July 26th, 2009
09:03 AM ET
14 years ago

White House: CBO 'overstepped' in its analysis

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/07/26/art.orszag0726file.cnn.jpg caption="White House Budget Director Peter Orszag fired back Saturday at an estimate from the Congressional Budget Office."]
WASHINGTON (CNN) - The White House has criticized the Congressional Budget Office's findings that the Obama administration's proposal to control Medicare costs would yield a moderate savings of $2 billion over the next decade.

White House Budget Director Peter Orszag said the CBO's analysis - which it relayed to House Majority Leader Steny Hoyer on Saturday - could feed a perception of the office's bias toward "exaggerating costs and underestimating savings."

"The point of the proposal ... was never to generate savings over the next decade," Orszag said in a letter posted on Saturday.

"Instead the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term."

CBO Director Doug Elmendorf's letter to Hoyer on Saturday was in response to the Senate Majority Leader's request for analysis on "possible approaches for giving the President broad authority to make changes in the Medicare program," Elmendorf wrote.

The Obama administration is touting a proposal to give a medical advisory council the power to help decide the scope of coverage that would be eligible for reimbursement under Medicare.

Administration officials say the proposed "Independent Medicare Advisory Council" would both improve health care quality and control costs. Some health care industry groups object to the proposal, saying such a council would not be qualified to make those judgments.

The CBO's review of the proposal found that "the probability is high that no savings would be realized … but there is also a chance that substantial savings might be realized," Elmendorf wrote.

"Looking beyond the 10-year-budget window, CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis."

Orszag, a former director of the CBO, pointed out that "it is very rare for CBO to conclude that a specific legislative proposal would generate significant long-term savings so it is noteworthy that, with some modifications, CBO reached such a conclusion with regard to the IMAC (Independent Medicare Advisory Council concept."

But he also criticized Elmendorf's findings.

"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," Orszag said.

"In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped."

The new council, if approved, would replace the current Medicare Payment Advisory Commission, which is made up of doctors and health care experts. Once a year, it gives recommendations about coverage and reimbursement rates for Medicare but has no authority to enforce its ideas. Its report in March recommended that payments for primary care physicians be increased and home health services rates be decreased.

The proposed council would be comprised of doctors and health care experts making their recommendations based on extensive data and analysis of best health care practices, according to administration officials.

It would be an independent executive branch agency - which would give its recommendations more weight. The president would have to approve or disapprove the its recommendations as a package. If it is approved, the package would be enacted if Congress did not vote against it within 30 days.

Proponents believe this would improve care and help eliminate some of the wasteful spending by doctors who are now paid separately for each visit and procedure they authorize. Instead, this council could recommend, for example, a comprehensive approach to treat a patient with chronic heart condition or high

The administration says that by encouraging doctors to follow this type of plan, the government will save money by cutting out unnecessary treatments and procedures. The council's recommendations would then go to the commission overseeing Medicare to determine the specific procedures and the actual reimbursement amount.

"It is not an exercise in just cutting reimbursement rates. In fact, in some cases, we may need higher reimbursement rates for certain aspects," President Barack Obama explained at a town hall meeting in Shaker Heights, Ohio, on Thursday.

The members of the proposed Independent Medicare Advisory Council would study different procedures done nationwide to determine what are the best treatments being given in order to determine their recommendations.

Administration officials, though, say this council will not make decisions about what coverage a patient gets.

Still, opponents view this proposal as "big brother" dictating medical treatment.

The conservative Heritage Foundation describes the initiative as being "the equivalent of a federal health board determining how health care was rationed for all seniors."

–CNN's Kevin Bohn, Jessica Yellin, and Ed Henry contributed to this report.

Filed under: Health care • Obama administration • Peter Orszag
soundoff (51 Responses)
  1. Charlie in Maine

    Quality care is going to cost money. If George W Bush did anything to help this country it was to prove that we can spend 12 million dollars an hour on something if it is a priority. Now if we can stop spending that occupying Iraq (a country that never attacked us) we could spend a fraction of that money on health care and be fine.

    July 26, 2009 09:11 am at 9:11 am |
  2. Limit Congressmen, Representatives, Senators to two terms like the President!!!

