Jumping Through Hoops For The CBO…Again

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Ezra Klein and Jonathan Cohn are right to celebrate the Congressional Budget Office’s (CBO) recent decision to exclude the federal mandate to purchase health insurance from the federal budget “so long as people had a variety of private plans from which to choose and a government entity was not in charge of collecting their insurance premiums.” As Ezra notes, an opposite ruling led to disastrous consequences during Clinton’s reform efforts:

In 1994, a pretty similar question was decided in the other direction. Robert Reischauer, then the director of the CBO, decided that the premiums that individuals were charged to purchase private insurance under Clinton’s plan would be included in the budget. This didn’t change the nature of the proposal. But it made its cost tag look huge.

Donna Shalala, Clinton’s secretary of health and human services, later termed the ruling “devastating.” And it was. It made health care reform look obscenely expensive. And the same thing could have happened this year. Rather than costing $100 billion per year or so, it could have cost a couple trillion a year. No change in the plan. Just a change in the budgetary treatment of the plan.

This time, the CBO ruled that the mandate could remain off the books if consumers could “choose among a number of insurance plans,” the plans offered “different levels of coverage,” and consumers could “choose among several different insurance companies competing on price.” Most conceptions of the health insurance exchange envision just this kind of competition — a key distinction from the Clinton proposal which funneled all health insurance dollars through various Health Alliances.

But the very fact that we’re all so worried about the CBO highlights the craziness of allowing one office to hold health care reform hostage. Why exactly are reforms jumping through hoops to satisfy the CBO? We do it because we have to — that’s the process, the CBO has the magic numbers — but shouldn’t we design legislation based on what’s most effective in controlling costs and increasing access, not around how some actuary chooses to calculate something?