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Kent Conrad and the 'Annie Hall' Theory of Health-Care Reform

conradcameras.jpg

Kent Conrad is chairman of the Senate Budget Committee and one of the chamber's loudest, and most powerful, deficit hawks. On Tuesday, for instance, he directed the Congressional Budget Office to score the impact of health-care reform over a 20-year time frame, rather than the traditional 10 years. This is a tougher fiscal test than any bill has had to pass in memory.

You could see this as a good thing. Reformers sometimes argue that health-care reform's true impact on the cost curve will be seen over the long term. If CBO's scores reflected that, Conrad's demand could be a boon to reform. But Conrad doesn't appear to believe the scores will reflect that. He called the CBO's scoring of the bill's cost controls "stingy," and predicted that "the savings will be greater than CBO is showing."

In other words, he thinks the CBO is underestimating the savings that reform will deliver, but he wants to see those savings underestimated over a longer period of time, which will make the total gap between the revenues the CBO predicts and the savings it misses appear larger. It's a bit like the restaurant review from "Annie Hall": The food was terrible, and such small portions!

The end result is likely to be a new hurdle for health-care reform: a CBO report that makes the bill's total cost sound higher, as it's measured over 20 years, and its savings seem smaller, as they're underestimated over 20 years. The Huffington Post caught up with Conrad and asked him whether this would kill the reform effort. "No," he replied, "but it makes it more challenging." The question is why Conrad wants to make health-care reform more challenging.

One explanation is that Conrad is a stickler for deficit reduction, even at the cost of health-care reform. After all, the CBO's acid test might be overly difficult, but perhaps a high bar is warranted for a reform of this magnitude. "We've got to have somebody that we give this responsibility to and that we follow," Conrad explained. That would be more credible if not for two data points.

The first came earlier this year when Conrad modified Obama's first budget. Obama had eliminated a couple of Bush-era gimmicks that made the deficit appear smaller than it really was. Bush, for instance, shortened the budget window from 10 years to five, so the total deficit sounded smaller. Obama's budget returned it to the traditional 10. And then Conrad changed it back. The Politico reported that Conrad made this decision "because of the uncertainty of long-range forecasts." Others thought he did it to hide the size of the deficit. In any case, 10 years, as the alert reader will notice, is less than 20 years. If 10 years was too long a time period for certainty, then it is difficult to see how 20 years could possibly be acceptable.

The second came in 2003, when Conrad voted for the Medicare Modernization Act, better known as Medicare Part D. The Congressional Budget Office estimated that the bill would increase the federal deficit by $421 billion and reduce federal revenue by another $174 billion. The total cost to the deficit, then, neared $600 billion. Conrad not only accepted the CBO's 10-year time frame, but he voted for the bill. His press release enthusiastically touted the fact that the bill would "bring more than $70 million to North Dakota hospitals over the next ten years."

Conrad's record in the Senate, then, would lead you to believe a couple of things. For one, he distrusts long-range projections. Even 10 years is too uncertain. He also believes some priorities overwhelm deficit concerns, health-care coverage being one of them. But when faced with a health-care reform that will be deficit neutral within the 10-year time frame, he is demanding that it instead be measured against an even more uncertain 20-year time frame, and by an agency that he claims underestimates savings. The CBO's scores are terrible, in other words, and come in such small portions!

Photo credit: AP Photo/Alex Brandon.

By Ezra Klein  |  September 16, 2009; 8:59 AM ET
Categories:  Budget , Health Reform  
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Next: Happy Max Baucus Bill Day!

Comments

Can they "score" the cost - to our personal/family deficits - if this goes on another 20 years?

Or how about scoring the cost of HR 676 over 20 years?

Posted by: katiebird36 | September 16, 2009 9:10 AM | Report abuse

I think this is probably just to illustrate how dishonest it is to start the taxes before the benefits kick in as an accounting trick to make it look like a self funding program over 10 years when it reality the taxes are not at all sufficient to make this program self sustaining moving forward once you get past that 10 year mark. Its a dishonest tactic and honest supports of the bill should understand that. The bill was carefully crafted just to look as good as possible over 10 years without regard to what happened just outside that window. Of course a longer timeframe should be used in this scenario. I wouldn't pick 20 years but I'd certainly want to look at 10 years past where the benefits kicked in.

Posted by: spotatl | September 16, 2009 9:25 AM | Report abuse

Conrad is cautious because, unlike you Ezra, he has a much better understanding of how dangerous this deficit situation is than it was in 2003. We are at the precipace of ruin and he needs to be careful. Also, Conrad understands this is a substantially bigger program expansion than the Medicare Part D plan and therefore the estimates are even more important and our Congress then needs to be much more careful.

Posted by: lancediverson | September 16, 2009 9:29 AM | Report abuse

"Annie Hall"? Please. That line was probably had a thick layer of dust on it by the time Joe Miller wrote his joke book.

Posted by: rt42 | September 16, 2009 9:32 AM | Report abuse

"Annie Hall"? Please. That line probably had a thick layer of dust on it by the time Joe Miller wrote his joke book.

Posted by: rt42 | September 16, 2009 9:33 AM | Report abuse

Another way of looking at it is Kent Conrad is a Blue Dog hypocrite.

But of course the plan is going to cost more than anyone expects. Employer-based coverage will continue to drop. More people will get subsidies. Cost explosion.

Posted by: bmull | September 16, 2009 9:46 AM | Report abuse

Don't forget the Conrad also voted to "reduce" Obama's budget deficit by pretending that Congress will allow the Medicare reimbursement rates to drop to absurdly low levels.

I really, really, hope that Elmendorf responds to Conrad's request by saying "No. We're not going to score your bill out to 20 years. Our predictive powers simply aren't that good. Man up and do your job".

