -- intervention in a legislative battle was its estimate of the 1994 Clinton health-care proposal. "The major issue," recalls Robert Reischauer, then director of the CBO, "was not how much it cost but whether the premiums that you were charged as an individual were governmental in nature and would thus be in the budget." Reischauer and the CBO decided they were. The premiums paid by every American would be included in the Number. This meant the Number was huge -- vastly larger than the price tag previously affixed to the proposal by the Clinton administration. Hearing the news, one senior administration official moaned to The Washington Post, "The Republicans will jump all over this and say we're increasing the budget by 25 percent and putting through the biggest tax increase in history." The New York Times editorialized that "the opponents of President Clinton's health care bill think they have struck political gold in an analysis of the bill just released by the Congressional Budget Office."They were right. Donna Shalala, Clinton's secretary of health and human services, called the ruling "devastating." But through all of this, Clinton's bill never changed. Nor did the amount individual Americans would pay. Only the Number changed. And it wasn't an obvious decision that the CBO made. Indeed, even some of the CBO's leading lights questioned the judgment. "In all honesty," says Rivlin, who by that time was head of the White House Office of Management and Budget, "I wasn't sure my colleagues had done it right. I mean there are mandated expenditures such as if you have to put a handicap ramp in front of your building. That's a mandatory expenditure, but that's not a tax." But it didn't matter. That was the Number, and it helped kill the bill. The books that the CBO released this week are essentially a guide to the CBO's scoring process. They tell congressmen, in advance, how the Number will be built. The Wonk Room and The New York Times are focusing on the equations. But they're not what's changed. Rather, the difference is that Congress knows what they'll be in advance. The scoring process will still be a minefield, but now legislators will have a map. There won't be a situation analogous to 1994, when the White House was shocked by an unwelcome assumption and their legislation was mortally wounded by a staggering price point. Obama and his allies in Congress, along with Orszag's help, will be able to build a bill able to survive the scoring process. They can, effectively, decide their own Number. Image used under a CC license from Train Orphans. THE IMPORTANCE OF THE NUMBER.
Kennedy's office sent out a press release. The New York Times ran a story. The Wonk Room wrote up the findings. This is not how Congressional Budget Office reports are usually greeted. But the release of their two books on health care -- Key Issues in Analyzing Major Health Insurance Proposals and Budget Options, Volume I: Health Care -- is a big deal. Indeed, the books are unprecedented. But the coverage thus far isn't quite getting at their import.To understand why these books matter, consider the first sentence of my profile of Peter Orszag, former head of the Congressional Budget Office and incoming director of the Office of Management and Budget. It's a quote from Senator Ron Wyden, one of Congress's most involved and aware reformers. "The history of health reform," he says, "is congressmen sending health legislation off to the Congressional Budget Office to die."This is not part of the normal history. The CBO's rulings don't make much news. But they can be decisive. To understand why, ask yourself this question: How do we decide how much a government program costs? It's an essential question. Programs need prices, because the government has to produce a budget. But pricing legislation in advance is impossible. Consider the challenges of a health-care plan that only exists on paper. What medical technologies will emerge in coming years? Will there be a recession that forces more Americans onto government subsidies? Will the next flu season be a bad one? No one knows.But you still need a number. So Washington operates amidst a tacitly agreed-upon imprecision. What the CBO says, goes. "In this town," says Henry Aaron, a senior economics fellow at the Brookings Institution, "it's not infrequent to hear people say it doesn't make any difference what it really costs. It only matters what CBO says it costs." The CBO's most famous -- or infamous -- intervention in a legislative battle was its estimate of the 1994 Clinton health-care proposal. "The major issue," recalls Robert Reischauer, then director of the CBO, "was not how much it cost but whether the premiums that you were charged as an individual were governmental in nature and would thus be in the budget." Reischauer and the CBO decided they were. The premiums paid by every American would be included in the Number. This meant the Number was huge -- vastly larger than the price tag previously affixed to the proposal by the Clinton administration. Hearing the news, one senior administration official moaned to The Washington Post, "The Republicans will jump all over this and say we're increasing the budget by 25 percent and putting through the biggest tax increase in history." The New York Times editorialized that "the opponents of President Clinton's health care bill think they have struck political gold in an analysis of the bill just released by the Congressional Budget Office."They were right. Donna Shalala, Clinton's secretary of health and human services, called the ruling "devastating." But through all of this, Clinton's bill never changed. Nor did the amount individual Americans would pay. Only the Number changed. And it wasn't an obvious decision that the CBO made. Indeed, even some of the CBO's leading lights questioned the judgment. "In all honesty," says Rivlin, who by that time was head of the White House Office of Management and Budget, "I wasn't sure my colleagues had done it right. I mean there are mandated expenditures such as if you have to put a handicap ramp in front of your building. That's a mandatory expenditure, but that's not a tax." But it didn't matter. That was the Number, and it helped kill the bill. The books that the CBO released this week are essentially a guide to the CBO's scoring process. They tell congressmen, in advance, how the Number will be built. The Wonk Room and The New York Times are focusing on the equations. But they're not what's changed. Rather, the difference is that Congress knows what they'll be in advance. The scoring process will still be a minefield, but now legislators will have a map. There won't be a situation analogous to 1994, when the White House was shocked by an unwelcome assumption and their legislation was mortally wounded by a staggering price point. Obama and his allies in Congress, along with Orszag's help, will be able to build a bill able to survive the scoring process. They can, effectively, decide their own Number. Image used under a CC license from Train Orphans. 
