Yuval Levin on the CBO

He writes,

Rather than produce stark hard-number projections behind a heavy veil, the CBO and JCT could act more as developers and stewards of an open public model, available online to anyone with sufficient technical prowess to use it. The two agencies, with outside help, would create and maintain the model, and would decide on a set of official economic assumptions and policy expectations to be used in modeling for formal budget-process purposes. Anyone could “score” any policy proposal using those official assumptions and could also use the model with other assumptions to project a proposal’s consequences under alternative circumstances.

I do not think that any fix of the Congressional Budget Office or Joint Committee on Taxation gets at the problem.

Alan Blinder once pointed out what he called Murphy’s Law of economic policy. That is when economists agree on something and are confident about it, nobody listens. But when economists are engaged in speculation and biased argument, they get attention.

When it comes to “scoring” health bills for their effect on the proportion of the population with health insurance, the CBO is engaged in speculation, and Levin points out a form of bias.

It is by this point basically a quirk of the CBO model that it judges the mandate to be exceedingly effective — far more effective than the evidence of the past few years would suggest.

If your model tells you that a lot of people purchased health insurance because of the mandate, then it will predict that a lot of people will decline health insurance without it. And, of course, the press will report this as people “losing” their health insurance.

On the other hand, when the CBO puts out its reasonable forecasts that entitlement spending is not sustainable, pundits tell us not to take those seriously. But as far as I can tell, those forecasts are still on track.

This entry was posted in Economic education and methods, Economics of Health Care. Bookmark the permalink.

4 Responses to Yuval Levin on the CBO

  1. Zane Grey says:

    I don’t think losing health insurance is usually treated quite this cynically by media. Surely it would not be hard to separate who is no longer eligible for a benefit from who still is eligible but opts not to claim.

  2. Lord says:

    A little less BS. The CBO was actually quite accurate given the unknowns. They didn’t anticipate the Supreme Court decision or the states that refused to expand medicare. They didn’t anticipate so many companies would prefer to add coverage than pay the penalty. The number covered is higher than they predicted though not necessarily through the exchanges.

    Given 80% of those on the exchanges are highly dependent on subsidies, no one should be at all surprised they wouldn’t be able to afford it without them. The few that don’t want it already pay the penalty as that is much cheaper. Get real.

  3. Rich Berger says:

    It would be interesting to have a shadow CBO. Would they give access to their models?

  4. Tom G says:

    It would still be a public policy conversation coup to have the CBO model be “open source” with GitHub, for instance, or some other version control. Allowing others to make branches into their own model based on the “official” starting model — with explicit assumptions.

    Venezuela’s socialism was long unsustainable, yet very popular until they … “ran out of other people’s money.” It remained popular/ uncriticized by many Professors for most of Chavez’s ruling years.

    The US gets national socialism from nationalist populists on the right accepting the need for socialist gov’t control in order to attract enough Dem/Independent support, like Obamacare replacement that makes the gov’t pay (socialize) pre-existing conditions and most health payments. The voters are becoming corrupt — wanting benefits that others pay for, with rationalizations on why that’s ok.

Comments are closed.