The Corner

Sen. Baucus Works the Budget Refs

At a hearing last week, Senate Finance Committee chairman Max Baucus tried to turn up the heat on the Congressional Budget Office (CBO) when he said the whole health-care reform effort might be in jeopardy if CBO remains skeptical about his cost-cutting efforts.

It’s telling that Senator Baucus has taken to working the budgetary referee so early in the game, so to speak. All along, the biggest challenge Democrats were going to face in the health-care debate was how to pay for their ambitious plans. It’s pretty easy to promise “universal coverage” with affordable premiums for every household. It’s another matter entirely to put together a credible and politically viable way to pay for the expensive new government subsidies such a plan implies. 

Sen. Baucus is hoping CBO will make his job easier by giving him credit for “bending the cost curve” with a series of reforms he released last week in a white paper. That would be a huge stretch.

Some of the ideas on Senator Baucus’s list have merit. Most have been pushed for years by various health-care analysts, although the names of the initiatives have changed. Overall, they amount to a call for better bureaucratic engineering of Medicare’s payment systems, but there’s no real reason to expect such an effort to turn out any better in the future than it has in the past. 

And even if it did, it wouldn’t change the fundamental financial incentives which CBO has already said, in a report and testimony, are the real keys to making progress on cost escalation. Of course, the kinds of changes that would make a real difference are also the ones that would that would ignite the most political controversy too.

Which is why Senator Baucus is starting to sound a little desperate. He knows that if CBO holds firm, his only option is to go back to his Democratic colleagues and ask them to support real spending cuts and tax increases to pay for his health-care bill. And, despite all of the talk that now is the time to pass sweeping legislation, there’s no evidence that rank and file Democrats have agreed, or are ready, to walk that particular plank.

In the end, CBO is very likely to deliver the same message to Senator Baucus that they have delivered to many others at various times over the years: There’s no politically easy way to “bend the cost curve.” If there were, it would have been done already.

[For full disclosure, I am working on a project which is looking at how to improve cost-estimating for diabetes treatment. However, my recommendations in that project would not substantially alter the overall cost-estimates for a health-care reform bill, nor do I believe CBO should do anything differently with regard to the vast majority of provisions under review in such measures.]

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