Former CBO Director Responds To Report On GOP Health Care Bill

NPR's Ari Shapiro talks to Douglas Holtz-Eakin, former director of the Congressional Budget Office, about the CBO report on the cost of the latest health care bill and the group's overall reliability in predicting the cost of such legislation.

ARI SHAPIRO, HOST:

Today some Republicans have been attacking the non-partisan Congressional Budget Office. The CBO, which is now led by a Republican, produced a report on the GOP health care bill known as the American Health Care Act. The report concludes that the bill would reduce the federal deficit by $337 billion over 10 years, and 24 million more people would be uninsured over the decade.

Douglas Holtz-Eakin is a Republican economist who ran the Congressional Budget Office in the early 2000s and joins us now. Welcome back to the program.

DOUGLAS HOLTZ-EAKIN: Thanks for having me.

SHAPIRO: Health and Human Services Secretary Tom Price says, we disagree strenuously with the report. Lots of other Republicans have said the numbers can't be trusted. You used to run the office. Do you think these numbers are legitimate?

HOLTZ-EAKIN: Yes, the numbers are legitimate. That doesn't mean you can't disagree with them. But that's certainly a credible report that was done to the usual high CBO standards.

SHAPIRO: And so how big a problem do you see it that 24 million people would be uninsured over a decade with this plan?

HOLTZ-EAKIN: Well, here's the way to think about it. If you look at what CBO predicts for just next year, they say that 5 million individuals will choose not to buy individual insurance, and 6 million will choose not to take up Medicaid. So just one year from now before anything's been phased out, they're going to make the decision to not be insured. They chose to do it. So you have to ask yourself, maybe they're doing the thing that's best for them. Is that OK? And that becomes the public policy question. Do you trust their decisions?

SHAPIRO: Although, the CBO report also says some people would forego insurance in response to higher premiums. Even if they're making a choice, it doesn't seem like a choice that they would want to make.

HOLTZ-EAKIN: But you can't tell from what's in the report. All you have is an individual making a decision. And you know, this is not when premiums have changed very much. This is just next year. And this really displays the power of the individual mandate in CBO's calculations. They place a great weight on it being illegal to be uninsured as the way people get insurance.

That's a place where there is some research disagreement just how effective the mandate's been. And that's the place where I think there's a dividing line in the public policy debate. Republicans are saying consistently, we trust Americans to make their own health care decisions; we want to give them the option and see what they do.

SHAPIRO: President Trump has said more than once that his plan would provide health care for everyone. With this Congressional Budget Office report, can he continue to argue that this plan would cover everyone?

HOLTZ-EAKIN: He can't say everyone will have insurance. It's clearly not true. He can say that everyone has the option to go buy insurance. And then the question will be, do we think we've supported those with especially high-cost cases or those with especially low incomes sufficiently to make that choice a real choice?

SHAPIRO: And do you believe that this bill offers that kind of support?

HOLTZ-EAKIN: I think it does. The difficulty in the CBO score - and I mean this as a matter of just the science of doing these kinds of scores - is that a big emphasis is placed on using money given to the states in the Patient and State Stability Fund. This is a hundred billion over the next decade.

How will the states use that money? They have great flexibility. They can give it to insurer as a reinsurance for expensive patients. They can give it directly to individuals to cover out-of-pocket costs. It's hard to know what they'll do in advance. And the degree to which they target those people is the key to deciding if you're happy with it.

SHAPIRO: You've argued that Democrats focus too much on how many people are covered. Explain how you keep costs down if you don't have healthy people in the insurance pool balancing out the costs for the sick people who end up using the system a lot more.

HOLTZ-EAKIN: That's an insurance question. How do you shift around the cost of national health care? The real issue is the cost of national health care. Our bill is too big for the quality of services we get, and that should be the focus.

SHAPIRO: Before this report came out, you wrote that you thought the House bill could become a law just barely, that it would squeak through the Senate with 51 votes. Maybe Vice President Pence would have to be the tie-breaking vote. Now we've seen Maine Senator Susan Collins say this is a cause for alarm. Senator Tom Cotton of Arkansas, also a Republican, says the House should take a pause and fix some of these problems in committee. Do you still think that this bill as written can become law?

HOLTZ-EAKIN: I do. And part of that logic is simply it has to. I think Republicans have put themselves in a position where they simply can't afford to fail. They're going to have to go to the 2018 midterms with some set of accomplishments as the party that's running the government. This is a central piece of their promise in the governance, so I don't see how they can let it fail.

SHAPIRO: Douglas Holtz-Eakin is a former director of the Congressional Budget Office, and he's now president of the conservative think tank The American Action Forum. Thanks for joining us.

HOLTZ-EAKIN: Thank you.

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