Also, why is Conrad being such a schlameel while when Byron Dorgan is keeping so quiet?

Posted by: NicholasBeaudrot | September 16, 2009 10:27 AM | Report abuse

so the battle continues

conrad is a member of the baucus gang

the baucus plan is released and DOA (as expected)

conrad interjects another hurdle

20 year scoring

we have become accustomed to the lock step march of the GOP

we are accustomed to the "lock-step" march of the GOP, the freewheeling intraparty battling of the DEMS is disconcerting

conrad and baucus are certainly trying to help their president get his health reform

Posted by: jamesoneill | September 16, 2009 10:29 AM | Report abuse


I think it's because of this paper from last month (http://content.healthaffairs.org/cgi/content/short/hlthaff.28.5.w978, sorry to keep coming back to it but I sort of think it's huge),

It states:

"For health policy directed at chronic illnesses, a near-term focus is problematic, as the natural history of disease progression often goes well beyond ten years. Thus, the full impact of policies intended to head off unnecessary expenses will not be in full view for policymakers with cost estimates stopping at year ten. The problem cuts both ways. A more complete accounting of the costs of a chronic-illness intervention would capture the potential offsetting costs of reductions in care for avoided or postponed complications, but it would also capture the increased spending associated with the chronically ill living longer lives."

Posted by: ThomasEN | September 16, 2009 10:32 AM | Report abuse

This may be an unintended good move on Conrad's part. What cures those year 10-20 outlays is pushing provider payment reform which in HR 3200 are only study groups and demonstrator projects at the start. Those reforms have already been proven at Mayo and Cleveland Clinics and Kaiser Permanente, not to mention around the world. Implement them now instead of waiting and provider costs go down as well as insurance costs.

Posted by: markg8 | September 16, 2009 1:49 PM | Report abuse

Let's not forget that Kent Conrad basically wrote the farm bill that was a pork-laden subsidy fest (in partnership with Saxby Chambliss while screwing Tom Harkin) and helped lead the opposition to the Dorgan-Grassley payment limits amendment. That was before Grassley went nuts, though.
And if I recall correctly, he flat out opposed Obama's proposal to cap charitable deductions, a truly progressive idea. And he came up with the co-op idea out of nowhere, probably to give cover to Baucus, and didn't even know what he was talking about because he couldn't give specifics when questioned.
When it comes to a complete lack of principles disguised as bipartisanship, Conrad, even more than Baucus, is exhibit "A".

Posted by: sideshow1979 | September 16, 2009 5:13 PM | Report abuse

In his news briefing Baucus said what the Federal Government pays doctors is not part of Health Reform :-)

Posted by: cautious | September 16, 2009 6:20 PM | Report abuse

In 1998 the CBO projected 10 more years of surpluses. Why does anyone believe these fictions? Look at the Social Security projections. Wrong, wrong wrong.

The projections are based on many assumptions (read"wild gusses") that cannot be predcited because they depend on future events. These assumptions are never mentioned and the projections are treated as predictions. "If the Redskind win all the rest of their games they will win their division" is a pretty good projection, but "the Redskins will win their divsion" is a lousey prediction.

This is madness.

Posted by: lensch | September 16, 2009 6:48 PM | Report abuse

lensch, i'm no fan of unrealistic projections, but you completely misunderstand the things you are talking about.

in terms of CBO forecasts, they are based on the assumption of existing conditions continuing. in the case of 1998, for example, that meant no tax cut, no war in iraq, no medicare d, no gigantic defense spending binge on top of the war in iraq.

so of course the 1998 projection was wrong, but not because it had to be wrong: it is entirely possible to imagine a much smaller tax cut, no war in iraq, no medicare d as constructed by the gop, and no gigantic defense spending binge on top of the war in iraq.

at which point, it is entirely possible that we would have had general fund surpluses over the 10 years in question.

similarly, i have no idea of what you are talking about with respect to social security projections at all: the trustees provide 3 scenarios each year, and if we want to look at those scenarios over time, what we see is that typically, the headline assumption has been too pessimistic.

these kinds of projections are not the equivalent of saying "i think the redskins will win the division."

Posted by: howard16 | September 16, 2009 7:25 PM | Report abuse

Hi Howard, you do a good job of making my point for me. We use these projections as though they tell us what is going to happen, not what is going to happen if A, B, C, D, ... all happen. I am not saying that the 1998 projection was a bad projection; I am saying it was a bad prediction because its assumptions, as you point out, were incorrect.

Using these projections as predictions, ignoring the assumptions is exactly like using the projection "If the Redskins win all the rest of their games they will win their division" to predict that the Redskins will win their division.

I don't know how I can make it clearer.

Maybe an example. The middle SS projection assumes the average growth in the GDP will be 1.78% I claim it is simply impossible to even estimate the uncertainty in this assumption. Can you imagine an economist trying to guess the average growth in the GDP for the next 75 years in 1820 or 1930?

When the CBO says this bill or that bill will cost a trillion dollars in the next 10 years, they are making a number of assumptions that we just do not know are going to be true. So why should we believe what they say?

Posted by: lensch | September 16, 2009 8:12 PM | Report abuse

lensch, i don't disagree with you that projections can only be as accurate as the inputs to the projection and the uncertainty range associated, so insofar as a projection is treated as a fact, you shouldn't believe it.

but that doesn't mean that a projection is without merit: assuming the inputs and uncertainties are clearly defined, there's nothing wrong with projections.

after all, i don't know that i won't be hit by a car later today, but i'm nonetheless going to project my family's expenses and my income just as if i won't be hit by a car today.

Posted by: howard16 | September 17, 2009 10:51 AM | Report abuse

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