Ex-CBO Chief Elmendorf Says ‘Unfortunate' No Specific Alternative to ACA Five Years On

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By Jonathan Nicholson

May 21 --In his old life, Douglas Elmendorf had business cards but no opinions. Nowadays, he has no business cards, but he has opinions.

The 53-year-old Elmendorf stepped down as director of the nonpartisan Congressional Budget Office a little less than two months ago. While he was in that job for six years, Elmendorf was widely regarded by lawmakers on both sides of the aisle as a tough, but usually fair, fiscal referee. He cultivated that image with his carefully calibrated responses on subjects as diverse as the 2009 economic stimulus law, the 2010 health care overhaul and the minimum wage.

“I think in some ways too much attention is paid to CBO's estimates, which are, after all, only estimates with a great deal of uncertainty around them.”


Douglas Elmendorf

But freed from his need to remain publicly neutral, the notoriously press-shy Elmendorf has begun giving voice to his views recently. That process started May 20 with an appearance at a “fiscal summit” in Washington where he said guarded but positive things about two pet Republican policy ideas, Medicare “premium support” and dynamic budget scoring.

And, in an exclusive interview May 20 with Bloomberg BNA, Elmendorf said:

• without an alternative that can be scored on coverage and costs, the health care debate remains essentially a choice between the Affordable Care Act and nothing;

• he supported the recent enactment of a “doc fix” bill to overhaul the Medicare reimbursement system, despite its $141 billion 10-year cost, because it removed a recurring policy issue from Congress' plate;

• the 2011 “supercommittee” was a “missed opportunity” to make progress on the budget; and

• additional action to get the budget closer to balance should wait until the economy is stronger and the Federal Reserve interest rates are above their current virtually zero level.

No ACA Alternatives With Scores

Elmendorf said the ACA has not seen the kinds of increased costs and disruptions in the insurance market that critics had feared. Citing CBO data on the act's coverage provisions, he said it is resulting in about 25 million extra people being insured annually, at an estimated cost in 2017 of about $4,500 per newly insured.

“So the question remains: is it worth that increase of 25 million people being insured, is that worth the costs to the changes in rules and the subsidies? And that fundamental choice, I think, is the same now as it was five years ago,” Elmendorf said. “And it's the same in part because there are no alternatives to the Affordable Care Act that are on the table with independent, reputable estimates of their effects on insurance coverage and the federal budget.”

While he said there have been ideas put forward by members of Congress, think tanks and people at universities as alternatives, none of them have been examined with the same rigor the ACA was.

“So the choice the American people face at this point remains the Affordable Care Act or not,” he said. “I think it is unfortunate that after five years of heated debate about the Affordable Care Act, we don't have information we would need as citizens to evaluate alternatives.”

Republican leaders have said they expect to offer a health care alternative, but before acting are waiting for the King v. Burwellcase pending before the U.S. Supreme Court, which centers on the law's insurance subsidies.

Simple Repeal Estimate May Not Be Useful

Elmendorf also said simply repealing the ACA is a more complex task, from a scoring point of view, than one might think. Part of its complexity is a raft of provisions on things like health care provider payments where it is uncertain what would happen if the ACA were repealed but replacement language dealing with those provisions were not included. CBO has not compiled a budget score for a full repeal bill since 2012 and that complexity is the major reason, Elmendorf said.

“It can do an estimate of repeal, but it would take a lot of time and effort and it might not be very useful unless the nature of the provisions-- what you actually want to have happen--was spelled out,” he said.

Elmendorf did concede somewhat on one conservative criticism of the ACA: that the bill's policies were written to obtain a positive, deficit-reducing score, rather than putting the policies ahead of the score.

He said that was not unique to the ACA, but it showed lawmakers were willing to adjust policy proposals in light of budget concerns.

“I think the bad part is that sometimes policies are twisted around to meet particular budgetary targets that may be somewhat arbitrary. And I think in some ways too much attention is paid to CBO's estimates, which are, after all, only estimates with a great deal of uncertainty around them,” he said.

Permanent 'Doc Fix' Worth It

Elmendorf endorsed the recent enactment of an overhaul to the Medicare reimbursement system--the Sustainable Growth Rate--to doctors (Pub. L. No. 114-10). The proposal drew opposition from an unusual alliance of anti-deficit and anti-spending activists dismayed with the overhaul's $141 billion 10-year price tag and uncertainty over its long-run costs.

