Make the CBO Show its Work

August 4, 2017

When Democrats passed Obamacare on a party-line vote in March 2010, the Congressional Budget Office estimated that by 2016, 21 million people would receive health insurance through the law's exchanges. In reality, just 10 million people did.

The CBO's model was off by more than 100 percent.

The same CBO estimate predicted that Medicaid would grow by 17 million enrollees to about 52 million. In reality, more than 34 million people have signed up for Medicaid since Obamacare became law, for a total of 74.5 million recipients today.

Again, the CBO's model was off by around 100 percent.

Now the CBO wants us to believe, based on the same models, that just repealing Obamacare's individual mandate, without a single dime's worth of cuts to Medicaid, would cause more than 7 million people to abandon their Medicaid coverage.

There are good reasons to be skeptical of the quality of healthcare that lower-income Americans receive through Medicaid, but why would 7 million voluntarily give up Medicaid coverage they receive for free? These CBO projections, and others like it, strain the boundaries of common sense.

When it comes to topics like the effectiveness of the individual mandate, there are sharp disagreements among experts. That's why, in the academic community, scholars have to "show their work" by publicly disclosing their data, estimates, and analysis to scholarly scrutiny, and most importantly, refinement and improvement.

Congress does need a scorekeeper to provide budgetary estimates for the policy changes it considers. But at a bare minimum, that scorekeeper should be forced to show how its models work. Currently the CBO doesn't have to do that. It's a "black box," a secret formula even Congress can't be allowed to see, yet which the House and Senate must treat as if they were handed down on stone tablets at Mt. Sinai.

It's an indefensible situation.

That is why I have introduced the CBO Show Your Work Act of 2017. This bill would require the CBO to publish its data, models, and all details of computation used in its cost analysis and scoring. CBO would keep its role as official scorekeeper of congressional budget proposals – but now the public and the economic community would be able to see what's going on in all those spreadsheets and algorithms.

That is, it would hold CBO to the same standard the American Economic Association's "Data Availability Policy" sets for all academic economists: requiring all paper authors to ensure their data "are readily available to any researcher for purposes of replication."

Consider again Obamacare's individual mandate. President Barack Obama opposed an individual mandate while campaigning in 2008, but saw the light later when the CBO started scoring Obamacare drafts.

A 2009 memo written by then-White House health adviser Nancy-Ann DeParle informed the president, "Based on our policy analysis, we believe that a weak requirement for all Americans to have insurance may come close to achieving the maximum coverage that can be achieved through aggressive outreach and auto-enrollment. Unfortunately, however, the Congressional Budget Office (CBO) will likely take the position that without an individual responsibility requirement, half of the uninsured will be left uncovered."

Following this memo, Obama chose to substitute the CBO's policy judgment for his own. The individual mandate became a pillar of the largest policy change in a generation.

Policymakers need data and data analysis to do their jobs. But to do their jobs well, they need the best analysis. And centuries of practical experience tell us that transparency and replicability are essential to the pursuit and acquisition of knowledge. There is simply no serious argument for insulating the most influential economic modelers in the United States from the academic standards that govern everyone from Nobel Prize-winning physicists to second graders "carrying the one" as they learn long addition.

We can do better as a Congress and a nation. We are never going to agree on what the best healthcare, tax, or energy policies should be. But when we make our arguments about the costs and benefits of our preferred policies, we should at least be willing to explain how and why our policies would work.

Making the CBO show its own work would be a great first step.

Op-ed originally published in the Washington Examiner