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. Back to Simple Life

    Hasn't anyone noticed how wealthy the insurance companies and big oil companies got in the previous 8 years?

    Pay attention people. NOTHING was done for us in the last admin.

    At least this one is trying to help US. If you have a gas guzzler and high-cost ins. premiums and you like it, KEEP IT.

    July 26, 2009 10:07 am at 10:07 am |
  2. Right Leaning Independent

    Oh how Obama loved the CBO when he quoted their analysis in all of the Presidential debates!! Now they "exaggerate" eveything! I bet you voters knew that when you listened to him debate how his plans were so much better according to the CBO!! What a joke this is becoming...

    July 26, 2009 10:13 am at 10:13 am |
  3. Mindy Rodriguez

    We DO NOT want anyone in dc taking the medicare funds for their own plans! Please check all of your paychecks and you will see their is one line and it says MEDICARE. Each and every time the government removes revenue from our paychecks it has been promised to be placed in the MEDICARE program NOT any other plan! Americans realize that the people in DC think we do not have brains but they better think twice! ARREST ALL SENATORS, PRESIDENT AND CONGRESSMEN THAT VOTE TO REMOVE MEDICARE FUNDS FROM OUR HARD WORKING AMERICAN SENIORS FOR THEIR OWN PUBLIC HEALTH DUTY TO DIE PLANS!
    Americans saw what happend when their funds were removed from the special social security insurance fund....politicians have wasted it on what they want! We are not going to make that mistake again! ARREST THESE THUGS BEFORE THEY HURT OUR SENIORS!

    July 26, 2009 10:15 am at 10:15 am |
  4. Can you stand the TRUTH?

    TO our GOVERNMENT LEADERS> Don't mess with medicare and quit indulging in Social Security. Us aged people over 65 rely on medicare in some of our cases it's a must because we served and retieded from military service. We can't get medical providers to accept medicare now. ESPICALLY SPECIALIST. Of course we can go to a military base. Not feasible for some of us who have to drive 150-200 miles to get there. After serving our country faithfully you'd think our government would serve us faithfully. NOT SO. Instead they use our paid by us social security and medicare benefits to take care of illegals finance wars they shouldn't get into and etc. Then tell us Social Security is going broke. WE VOTED YOU FOOLS INTO OFFICE WE CAN TAKE YOU OUT.

    July 26, 2009 10:18 am at 10:18 am |
  5. kishen c.rao

    stop acting funny and help pass health care., guys...we need to pass health care....;now

    July 26, 2009 10:18 am at 10:18 am |
  6. LA Cajun

    What do wealthy oil and insurance companies have to do with this debate? Are you jealous? Get an education, get a job and then you'll have insurance. Or you can sit on your butt and hope that someday you'll get a congress liberal enough to tax those who got off their butts and worked to become successful. The only problem is, when you start taxing the successful, they stop producing and then the downward spiral starts. Get over your class envy, get a job and start helping the economy grow.

    July 26, 2009 10:25 am at 10:25 am |
  7. Lilarose in Bandon, Oregon

    I had a knee replacement two weeks ago.

    I was really appalled at how antiquated the routines within the hospital were while I was there.

    They handed me a list of all the meds I was taking (based on info I gave them) and the entire list was handwritten! How inefficient! If they have nurses and other employees who can't type into a computer, they need to set up keyboarding classes.

    One of the most important skills your kids can learn is keyboarding. This can be taken in middle school and should be a required class. I am a retired high school business teacher, and I am appalled at what poor business skills our kids get in school now because all those classes are electives so they don't want to take them.

    I personally refused to hire a college student who wanted to work for me because she couldn't type.

    July 26, 2009 10:26 am at 10:26 am |
  8. joe smith

    thats' like saying, by 2015, cars will get 35 mpg, but in 2015 a gallon of gas will be $4.78/gallon..wheres the savings..didn't see any wage and price controls on government, why, because they don't have to, just the men and women in the trenches as always..

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

    the CBO is NON-PARTISAN.
    Orszag is HIGHLY PARTISAN.

    whom should we believe?

    July 26, 2009 10:29 am at 10:29 am |
  10. Seth

    Why is CNN all of a sudden being critical of their media baby they created. They are now criticizing the very thing they invented when they lied to the people. What a deal they cut with this administration.

    July 26, 2009 10:30 am at 10:30 am |
  11. lynn in NM

    Gee, when the CBO said something against Bush's plans, the Dems were all over it and it was gospel. Now that it's saying an Obama plan will be more expensive, "they have overstepped thier bounds". Can't have it both ways, ladies and gentlemen (and I use the term very loosely).

    July 26, 2009 10:31 am at 10:31 am |
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