Controversy is coming to a boil over the next Congressional Budget Office director because he or she is going to have put a price on Obamacare.
That makes it one of the most sensitive appointments of the new, GOP-dominated Congress, and the choice could have huge long-term repercussions.
Some conservatives say current CBO Director Douglas Elmendorf has done a good job and should stay on when his current term expires in January.
But others, including Grover Norquist, the powerful head of Americans for Tax Reform, want someone more amenable to conservative economic and budgetary assumptions.
“All you have to do is look at the CBO’s long-term budget outlook and you know where you’re going to end up, and that’s health care programs,” former CBO director Douglas Holtz-Eakin told the Washington Examiner recently. “That means dealing with the Affordable Care Act and its future,” plus Medicare and Medicaid, the federal health programs for the old and poor, said Holtz-Eakin, now president of the right-of-center American Action Forum think tank.
The CBO’s latest projections show government spending on health care programs jumping from 4.8 percent of economic output in 2014 to 8.0 percent in 2039. That’s unsustainable, according to the CBO, and threatens to crowd out other spending such as on defense.
The next CBO director will have to lay out the costs and benefits of Republican plans to repeal or change Obamacare. But he also will have to audit the wider national health care outlook in their wake.
“Over the next few years we’re going to learn more about how health care is actually operating,” said Donald Marron, director of economic policy initiatives at the Urban Institute and a former acting director of the CBO.
The CBO has developed complex models to estimate how many people would be affected by reform. But with the law now in place and millions of people enrolled in insurance plans through its exchanges and Medicaid expansion, the effects of Obamacare’s cuts to Medicare Advantage and reduced payments to health care providers remains a big question.
The CBO needs to work out many issues, such as how much Washington will pay doctors and hospitals for their services.
Another major issue that the CBO may confront is the federal disability system. The Social Security Disability Insurance trust fund will run out in 2016, Social Security’s trustees say. The program’s 11 million beneficiaries would face an immediate 25 percent cut.
The program is “vitally important,” Marron noted, and will require CBO attention. The funding shortfall could be made up by diverting payroll tax revenue from the Social Security retirement trust fund. But senior Republicans and Democrats want to use the issue to pursue broader disability insurance reform.
Republicans also want to get busy reforming taxes. They intend to introduce “dynamic scoring” of tax rate reductions, which means taking into account the revenue boost of faster economic growth. This would mean revenue losses from tax cuts would be accounted as smaller than in past CBO scoring, creating fewer estimated losers and thus making cuts more popular.
Democrats oppose dynamic scoring but incoming House Ways and Means Committee Chairman Paul Ryan of Wisconsin and incoming House Budget Committee Chairman Tom Price of Georgia intend to pursue it.
