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C-B-Oh No!
July 26, 2009 8:35 AM
This weekend the Congressional Budget Office releaseed a letter about the Obama administration's proposal for an independent Medicare commission that would set pricing and protocols, a letter the Obama administration found both overly skeptical and an overreach, in the latest chapter of its continuing disagreeements with Congress's independent budget-analyzing arm.
CBO director Doug Elmendorf said his team reviewed draft legislation written by the administration to create an Independent Medicare Advisory Council, or IMAC, and estimated such a board would "yield savings of $2 billion over the 2010–2019 period."
Looking beyond that decade, Elmendorf wrote, "CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis."
IMAC would consist of five medical experts -- either doctors or those with in medicine or health care policy -- appointed by the President andd confirmed by the Senate. Every year IMAC would make recommendations on how much Medicare should pay for various services.
Office of Management and Budget director Peter Orszag yesterday afternoon, writing at the OMB blog, took issue with Elmendorf's analysis, calling IMAC a "game changer."
"The bottom line is 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 concept," wrote Orszag, the former CBO director. "A final note is worth underscoring. 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."
As an example, Orszag writes that "CBO somehow concluded that the council could 'eventually achieve annual savings equal to several percent of Medicare spending...[which] would amount to tens of billions of dollars per year after 2019.' Such savings are welcome (and rare!), but it is also the case that (for good reason) CBO has restricted itself to qualitative, not quantitative, analyses of long-term effects from legislative proposals. In providing a quantitative estimate of long-term effects without any analytical basis for doing so, CBO seems to have overstepped."
CBO's Elmendorf supplied reasons for the relatively skeptical take on cost savings IMAC would create: its five-year start-up period; that the IMAC proposal "does not explicitly direct" members to reduce Medicare "expenditures nor does it establish any target for such reductions"; that "the composition of the council could be weighted toward medical providers who might not be inclined to recommend cuts in payments to providers or significant changes to the delivery system."
The CBO letter allowed that "savings might not be realized at all because the proposal specifies a process without specific goals for savings or a 'fall-back' plan for ensuring spending reductions if the combination of annual IMAC recommendations and Presidential approval does not produce hoped-for savings. ...On the other hand, there is a small chance, in CBO’s judgment, that the council would propose and the President would approve significant changes to Medicare that would reap substantial savings."
- jpt
July 26, 2009 | Permalink | Share | User Comments (40)
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As a strong supporter of Obama's Healthcare initiative, I DON'T take offense to the CBOs comments that the IMAC proposal "does not explicitly direct" members to reduce Medicare "expenditures nor does it establish any target for such reductions"
They are basically saying the IMAC needs to get more teeth in any bill to be counted.
Its time to apply pressure on Democratic legislators to put more accountability in to their proposals, not throw out the baby with the bath water.
Posted by: Young Atheart | Jul 27, 2009 1:39:25 PM
Sounds like its time for the Obama Administration to go "sit in" on some more CBO meetings...
They're still acting too non-partisan. I guess the threats need to be made more clear to force them to fall in line.
That or they'll go the way of the IG's.
Posted by: Gekk | Jul 27, 2009 12:46:22 PM
I find this shocking, to say the least. Since when is the CBO trying to dictate policy? Who elected them?
As you and I have discussed before Jake, I believe there's WAY too much reliance by the media on CBO figures, are rarely, if ever, accurate in the long term. The CBO's is meant to be ONE, of a number of tools designed for Congress' use, not the media's Holy Grail of all knowledge and wisdom. Most people never even heard of the CBO until recently.
Something smells if you ask me.
Posted by: Teri B. | Jul 27, 2009 12:03:07 PM
Obama's cool aid is not working; so next month he will hold BBQ meetings over the grill.. Ofcourse, as usual, all at the taxpayer's cost.
Posted by: BAITER | Jul 26, 2009 6:24:20 PM
No government program EVER saved us money. This one's no exception.
Posted by: Kurt | Jul 26, 2009 4:54:49 PM
Guess that little talk at the White House didn't have quite the effect Obama was hoping for.
Obama must have forgotten the beer.
That solves everything.
Posted by: max | Jul 26, 2009 3:35:44 PM
Palin/Elmendorf 2012
Posted by: reed | Jul 26, 2009 3:33:19 PM
"On the other hand, there is a small chance, in CBO’s judgment, that the council would propose and the President would approve significant changes to Medicare that would reap substantial savings."
Right: the "council". That way, they can kill off every un-rich person over 55, without anybody bothering CONGRESS.
