CBO Chief On Health Care Bills

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With health care overhaul legislation set for action on Capitol Hill, all eyes are on the bottom line. But estimating the financial impact is incredibly complex and contentious. In search of clarity is Doug Elmendorf, the head of the Congressional Budget Office. Elmendorf discusses how his office puts a price tag on proposed bills, and his view of this latest health care effort.


From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.


And I'm Michele Norris.

And we begin this hour with the man behind the numbers on cost estimates for Congress' health care legislation. Doug Elmendorf is director of the Congressional Budget Office. And that means, simply, he's had a lot of work to do. In a moment we'll talk more about the specifics of the bills in the House and the Senate and how they compare, but, first, we're joined now by Doug Elmendorf. Welcome to the program.

Mr. DOUG ELMENDORF (Director, Congressional Budget Office): Thank you for inviting me.

NORRIS: So this is a holiday week, and I'm guessing that two days from now you'll be sitting at a Thanksgiving table and your aunt or your brother-in-law or your sister may turn to you and ask: What's up with this health care legislation? What do you say to them?

Mr. ELMENDORF: Well, I'll tell them the reason I have dark circles under my eyes, as do all of my colleagues, is that we're working very hard to provide all the analysis that can to Congress of competing proposals for health reform. As you know, the Congress is considering very substantial changes in the way that many Americans would get health insurance and that poses quite a challenge for those of us at the CBO, who have to estimate the effects of these proposals on the number of people with insurance coverage, on the effects on the government budget, on the effects on premiums people would pay.

NORRIS: How do you do this? Is it just a matter of going through books and reports, data and some sort of algorithms, or do you do something that's tantamount to the kind of war games that the Pentagon might do?

Mr. ELMENDORF: We have models that basically include people and families and businesses on making purposeful decisions about how to get health insurance, given the prices they face in different markets, given the taxes and other subsidies they might have. And we can - a model is developed using estimates of how people have behaved in the past. And then we basically introduce them to the model, a new set of choices for people in getting health insurance. And we see the way that households and businesses respond.

The challenge is that the changes being considered are really outside of the range of changes that we've seen in the past in most of the country. So it's difficult to be sure that the model is producing sensible results. And we always emphasize the uncertainty that surrounds our estimates.

NORRIS: Well, if I can just dig in about it a little bit because it sounds like some of what you're talking about is behavioral economics. How do you measure for things that don't currently exist? For example, penalties for people who don't buy health insurance or doctors moving away from a fee-for-service system that would sort of change the economic model.

Mr. ELMENDORF: Well, I can start with your example of penalties. It's fairly straightforward to calculate the financial incentive for doing certain sorts of things in the current health insurance system or in a reformed health insurance system. What is harder is to assess the other aspects of that decision, how people would value having health insurance or how they would feel about violating a mandate in law to buy health insurance. And for those less quantifiable factors, we try to look at other examples of people's behavior that are required and for which violations would lead to certain penalties.

NORRIS: What would be an example of that?

Mr. ELMENDORF: Well, for example, paying one's taxes. You're required to pay taxes on - according to certain rules, not everybody does and there is some penalty if you do not and are caught. We can also look at - there are some states that have imposed health insurance mandates with subsidies for buying insurance. Massachusetts is the critical example. And we try to learn from that experience. And it is a combination of reading research and applying our judgment about how to interpret that research and apply it to the policies being proposed now.

NORRIS: When's the last time you've had a day off?

(Soundbite of laughter)

Mr. ELMENDORF: You know, our health team at CBO is working constantly, and I'm part of that. But we have people here at CBO working on many other issues, who are working very hard as well. Congress has a very ambitious agenda for this session in terms of the issues they're considering and the scope of changes and policy they're considering. And we're just trying to keep up with them.

NORRIS: Mr. Elmendorf, thank you very much for your time.

Mr. ELMENDORF: Thank you for inviting me.

NORRIS: That's Doug Elmendorf. He's the director of the Congressional Budget Office.

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