NCPA Idea House


Policy Issues

NCPA Publications

Both Sides

Commentaries

Audio/Visual

NATIONAL CENTER FOR POLICY ANALYSIS

Kerry health-costs debate alarms CBO: $1 trillion price tag, or is it really only $653 million?

May 19, 2004 Wednesday

The Congressional Budget Office (CBO) is looking to dodge an escalating political and partisan debate over the projected costs of Sen. John Kerryis (D-Mass.) healthcare proposal.

Some healthcare experts say Kerryis plan to cover 27 million uninsured Americans would cost more than $1 trillion over 10 years. Those claims have raised the possibility that GOP lawmakers will ask CBO to score it.

Ken Thorpe, a former Clinton administration official who is now a professor at Emory University, initially estimated, at the request of the Kerry campaign, that Kerryis proposal would cost $895 billion.

Republicans immediately lambasted it for being fiscally irresponsible and ran political ads saying Kerry would need to raise taxes to pay for his healthcare agenda.

Last month, Thorpe revised his estimate. Based upon new information the campaign had supplied, Thorpe lowered the price tag from $895B to $653B.

John Goodman, president of the National Center for Policy Analysis (NCPA), a conservative policy institute, called it unsurprising that the price tag dropped when it did.

”It is amazing how an attack ad can affect the economics [of Kerryis proposal],” Goodman said. The NCPA has argued that Kerryis plan is far more expensive than Thorpe’s projection.


In his revised estimate, Thorpe credited Kerry with more than $116 billion in savings for the proposalis disease-management programs. These initiatives stress preventive screening that would catch serious illnesses early. Some health officials say disease-management efforts extend lives and save money because hospitalizations and surgeries are avoided.

In his analysis of Kerryis plan, Thorpe said the expansion of disease and care management in Medicare and other health programs go ibeyond anything contemplated under current law.i

But some maintain that the CBO would not be as kind to Kerry.

Joseph Antos, a healthcare expert at the American Enterprise Institute and former CBO official, said, iI think CBO would come up with minimal savings [for the Kerry planis disease-management proposals] at best.i

The new Medicare law includes a number of disease-management provisions, such as providing new Medicare enrollees with a free physical. But CBO o which scored the law at $395 billion o did not credit the bill with any savings for preventive measures.

House Ways and Means Health Subcommittee Chairwoman Nancy Johnson (R-Conn.), who has held hearings on treatments for chronic care, has criticized CBO repeatedly for failing to credit the Medicare bill for its disease-management programs.

Rep. Bill Thomas (R-Calif.), chairman of the Ways and Means Committee, said he believes Kerryis plan would cost more than $1 trillion.

Last week, Thomas said, iWe had disease management in the Medicare bill. O Iid love to have [Thorpe] do the scoring on our [disease-management programs].i

Some have speculated that Thomas n who conducted relentless oversight of the Clinton administrationis healthcare policies o would ask CBO to score the plan.

iI could see Thomas doing that,i a GOP aide said.

iIf Thomas really wanted it, he would get [a score] on Kerryis plan,i Antos said.

Christin Tinsworth, a spokeswoman for Thomas, said she does not anticipate Thomasis asking the CBO for a score. She said Kerry has not released enough information that would allow for a score, adding, iThereis not enough meat on the bone.i

A CBO spokeswoman said the agency will not score plans for political purposes and pointed out that the CBO only scores bills that are moving through Congress. The CBO does not analyze the vast majority of bills introduced, she added.

The CBO is required to score legislation that is approved by congressional committees, and although responding to inquiries from committee chairs is one of its top priorities, sources say the CBO is unlikely to score Kerryis plan even if a panel head requests it.

Thorpe maintains that Kerryis healthcare plan has ienforceablei disease-management plans while the new Medicare law does not. He adds that the savings he credited to Kerry are imodest,i and points to recent studies showing that disease-management programs on heart disease reduce hospital stays by up to 50 percent.

Even if health plans are required to have disease-management initiatives, Antos said that does not mean that many people are going to adopt healthier lifestyles. The theory of iweire going to save money and get you to do something you normally wonit doi does not always work in practice, Antos added.

Top Republicans have been known to ask CBO to score Democratic healthcare plans. After then-first lady Hillary Clinton released her healthcare plan in 1993, then-House Minority Leader Newt Gingrich (R-Ga.) urged CBO Director Robert Reischauer to score the proposal.

After Reischauer declined to do so repeatedly, a frustrated Gingrich asked the CBO chief what it would take for the agency to score Clintonis plan.

Reischauer replied, iGet in the majority.i

After the 1994 elections, Gingrich became House Speaker and Clintonis plan never moved through Congress.

Although Republicans are in the majority, the CBO does not want to get involved in presidential politics, according to sources familiar with how the agency operates.

Gingrich said he believes that the CBO and the Office of Management and Budget have an iarchaici understanding of disease management. The former speaker told The Hill that he believes Kerryis plan would probably save money, but criticized its emphasis on expanding the federal government.

Over the past several months, the projected costs of healthcare legislation have attracted many headlines. The Bush administration projected that the new Medicare law would cost almost $140 billion more than CBOis estimate. The administrationis estimate did not surface until after the bill was signed into law, and Democrats have alleged that the administration covered up those projections.


 

Copyright 2004 Capitol Hill Publishing Corp.  
The Hill

 


12770 Coit Road Suite 800 Dallas, TX 75251 Phone 972/386-6272 - Fax 972/386-0924 601 Pennsylvania Avenue NW, Suite 900 South Building, Washington, DC 20004 Phone 202/220-3082 - Fax 202/220-3096 Copyright © 2004 National Center for Policy Analysis All rights reserved - Privacy Policy