    You Senators , Congressmen, Representatives need to understand that us people retired from the military services have to depend on Medicare at age 65. Of course we could drive to a military base a hundred or two hundred miles away for treatment. Not feasible when you're over 65. You have already messed with medicare and got it so fouled up we have a hard time in fainding a medical facility to EVEN ACCEPT MEDICARE. And now your redoing medicare to make it even worse. how is this going to help the common man that whose health benefits depend on medicare. They still have to to buy a high cost supplement insurance that will not pay anything. BUT THIS STILL WILL NOT MAKE A SPECIALIST ACCEPT YOUR MEDICARE. OF COURSE YOU PAY UP FRONT AND THEY FILE ON MEDICARE FOR YOU BUT THEN STILL CHAGRGE YOU A BUNDLE BECAUSE MEDICARE DOES NOT PAY ENOUGH. IS THIS HONEST. HADES NO.

    July 26, 2009 09:14 am at 9:14 am |
  3. Steven

    The CBO has a reputation for exaggerating costs and underestimating savings, and the Federal Government has a proven track record of exaggerating savings and underestimating costs. My money is on the CBO.

    July 26, 2009 09:16 am at 9:16 am |
  4. SD, Michigan

    So every other industrialized country on Earth had this figured out, but not us. Everybody else is failing and we're so awesome...Riiight!
    Let's keep it as it is since it's so peachy....
    Besides, it'll "break" the President, it'll be his next "Waterloo". Yeah, I'd die to see it......(of cancer, of course).

    July 26, 2009 09:17 am at 9:17 am |
  5. Paul Cooper

    Someone should ask Mr. Orszag to list all those federal programs that CBO overestimated the cost of, as well as all those savings they underestimated the cost of. He has it exactly backward, and, since he used to run the place, he has to know it. Which means he's lying through his teeth. Something this administration has proven highly adept at.

    July 26, 2009 09:17 am at 9:17 am |
  6. Ron

    Can't keep doing nothing, folks. Tax cuts won't get rid of your children's obesity and cure your breast cancer after you lose your job.

    July 26, 2009 09:18 am at 9:18 am |
  7. every one wants a peice of the lime light

    breath people, don't shoot from the hip

    study this and do it correctly

    July 26, 2009 09:26 am at 9:26 am |
  8. Henry Miller

    In other words, the CBO is wrong because Obama said so–and how dare they contradict The Chosen One!

    Every single unbiased analysis so far of the costs and benefits of Obamacare show it to be vastly more expensive than Obama will admit, and will have fairly little success in covering the uninsured. In other words, like Porkulus, it's yet another immense waste of taxpayer money.

    Figures don't lie, but politicians do.

    July 26, 2009 09:27 am at 9:27 am |
  9. SD, Michigan

    People, if you're college educated, search for a job overseas. It'll pay nice and you'll have great healthcare.

    July 26, 2009 09:27 am at 9:27 am |
  10. Debra

    I agree with Orzag who has experience in the role of CBO. I find it interesting that the CBO is such an activist in this current debate and admittedly not capable of identifying the savings of the Reform legislation built into the proposal. When you look at only initial cost outlays without predicting the savings for which the reform plan is designed, you can't possibly predict the overall picture economically. The medicare proposal is just one element of this whole debate and the CBO once again has no complete picture but felt it had to respond with some answer: "the probability is high that no savings would be realized … but there is also a chance that substantial savings might be realized". Thanks but no thanks for the non-help. I would suggest that the Congress stop asking for this 'expertise' that sheds no light on the subject. Further, when have President's or for that matter Congress listened to the CBO (e.g. Bush's war or his tax for the wealthy scheme)?

    July 26, 2009 09:27 am at 9:27 am |
  11. sarah K.

    The problem with comparing the spending on Irag and healthcare is while i disagree with the war the spending hopefully will stop and the healthcare cost will be ongoing.

    July 26, 2009 09:27 am at 9:27 am |
  12. truthsayer

    bet doug elmendorf is a repub

    July 26, 2009 09:31 am at 9:31 am |
  13. sw in georgia

    We don't see 1000s of uninsured dead in our streets so they are getting medical care at our expense now. How much of those hidden cost are we paying now. Is the 1 trillion the new plan is expected to cost already being paid but hidden from view. Where is the accounting for those figures from the cbo – maybe they should be required to give a price for what the cost of our current healt care system vs any proposed changes. The we could compare apples with apples not apples with oranges.
    How much are we paying today for uninsured treatments – look at the cost of operating any public charity hospital and you get some idea. Grady hospital in Atlanta runs hundreds of millions in losses each year treating the uninsured and under insured. We all are paying that bill.

