Resetting the Scoreboard: Why CBO Should Abandon Its Flawed Analysis of the Center for Medicare and Medicaid Innovation

February 15, 2018

Executive Summary
Congress created the Center for Medicare and Medicaid Innovation (CMMI) in the Affordable Care Act and vested it with extraordinary powers. CMMI can conduct demonstration projects in the Medicare, Medicaid and Children’s Health Insurance Program and expand those projects nationwide without congressional approval.
The Congressional Budget Office (CBO) believes that CMMI will achieve substantial federal savings. It bases this conclusion not on analyses of projects that CMMI has undertaken, but on faith in the CMMI process. CBO assumes that process will produce money-saving ideas and that the center will scrap failed projects and expand
successful ones.

“The savings that CBO expects to result from the center’s activities,” a senior CBO official said in congressional testimony, “stem largely from the judgment that successful demonstrations will be expanded and achieve savings.”
The statement’s circularity – CBO “expects” CMMI to achieve savings because CMMI will “achieve savings” – is but one way which the agency’s analysis of CMMI departs from its long-established methods of preparing estimates. In addition to assuming that CMMI will sometime in the future conceive, launch and nationalize successful projects, CBO conjured a numerical factor to convert its assumptions into dollar estimates. It then embedded these numbers in its Medicare baseline, the yardstick against which it measures legislation.

CBO’s unique approach to CMMI thus colors its analysis of legislation designed to achieve Medicare savings. CBO believes that any bill that would overlap with any ongoing or possible future CMMI demonstration would increase Medicare spending above baseline levels. Even if Congress offers up a proposal that would reduce spending relative to the statute, CBO will score it as a spending hike if it believes that CMMI might someday test a similar policy.
CBO thus ascribes unobserved and unobservable savings to projects that CMMI has not yet undertaken (and may never undertake), quantifies these savings through the application of an arbitrary numerical factor, incorporates the savings into its Medicare baseline, and measures the budgetary effects of legislation against this revised baseline.

This paper traces the history of Medicare demonstration projects and shows how CMMI’s authorities differ from its predecessors. It then examines CBO’s assumptions about CMMI, carefully tracing the reasoning that has led to its conclusions. It then shows how recent events, including the Trump Administration’s cancellation of CMMI projects that CBO believed would save money, expose flaws in CBO’s assumptions and reasoning. It concludes with recommendations for CBO, Congress and the executive branch with respect to CMMI.

via https://www.ntu.org/library/doclib/Why-CBO-Should-Abandon-Its-Flawed-Analysis-of-the.pdf


Affordable Care Act Changes To Medicare Led To Increased Diagnoses Of Early-Stage Colorectal Cancer Among Seniors

February 1, 2017

The Affordable Care Act (ACA) helped make preventive care, including recommended cancer screening, more affordable and accessible for millions of Americans. Using population-based data from the Surveillance, Epidemiology, and End Results (SEER) Program, we estimated the impact of ACA policy changes to facilitate the diagnosis of cancer at an earlier and more treatable stage. We estimated that the ACA resulted in an increase of 8,400 (8 percent) diagnoses of early-stage colorectal cancer among US seniors in the period 2011–13. However, the ACA had no distinguishable effect on the number of diagnoses of early-stage breast cancer over the same time period. It is likely that the ACA initially affected the diagnosis of colorectal cancer more than that of breast cancer because the decrease in out-of-pocket spending was larger for colorectal than for breast cancer screening.

Source: Affordable Care Act Changes To Medicare Led To Increased Diagnoses Of Early-Stage Colorectal Cancer Among Seniors


Early death after discharge from emergency departments: analysis of national US insurance claims data | The BMJ

February 1, 2017

In this national analysis, we found that over 10 000 Medicare beneficiaries each year died within seven days after being discharged from emergency departments, despite mean age of 69 and no obvious life limiting illnesses. For context, these deaths accounted for 1.7% of all non-hospice deaths in the Medicare fee for service population annually

Source: Early death after discharge from emergency departments: analysis of national US insurance claims data | The BMJ


Full Repeal of Obamacare Would Hasten Medicare’s Insolvency | Committee for a Responsible Federal Budget

January 7, 2017

Under current law, CBO projects Medicare’s HI, or Part A, trust fund will exhaust its reserve by 2026. By our estimate, full repeal of the ACA would advance that insolvency date to 2021 and more than triple the program’s 10-year deficit. Repealing the ACA’s coverage and tax provisions but retaining its Medicare cuts would advance its insolvency date to 2024 and increase its deficit by half. And either change would significantly worsen Medicare HI’s long-term financial outlook.

Source: Full Repeal of Obamacare Would Hasten Medicare’s Insolvency | Committee for a Responsible Federal Budget


What Are the Implications of Repealing the Affordable Care Act for Medicare Spending and Beneficiaries? | The Henry J. Kaiser Family Foundation

December 14, 2016

This brief explores the implications for Medicare and beneficiaries of repealing Medicare provisions in the ACA. The Congressional Budget Office (CBO) has estimated that full repeal of the ACA would increase Medicare spending by $802 billion from 2016 to 2025.1 Full repeal would increase spending primarily by restoring higher payments to health care providers and Medicare Advantage plans. The increase in Medicare spending would likely lead to higher Medicare premiums, deductibles, and cost sharing for beneficiaries, and accelerate the insolvency of the Medicare Part A trust fund. Policymakers will confront decisions about the Medicare provisions in the ACA in their efforts to repeal and replace the law.

Source: What Are the Implications of Repealing the Affordable Care Act for Medicare Spending and Beneficiaries? | The Henry J. Kaiser Family Foundation


The two mysteries of Medicare | The Incidental Economist

October 5, 2016

A growing proportion of Medicare beneficiaries are opting out of the government-run insurance program. They are instead choosing a private plan alternative, one of the Medicare Advantage plans. The strength of this trend defies predictions from the Congressional Budget Office, and nobody can fully explain it.

Here’s another mystery. Traditional Medicare spending growth has slowed, bucking historical trends and expectations. Though there are theories, we don’t fully know what’s causing that either.

Source: The two mysteries of Medicare | The Incidental Economist


Trust-Fund Budgeting > Publications > National Affairs

March 26, 2016

The passage of Obamacare is perhaps the most important recent example. By CBO’s 2010 estimates, Obamacare authorized $940 billion in new spending to expand insurance coverage over its first ten years. Congress partly offset these costs with provisions for new revenue like the medical-device tax and the so-called “Cadillac tax” on expensive employer-sponsored plans. To make up the remaining difference, it relied on Medicare changes similar to proposals that had been considered previously in the Senate Finance Committee’s earlier draft of the legislation: changes to physician payments, cuts to Medicare Advantage, and new Hospital Insurance revenues. All told, the actuaries credited Obamacare with $575 billion in net Medicare savings — even as those savings were used to paper over the law’s new spending. These ten-year estimates have changed over time, as the law’s schedule did not provide for full implementation until several years into the initial ten-year budget window.

Source: Trust-Fund Budgeting > Publications > National Affairs