Q&A: What is the CBO, and can you trust its numbers on the Republican healthcare plan?

Reporting from Washington —  Even before the Congressional Budget Office released its cost estimates in March on the House proposal to overhaul Obamacare, the Trump administration and GOP lawmakers were trying to discredit the much-anticipated report, or CBO score, as it’s familiarly called.

“Really been meaningless,” said Gary Cohn, Trump’s top economic advisor. “Consistently inconsistent,” added Sen. Tim Scott (R-S.C.). “A red herring,” chimed Rep. Larry Bucshon (R-Ind.).

Never mind that the CBO works for Congress and that its director, Keith Hall, was appointed by their own party leaders in the House and Senate in 2015.

To Alice Rivlin, founding director of the CBO, the Republican reaction hardly came as a surprise. Almost from the agency’s inception in 1975, the CBO’s budget scorekeeping on major public policy proposals has been criticized by politicians on both sides of the aisle when estimates didn’t line up the way they wanted.

Rivlin, a Democrat who headed the CBO until 1983, remembers the unhappiness in the Carter White House when her agency didn’t see eye to eye with the president’s proposal to deal with the nation’s energy crisis.

“Carter’s first energy plan was optimistic about what it could accomplish, and the CBO said so,” Rivlin recalled. That episode, she said, helped to establish the CBO’s reputation for impartial and objective analysis – which many experts and institutions say remains intact.

Here’s a closer look at the CBO:

What does the agency do?

Congress established the CBO in 1975 as a nonpartisan agency to help lawmakers deal with the federal budget and add financial rigor to pending appropriations and other legislation.

The CBO generates economic forecasts, makes budget projections, including analysis of the president’s annual budget, and prepares cost estimates for bills reported by congressional committees. It also analyzes, upon congressional request, specific programs and policy issues that affect the national budget.

Who are the people behind the reports?

The CBO has a staff of some 230 people, many with advanced degrees in various fields of expertise. “They bring in the best and brightest on each topic,” said Mark Zandi, chief economist at Moody’s Analytics.

The agency’s eight divisions include taxes, budget, national security and macro-economy. Its health and retirement division has more than two dozen analysts who regularly seek the views and advice of a panel of 20 outside experts in the healthcare field and academia.

“They consider all different angles when doing their work. Their staff is very professional, very thoughtful, and they vet very carefully all sides,” said Zandi, who is on CBO’s economic policy advisory board. “The end result is a pretty good consensus. I think they’re beyond reproach.”

What has been its track record?

Although there’s no comprehensive measure on the hundreds of cost estimates on bills it does every year, the CBO’s analyses and forecasting are regarded as good or better than others doing similar work.

It’s true that on economic forecasting, the CBO in recent years has been overly optimistic about growth while underestimating the rate of job creation, but so was almost every other private forecaster. And economists say that the CBO’s economic projections generally compare favorably against other outfits, and its long-term budget estimates have been fairly accurate.

“While no individual or organization can perfectly predict the future, the CBO has a long history of providing credible and impartial estimates based on the center of a range of likely outcomes,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. “CBO is our nation’s fiscal referee and should be respected even if you do not like the call.”

Read the CBO’s original cost estimate on the American Health Care Act »

How good were the CBO’s projections on the Affordable Care Act?

Critics have noted that CBO’s estimates of the Affordable Care Act, also known as Obamacare, grossly overestimated the number of people who would get health insurance.

What the CBO got wrong was mainly how many people would get insurance through the marketplaces. Enrollment on exchanges fell short by about 45% of the 21 million initially projected by the agency, but some of that difference was made up by many more Americans signing up for Medicaid than the CBO projected. Overall, the nation’s uninsured rate has fallen by close to the CBO’s estimate of about half.

Because enrollment has been smaller than expected, the CBO also overestimated how much Obamacare’s insurance coverage would cost overall. The agency said in March 2016 that, compared with the projection it made in March 2010, just before the law was enacted, the new estimate of the net cost of the insurance coverage provisions over the 2016-2019 period would be 25% lower, or by about $157 billion.

Douglas Elmendorf, the CBO’s director from 2009 to 2015, defended the agency’s work, citing a study by the Commonwealth Fund, a private nonpartisan foundation, which concluded that the CBO’s projections were “reasonably accurate.”

“The CBO was much more accurate than the guesswork by many individuals,” said Elmendorf, now dean of the John F. Kennedy School of Government at Harvard University. “CBO turned out to be not exactly right but much more right than most of the critics.”

A side-by-side comparison of Obamacare and the GOP’s replacement plan »

What was the reaction to the March report on the House GOP plan to repeal and replace Obamacare?

The CBO report released on March 13 said the House GOP plan would increase the number of uninsured by 24 million by 2026 and reduce the federal budget defict by $337 billion over the same period.

The analysis triggered the usual partisan sparring over the credibility of the CBO.

“We strenuously disagree with the report,” Health and Human Services Secretary Tom Price told reporters after its release. “It’s just not believable.”

White House spokesman Sean Spicer pointed to the CBO’s previous inaccurate projections for Obamacare enrollment.

“If you’re looking to get a bull’s-eye accurate prediction to where it’s going, the CBO was off by more than half last time,’’ he said Monday. “The last time they did this, they were wildly off.”

Democrats defended the agency.

“CBO is virtually unassailable,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said. “Everyone, Democrats and Republicans, whether it be George Bush, Barack Obama or anyone else, has gone along with CBO. [Republicans] appointed this person. He was supposed to be a conservative person. Unfortunately for the Republicans, he’s an honest person. They won’t be able to discredit this.”

What impact is the CBO’s report likely to have?

Over the years CBO’s projections have been influential in shaping policy, and the attacks from Republican lawmakers and the Trump administration speak to its perceived significance. That said, it remains to be seen how Monday’s report will affect the Obamacare-replacement legislation.

Elmendorf thinks that the CBO’s estimates of the extent of the insurance losses under the bill will make it much harder for Republicans to proceed with its plan. But Douglas Holtz-Eakin, president of the conservative American Action Forum and the CBO director from 2003 to 2005, said Democrats were never going to support the bill, while Republicans will have the same work cut out for them as before in having to bridge the gap between fiscal hawks and more moderate members.

“The CBO has been around a long time, and its reputation and credibility are built off the work that it does,” said Holtz-Eakin, who doesn’t see the recent round of criticisms diminishing the agency. As far as the estimates on the House plan are concerned, he said: “Honestly, I don’t think the report is going to change much.”

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