    July 26, 2009 09:31 am at 9:31 am |
  14. Larry

    Health care reform, if administered properly, will eliminate the bloated profits of insurance companies and health care providers. That's why we needed a public option, and fortunately it's still in the bill.

    It's so annoying knowing that people pay their premiums and over the years we've watched the coverage we get for those premiums dwindle away. The public option in the bill offers competition to insurance companies, the only way to get them to lower their rates.

    We've been held hostage by health care providers, insurance companies and pharmaceutical companies too long. I think people have gotten used to paying their premiums and not expecting a whole lot in return. Why pay your premiums?

    Think about AIG. The insurance magnate who is ready to give another round of multi million dollar bonuses and hasn't even paid back a dime of the $180 billion in TARP funds they received.

    July 26, 2009 09:38 am at 9:38 am |
  15. Jim

    The current WH Orszag budget director is the former Cheif at the CBO.

    He claims that the CBO pumps up the cost and lowers the savings. Perhaps we should believe the CBO, becasue Mr. Orszag knows how the game works, and why should we believe his numbers? Takes one to know one!

    July 26, 2009 09:40 am at 9:40 am |
  16. Alice

    The Whiner-in-Chief is still whining – no doubt, it's Bush's fault – or it's due to racism

    July 26, 2009 09:41 am at 9:41 am |
  17. Jack

    When the Blue Dogs get done killing this on the floor next week, maybe then Congress will listen to "We the people" as not everyone wants this to pass.

    July 26, 2009 09:41 am at 9:41 am |
  18. Rose

    What a joke. The Dems bring in the CBO and because he does not agree wtih Obama and Pelosi, that makes him wrong? What if he is right and they continue to shove this EXPENSIVE plan down our throats.

    July 26, 2009 09:43 am at 9:43 am |
  19. Andy in CT

    Charlie...Iraq invaded a key US ally and repeatedly broke a ceasefire agreement. 20 million people have been freed from a dictatorship thanks to President Bush.

    July 26, 2009 09:44 am at 9:44 am |
  20. Kenyan Wonder Kid

    These guys don't even keep honest personal tax returns (if they even bother, right Timmy?). And they now want us to believe them that the CBO numbers are biased or exaggerated because they do not support Obama's creative accounting system for this outrageous health care program??

    Pot, kettle, black...

    July 26, 2009 09:51 am at 9:51 am |
  21. tpbco

    This administration is lying through its teeth and every criticism is accused of being "anti" something. Sound familiar dems? Its what YOU did and said for the last 8 years...voting against every resolution AFTER you voted for it.

    Pass the RIGHT plan. This is obviously not it. This administration politically needs to pass ANYTHING – fast (look at the polls), and they would rather pass a BAD bill than none at all.

    What are they going to do, once they run out of "other people's" money?

    July 26, 2009 09:54 am at 9:54 am |
  22. LA Cajun

    Obviously many people's memories are very short or they conveniently are attempting to rewrite history. Sadam Hussein not only invaded Kuwait he continually violated United Nations resolutions and did everything he could to make the UN think he had chemical weapons. Additionally, Sadam Hussein practiced ethnic cleansing. Why are we so appalled by the Holocaust but not by what was going on in Iraq? George Bush has given millions of people the gift of freedom. Now its up to Obama not to screw it up.

    As far as Iraq goes, history will treat George Bush very well.

    July 26, 2009 09:59 am at 9:59 am |
  23. Willy Brown

    No they did not but Change is coming in 2010 and 2012.

    July 26, 2009 10:00 am at 10:00 am |
  24. independent Jim

    I'd believe the CBO before Orszag. The CBO is a neutral "call it like you see it" nonpartisan group. Orszag has an agenda.

    July 26, 2009 10:02 am at 10:02 am |
  25. SD, Michigan

    Oh it's oh soo good! Let's keep it this way!.
    (Until you get realy sick).
    Oh the other countries are just sooo wrong!
    (Untill you fall at the bottom of the list)
    Every American has "access" to healthcare....sure...just as I have "access" to the "Who wants to be a millionaire" show!

    July 26, 2009 10:06 am at 10:06 am |
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