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'The score' matters more than winning on Capitol Hill

From the October ACP Observer, copyright © 2007 by the American College of Physicians.

In normal towns, “What’s the score?” is understood as a sports term. Washington, D.C., of course, is not a normal town, and "the score" refers to the price tag that the Congressional Budget Office (CBO) assigns to proposed legislation.

CBO’s scoring methods can have enormous impact on U.S. health care policy because they can stifle innovative policies that result in better health care and potentially lower costs in the long run. They can even pit internists against insurers and lawmakers against their own constituents.

Why scoring matters

Congressional pay-as-you-go rules (pay-go) require that increased spending on entitlement programs, like Medicare and Medicaid, be paid for by budget savings or revenue (tax). The CBO, a nonpartisan agency that works for the U.S. Congress, is the official scorekeeper that determines how much federal spending will go up and how much of it will be offset by budget savings or revenue increases. The difference between CBO’s estimates of increased spending and savings from the offsets is the “score” assigned to a bill.

Congress’ intent in mandating pay-go was to impose fiscal discipline on itself. Without pay-go, the federal budget deficit would continue to skyrocket, requiring that the federal government sell bonds to lenders that will then have to be paid back later with interest. Interest payments on the federal debt are consuming an ever-growing part of the federal budget, leaving less money to fund other national priorities.

Congress’ pay-go rules and CBO scoring, though, have significant downsides. CBO uses a five-year budget window to project how much spending will go up and how much will be saved. Scoring may stifle innovation in health policy because CBO’s economists want proof that any proposed new spending will achieve savings within the five-year budget window.

For example, Medicare coverage for health care prevention may make for good budget and health policy, but CBO would have to be persuaded that the new spending will pay for itself within five years and will insist on hard evidence from actual experience. Otherwise, budget offsets (cuts or tax increases) would be required to meet pay-go rules, no matter how promising a new idea is.

Rather than encouraging innovation, CBO is more likely to consider as scoreable savings tried-and-true measures that are easy for economists to count. For example, cuts in Medicare payments to physicians or health plans are easy for CBO to estimate, but they end up pitting physicians against health plans, and health plans against physicians—increasing opposition to any bill that includes such offsets.

CBO scoring is also arguably undemocratic, because Congress is delegating to a non-elected federal agency decisions that should be made by elected representatives. It is not uncommon for congressional staff persons, and even members of Congress themselves, to tell constituents that they can’t support promising innovations that might save money because “CBO won’t let us” (meaning that they expect that the CBO will score the proposal as increasing federal spending). Often, lawmakers will alter legislative proposals to include offsets to receive a favorable score by CBO, even if the required offsets end up undermining what the legislation was trying to accomplish in the first place.

SCHIP: a case study

The congressional debate over the State Children’s Health Insurance Program (SCHIP) is a case study of how scoring rules can have an impact on health policy. Congress’s pay-go rules require that any new spending on SCHIP be fully paid for by scoreable savings or revenue increases. The Senate passed a bill that reauthorizes SCHIP and is paid for mainly by increasing taxes on cigarettes.

The House of Representatives passed its own bill, the Children’s Health and Medicare Protection (CHAMP) Act of 2007, which the CBO determined will cost substantially more than the Senate bill. This is largely because the Senate bill deals only with SCHIP, whereas CHAMP makes major improvements in Medicare. CHAMP replaces a 10% cut in Medicare physician payments with a positive update, which has to be paid for with offsets.

CHAMP also makes innovations in Medicare benefits: lowering how much beneficiaries have to pay for mental health services, expanding coverage for preventive services, funding research on the comparative effectiveness of different medical treatments, and creating a national pilot that will pay physicians to coordinate the care of patients with chronic illnesses through a “medical home.”

Because the CBO won’t count these innovations as saving money, they have to be paid for by cuts (reducing payments to Medicare Advantage plans and other providers) and tax increases (higher tobacco taxes). The result is that the CHAMP bill faces fierce opposition from health plans and others who are facing cuts, and from the tobacco industry and retail outlets that sell tobacco products that will be subject to higher taxes.

In other words, the House of Representatives, because it chose to include innovative changes in Medicare that have great potential to improve health care in the U.S., had to find even more CBO-approved offsets to meet pay-go rules, resulting in even greater opposition to the CHAMP bill.

The problems with Congress’ budget scoring rules aren’t the fault of CBO, which is only doing what Congress has asked it to do. Congress should recognize that budget rules to promote fiscal discipline can be useful, but can also lead to self-imposed limits on congressional decision-making that favor short-term thinking instead of long-term innovation. Successful businesses understand that some types of new spending—call them investments—are worth making. Some innovations are worth trying, even though they may not save money in the near-term, because of the potential they have to provide future long-term benefit.

Congress needs to do the same. Otherwise, Washington’s answer to “What’s the score?” will be to reject innovative policies in favor of fee cuts, tax increases and budget gimmicks that divide providers and increase opposition to needed reforms. Congress needs to recognize that some ideas, such as paying for prevention and care coordination, can result in better health care for everyone, with the potential for much lower costs over the long term.

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