“I think it was good that the Congress did away with the SGR. I think it was unfortunate that the bill widened budget deficits, but the constant discussion about it had really driven out a lot of more useful discussion about health care policy. And I think it was good to have that bill passed so people's attention could refocus on more important issues,” he said.

Along those same lines, Elmendorf said the 2011 budget “supercommittee” was a missed opportunity to do away with similar policy “cliffs” that bedevil lawmakers. The panel arose out of he 2011 Budget Control Act (Pub. L. No. 112-25) and its failure to find common ground on ways to reduce the deficit led to the lower, sequestration-enforced annual spending caps many lawmakers now see as too tight. CBO was involved as members of the bipartisan panel sought informal scores for various proposals that were debated behind closed doors but ultimately never made public.

“I think all the issues where Congress is tied up in very short-term solutions are issues that are not getting the attention to the longer-term solutions they need,” Elmendorf said, specifically citing annual or biannual debates over the Medicare formula, expiring tax provisions, highway programs' reauthorization and whether to ratchet up the spending caps that took effect because of the 2011 committee's failure.

“There is a limited bandwidth, meaning there are a lot of issues, a lot of demands on members of Congress, and I think that the more time that is spent doing things that are just getting us from today to two months from now is time that's not going to the more important challenges,” he said.

Waiting to Close Budget Gap Better

Elmendorf, who cut his teeth in the CBO's macroeconomic analysis division during his initial stint there from 1993 to 1995, said he did not think a recent spate of soft economic data or slower growth globally risks sending the U.S. economy back into recession. But he said he did worry that measures to bring the budget closer to balance over the short-term would provide an additional obstacle for the economy to overcome.

“I think it is important for policymakers to consider that fiscal policy not re-emerge as a headwind to the economic recovery.”


Douglas Elmendorf

“I am concerned about the slow pace of economic growth. I am surprised again at how slow and fitful the recovery has been. I don't think there's a large risk of the economy going backward, but I am disappointed it's not going forward faster. And I think it is important for policymakers to consider that fiscal policy not re-emerge as a headwind to the economic recovery,” he said.

“As long as the economy remains weak and interest rates remain at zero or close to zero, additional fiscal tightening would be a further drag on the economy. If we deferred fiscal tightening until the economy is stronger and interest rates were well above zero then the Federal Reserve would have the capacity to offset the short-term dampening effects of fiscal policy,” he said.

'Actually Not Patient at All.'

As for his own future plans, Elmendorf remained mum. “Oh, I'm looking forward to not working as hard. But I don't know what job I'm going to take,” he said. “I feel very lucky to have a number of exciting opportunities, but I haven't decided yet what I want to do.”

He said it was “terrific dumb luck” to have been picked to head CBO, and he was not exactly certain how he came to the attention of lawmakers when the post opened after Peter Orszag's departure to head the White House's Office of Management and Budget. Prior to the CBO, Elmendorf had been at the Hamilton Project, a part of the Brookings Institution associated with Clinton-era Treasury Secretary Robert Rubin.

Elmendorf jogs in his spare time, sometimes with his black Labrador retriever, Hobie, in tow. And he said he wants to try to catch up on television shows and movies he missed while heading CBO. With twin daughters away at college and his wife of 22 years, Karen Dynan, working as the Treasury Department's assistant secretary for economic policy, Elmendorf is under no pressure to decide much soon. He notes, though, he is often asked for business cards now, which he does not have.

In looking back on his time at CBO, Elmendorf said one thing that annoyed him was the misuse of the agency's analysis by partisans. “It was not unique to the ACA and it was not unique to one party over the other. There are a lot of people who are trying to boil something down to the length of a tweet. And I think that can often be misleading,” he said.

Elmendorf said he learned to value patience at CBO, even if he rarely appeared impatient or ruffled publicly, something he laughed about.

“The biggest misconception about me is that I'm patient,” he said. “People sometimes wrote after hearings that I'd been very patient, that I was very patient in answering questions. And my friends and family know that I am actually not patient at all.”

To contact the reporter on this story: Jonathan Nicholson in Washington at jnicholson@bna.com.

To contact the editor responsible for this story: Heather Rothman in Washington at hrothman@bna.com.