They’ve Got Your Number

Posted March 22, 2004 at 6:33pm

The truth may not actually be out there, but there’s little doubt that Democrats will continue this week to demand candor from the White House about its projected costs for the Medicare prescription drug law.

Using phrases like “the real cost” of the bill and “untruthful misrepresentations,” Democrats — such as Rep. Rahm Emanuel (Ill.) and Senate Minority Leader Tom Daschle (S.D.),

among others — have repeatedly asserted in the past few weeks that the “truth” about the Medicare bill was withheld from them during last year’s debate over the prescription drug benefit.

So the question to ask is: If Congress was lied to, who lied?

Though Congress’ own nonpartisan experts in the Congressional Budget Office estimated the bill would cost $395 billion over 10 years, Democrats are stuck on the increasingly problematic accusation that then-Bush official Tom Scully threatened to fire Medicare actuary Rick Foster in June 2003 if the bean counter told Congress that his estimate was $139 billion more expensive than CBO’s.

Scully insists that he did not threaten Foster, and it remains to be seen whether he or other administration officials broke the law. But the notion that Congress had false or erroneous numbers is pervasive, despite the admitted uncertainty of both CBO and the Centers for Medicare and Medicaid Services.

Democrats have spent much of their time pointing a collective finger at the Bush administration, but the underlying implication is that CBO must have lied or been grossly mistaken about its own estimate.

“I think it’s an indirect slap at CBO,” said Bill Hoagland, budget and appropriations adviser to Senate Majority Leader Bill Frist (R-Tenn.).

Hoagland and other budget experts noted that Congress and the executive branch almost always have different cost projections.

“For [Congress], we have to have some anchor to score legislation from and enforce budget points of order,” said Hoagland, explaining why Congress used its own independent agency for the Medicare cost estimates.

He added facetiously: “Otherwise, just get rid of CBO. Let’s further destroy our independence as a separate branch of government.”

Republicans have generally leapt to the defense of CBO, especially since it was they who repeatedly assured their small-government-minded colleagues that the $395 billion estimate for the Medicare law was correct.

Even Health and Human Services Secretary Tommy Thompson took CBO’s side against his own employees at CMS in a press briefing last week, saying the men and women at CBO “have a lot more experience than our actuaries.”

Thompson went on to say that because only 91 percent of eligible seniors take part in the current Medicare Part B program, it was a leap to suggest, as his own actuaries did, that 94 percent would participate in the prescription drug program.

“It doesn’t logically follow,” said Thompson. “I’ve always had a difficult time believing that.”

CBO estimated that 87 percent of eligible seniors would take advantage of the new drug program. Of course, it’s those assumptions about who will participate in the new drug program that form the heart of the $139 billion discrepancy between CMS and CBO.

“CBO, even though they aren’t running the program, seem to know more about the program than the CMS actuary,” said one House GOP aide. “Did [CMS] miss the memo saying that not everybody will participate?”

However, Ways and Means pit bull Rep. Pete Stark (D-Calif.), whose requests for information from CMS last summer allegedly led to Scully’s threat to fire Foster, said he put much more stock in the bureaucrat’s ability to accurately forecast Medicare costs. The Congressman charged that CBO “cooked the numbers” at the request of Republicans.

Stark did not offer any proof of his claims, which the House GOP aide called “a ludicrous assertion.”

Stark also insisted that CBO does not have the same experience as the CMS actuaries.

“I don’t think CBO has that kind of talent,” said Stark. “This is a very specialized area in which Rick and his guys are the only guys in town who can do this.”

Stark said that if he had the CMS numbers during last year’s debate, he would have been better equipped to argue that his own $900 billion drug benefit proposal was not so much more expensive than the Republican plan.

Jim Manley, spokesman for Sen. Edward Kennedy (D-Mass.), stressed that his boss’s vociferous complaints over the withheld estimates are directed at Republicans in Congress and the White House, not CBO.

“I don’t think anybody is meaning to suggest that [Foster’s] numbers are more accurate than CBO’s,” said Manley. “It’s just another estimate that should have been heard on Capitol Hill.”

Still, Manley said CBO’s “low-balling” of participation rates helped Republicans, because it kept the cost of the bill below the 2003 budget resolution’s $400 billion cap.

Noting that Republicans were using the increased participation estimates of the CMS actuary to try to build support for the bill, Manley complained that GOP leaders “were distributing the participation rates, but not the cost.”

Former CBO Director Robert Reischauer came to the defense of both groups of number crunchers.

“Both of these estimates are well within the range of the possible,” he said. “The fact is no one has a lot of experience doing this. These are educated guesses.”

Indeed, both CBO and the actuary’s office have reaffirmed their commitment to their original numbers, but have prominently acknowledged that they really don’t know how much the drug program will cost in the end.

“There is a great deal of uncertainty about its budgetary impact and a wide range of possible outcomes,” CBO Director Douglas Holtz-Eakin wrote in a Feb. 2 letter to House and Senate GOP leaders on the cost of the drug bill.

Similarly, CMS’s Foster noted in a Feb. 5 missive to his bosses, “I prefer the assumptions and methods employed by the Office of the Actuary, and stand behind our own estimates, while recognizing that an uncertain future could prove all of us wrong.”

Despite all the warnings of uncertainty, the Medicare cost debate can be boiled down to anger, mostly from Democrats, but also from some Republican opponents of the bill. These lawmakers are angry that they didn’t have the necessary ammunition to keep the bill from passing and ultimately becoming law.

“Overall, we should have known,” Rep. Jeff Flake (R-Ariz.) said of the CMS cost projections. “Anything that would have caused us to vote down that dog, I would have liked.”

And Flake, a consistent critic of the bill, said he doesn’t believe either CBO or CMS.

“Name one time when the estimates have actually been overestimated,” he challenged. “Intuition tells you that if you create a new entitlement program and don’t puts caps on it, you’re going to explode the costs.”

And it seems he may be right.

On Wednesday, the Ways and Means Committee will hear from Medicare’s trustees as well as Foster and Holtz-Eakin. The trustees are expected to drop the bomb that the prescription drug program will cost $7 trillion over the next 75 years, even as the Medicare and Social Security programs face a $50 trillion shortfall in that time.

Of course, that’s just an estimate.