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Health Care Policy
The C.B.O. and Health Care Finance Reform
By David F. Duncan, DrPH, FAAHB
2009/08/27

When it comes to forecasting the costs of health care reform, the Congressional Budget Office’s record is suspect.

In the debate over reform of health care financing opponents of reform have been relying heavily on C.B.O. estimates of the potential cost of providing coverage to the uninsured. Strangely, most of those same politicians ignored or ridiculed the C.B.O. estimates of the cost of Bush's war in Iraq.

Now comes an important op-ed on the subject in the New York Times written by Jon R. Gabel, a leading health care researcher at the University of Chicago's National Opinion Research Center. Dr. Gabel acknowledges the unquestionable integrity of the C.B.O., but he asserts that "the record shows that it has substantially overestimated the cost of health care reform three times out of three." He describes how in each of the past three decades, the C.B.O. substantially underestimated the savings that changes made in Medicare would bring. These consistent underestimates, he emphasizes, "arose not from any partisan bias, but from its methods of projection". While the C.B.O. is often quite good at estimating costs, their methods for estimating cost savings are far less effective. One particular flaw that Dr. Gable points out is the practice of assuming zero savings whenever there was no clear historic basis for assessing how great the savings would be, even though zero is not a reasonable estimate.

The result, he warns, is that underestimating cost savings from reform leads many in Congress to believe that "cost-cutting initiatives will have, at best, only modest effects. This, in turn, forces Congress to believe it can pay for reform only by raising taxes, which then makes reform legislation more difficult to pass."

Read the op-ed in its entirety at www.nytimes.com.


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