Wednesday, December 7, 2005

In the coming months Congress will appoint a new director to the Congressional Budget Office. It is not a small decision.

Congress has a unique opportunity to fundamentally transform the way government weighs the financial costs of policy decisions. Nowhere can transforming the CBO have a greater impact than in the area of health and health care. Doing so can literally save thousands of American lives and billions of their tax dollars.

The Congressional Budget Office, which was created to serve as Congress’ budget and economic adviser, has long used outdated models to analyze the costs of proposed legislation. These models ignore the economic growth, efficiencies and cost savings that result from implementing pro-growth policies. The result has been that members of Congress end up proposing legislation they think the CBO will “score” favorably — however inaccurate that score might be — rather than pursuing good policies.

Today, we spend billions on government programs that are financial black holes, while rejecting legislation that would actually reap dramatic savings for the federal budget. This happens because a bad CBO score makes any legislation — no matter its potential — appear too costly and therefore politically indefensible. In health care, the failure of the CBO to differentiate between operating costs and capital investment is short-sighted and a barrier to meaningful reforms that will save lives and save money. This mentality pervades similar agencies as well, like the Office of Management and Budget, the Joint Tax Committee and the Treasury Department.

One egregious example shows how a large score actually blocked expanding health care coverage to the uninsured. Rep. Sam Johnson of Texas introduced H.R. 1872, which would spend $125 billion over 10 years to expand coverage to the uninsured through Health Savings Accounts and tax reform. Unfortunately, the bill was pulled because, as Mr. Johnson put it, “the score was too big.” This is despite the fact that an estimated 18,000 Americans die unnecessarily every year because they do not have health insurance. This is despite the fact that we spend an estimated $125 billion every year on the uninsured. This bill would have saved lives and saved money.

The way the CBO scored Senate bill 1418, the Wired for Health Care Quality Act, is another example of how bad scoring methods can hurt good policies. The bill contains grant funding for connecting physicians and creating community networks, which the CBO scored to cost $652 million from 2006 through 2010. There is overwhelming evidence that proves health-information technology dramatically improves the quality of care. There are hundreds of case studies that show how health IT saves money through efficiency gains and automation. Yet the CBO mentioned no benefit of the macroeconomic savings in its scoring analysis. Instead, the CBO provided a four-page overview of the federal dollars that would be spent, but not a word on the anticipated savings.

Ignoring the savings and outcomes from capital investments is foolish, much like trying to save money by refusing to change the oil in your car. Nearly every member of Congress will vote for a bill if it improves the lives of their constituents and saves money at the same time, but they are unlikely to vote for a bill that is simply scored as costing the millions of dollars. This backward approach is a significant barrier to passing legislation that will dramatically improve patient safety and drive down health care costs.

Congress need look no further for evidence of badly needed reforms than the CBO’s grossly inaccurate revenue forecasts. Just this past summer, in yet another adjustment to an earlier estimate, the CBO revised its budget deficit projections for this fiscal year. In less than six months, it was off by nearly 12 percent. The projection from the Office of Management and Budget was even worse. It missed the mark by 21 percent — off by nearly $100 billion in just six months. How can our representatives make informed policy decisions with such faulty analyses? One way to improve the accuracy of the CBO’s analysis is to make public its statistical models. Secrecy is needed in national security, not financial forecasting. Citizens have a right to know how their representatives are counseled. When scoring models are transparent, citizen groups could do their own analyses and provide Congress with competing perspectives using modern methods. Transparency will open a much-needed dialogue about policy priorities, their expected benefits and how to finance it.

With the opportunity to name a new CBO director, the House and Senate should reform the entire institution. This should start with congressional hearings. By transforming the way we score proposed legislation, we will take an important step to delivering better health care and creating a 21st-century intelligent government. This will dramatically improve the lives of all Americans, while saving billions of dollars. This is an opportunity we simply cannot afford to miss.

Former House Speaker Newt Gingrich is the founder of the Center for Health Transformation. David Merritt is a project director at the center.

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