Mobsters do SUCH great public policy.
Posted by: Bet Noir | Jul 26, 2009 3:26:56 PM
I don't care about his birthplace(Honolulu)-I do care about his honesty, particularly when the CBO makes these statements. It is a matter of public record that the President had multiple unpaid parking tickets in Cambridge-some that he did not pay until 2007.His Bar application had a question on unpaid tickets-did he answer it correctly?It is easy to see why he feels that the Cambridge police acted stupidly-he has a bone to pick with them. If he is so smart,why isn't he a Phi Beta Kappa?
Posted by: Nephron | Jul 26, 2009 2:20:38 PM
jhw, I don't think Jake was "Working a little hard to gin up some conflict for a headline..." The headlines I saw around the web were not as clever but similarly focused on the blow that the CBO dealt to the WH spin on the IMAC idea. It seems the consensus of the sites I have read, whether they thought it a good thing or a bad thing, that the WH was pushing back at the CBO letter and that there was frustration at the WH at yet another assessment from the CBO that makes their task of selling the reform as cost-effective or at least budget neutral more difficult. I don't see Mr. Tapper's clever headline, or the article beneath the headline, as particularly slanted.
Posted by: moderate | Jul 26, 2009 2:13:58 PM
Savings = rationed care
IMAC = committee of bean-counters that will decide the fate of strangers who are paying for insurance.
Sounds pretty much like all the HMO committees, doesn't it?
Not a suprise... the Democrats midwifed HMOs in 1973. Ted Kennedy said the plan was fantastic, it would save money, it would be affordable health care for all, it would be the answer to everything. It became the only game in town, bloated, restrictive, profit-oriented, and focused on controlling costs through denying care (giving the democrats so many anecdotes from wronged patients that they could use for soundbytes). Somehow, mass amnesia struck the democrats and they clean forgot about having a hand in making HMOs the provider of choice. This phenomenon is common, but usually only affects the memory of campaign rhetoric and promises (eg Obama's scourging of Hillary Clinton for her plan to force people to buy health insurance, then taking that idea for himself, or telling seniors that McCain was going to take away their Medicare just before the election, then cutting Medicare himself after getting into office).
Now they have a new answer -- that sounds a whole lot like the old answer.
Well, they ARE all about recycling...
Posted by: Eyes Open | Jul 26, 2009 2:09:57 PM
When considering the $2 billion in potential savings, it is important to note that the CBO scored legislation in which the proposed Independent Medicare Advisory Council would not make any recommendations until September 1, 2014. See my Medicare Update blog post at
Posted by: Michael Apolskis | Jul 26, 2009 2:09:55 PM
Rasmussen now has him at 49%; Zogby at 48%. Meltdown.
Posted by: Fascist Hyena | Jul 26, 2009 2:02:41 PM
Just what is the difference between "substantial savings" and a profit ? Can't have anyone left making money (profiting) off this now can we ?
Posted by: Jesse | Jul 26, 2009 2:01:26 PM
According to Obama it is patriotic to pay taxes.
Under Obamacare will he ask the elderly and chronically ill to be patriotic and refuse treatment?
Do we want the government deciding who lives and dies?
This is more proof of Obama's God Complex--he thinks he knows what is best for every human on earth.
He sticks his nose into every aspect of our lives.
Posted by: nick | Jul 26, 2009 1:53:14 PM
But doesn't the CBO realize that Obama is concerned about saddling our children with debt?
That's why we HAVE to pass Obamacare.
The children.
His plan will save money. He said so at the news conference right before he called the police "stupidly".
I think Obama forgot that he has already saddled children and their children with his great ideas.
Posted by: max | Jul 26, 2009 1:47:38 PM
Maybe Obama was just acting stupidly when he told everyone on National TV that this proposal would save 2/3 or $666 Billion.
Posted by: robtr | Jul 26, 2009 1:22:21 PM
"Yes! And he was born on the planet Zoron!"
Prove it!
Posted by: Skittles | Jul 26, 2009 1:15:18 PM
"What about the 17 parking tickets from Cambridge that the President didn't pay?Why isn't anybody looking into this?Did he complete his Bar application correctly? What does this say about his honesty?"
___________________________________
Yes! And he was born on the planet Zoron!
Posted by: danita | Jul 26, 2009 1:12:49 PM
THIS JUST IN.....
ELmendorf has been fired. The White House says he was exhibiting the same incoherent traits as fired IG Walpin. More details as the story unfolds.
Posted by: RustyG | Jul 26, 2009 1:11:24 PM
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