On Tuesday, the Congressional Budget Office said that it will use a different type of economic analysis to study federal spending policies’ effects, particularly in regard to health care, Modern Healthcare reports.
CBO in the past has used a “static scoring” analysis, which examines policies’ direct economic effects and does not take into account how the economy will react to the policies in the long term. Meanwhile, a type of analysis called “dynamic scoring” — which CBO already occasionally uses — accounts for macroeconomic trends.
CBO To Use More Dynamic Scoring Analyses
According to Modern Healthcare, House Republicans earlier this year adopted a budget resolution that requires CBO to use dynamic scoring when estimating federal policy costs “to the greatest extent practicable.”
Keith Hall, who became CBO’s new director last month, told the Senate Budget Committee on Tuesday that the agency “expects to devote considerable attention to further developing its capacity to conduct dynamic analysis in the coming year so that it can effectively carry out the requirements specified” in the resolution.
Potential Effects on ACA, Other Health Programs
According to Modern Healthcare, dynamic scoring could have some effects on spending and revenue estimates for the Affordable Care Act and GOP-backed replacement plans for the law. Dynamic scoring often provides a foundation for tax cuts through macroeconomics, which Republicans have used to support cuts to Medicaid and Medicare as well as efforts to repeal the ACA, Modern Healthcare reports.
Hall said the method would be used heavily to evaluate changes to Medicaid, Medicare and other federal health programs. He noted the despite a recent slowdown in health care spending growth, “the government’s major health care programs will continue to rise substantially relative to the size of the economy.” Because of this, Hall said CBO “[i]n the coming year … expects to expend a great deal of effort analyzing health care spending,” noting that it already is “in the process of analyzing various aspects of the health care system and enhancing its analytical capacity to assess the effects of future legislation on that system and on the federal budget” (Herman, Modern Healthcare, 5/19).
Hall said CBO is analyzing “proposals to modify the [ACA] and the forthcoming Supreme Court decision” in King v. Burwell, which challenges the law’s subsidies to help U.S. residents purchase federal exchange coverage (Krawzak, CQ News, 5/19). A ruling in the case is expected by the end of June (California Healthline, 5/19).
In addition, Hall requested Congress allocate three new full-time employees for CBO, who would primarily focus on using dynamic scoring and reviewing “health care issues.”
Democrats Express Concern
Meanwhile, Democrats have called dynamic scoring “voodoo economics,” which can lead to lower tax revenues and increased national deficits (Modern Healthcare, 5/19). Democratic lawmakers challenged Hall to maintain CBO’s nonpartisan reputation. Hall responded that it is his goal “to maintain what [he] think[s] is an excellent reputation of CBO for doing independent, objective work” (CQ News, 5/19).