One of the key steps in the federal legislative process occurs when the Congressional Budget Office (CBO), an agency in the legislative branch that studies the budgetary and economic impacts of proposed laws, scores a bill.
The scores can provide ammunition for advocates on either side of an issue—if the CBO’s cost estimate comes back lower than expected, for example, it can be a boon for a bill’s supporters, while a higher-than-expected score can be a major asset for opponents.
The CBO is supposed to be independent and nonpartisan so it can be neutral on the merits of policies and focus exclusively on the numbers. But on the issue of health care, the agency solicits input from individuals with financial ties to companies and groups fighting to stop the left’s most prominent health care proposal.
The CBO’s 19-member Panel of Health Advisers is stacked with health care executives and directors, including several who are on the payroll of pharmaceutical, health insurance, and hospital companies that are members of the Partnership for America’s Health Care Future (PAHCF), a dark money nonprofit created to fight against Medicare for All. The advisers are appointed by CBO’s director and do not require any formal confirmation (though congressional staff can be consulted when the members are being selected).
Through annual meetings and occasional consultations, the CBO seeks the views of its panel of health advisers on topics such as economic impact modeling and emerging issues in the health care marketplace. The CBO “benefit[s] from the advisers’ understanding of cutting-edge research and the latest developments in health care delivery and financing,” the agency writes on its website, also noting that while the advisers “provide considerable assistance, CBO is solely responsible for its work.”
The most recent meeting of the panel, held on Sept. 20, included a working lunch focused on the CBO’s modeling of single-payer proposals like Sen. Bernie Sanders’ (I-Vt.) Medicare for All Act.
PAHCF’s stated goal is to change the national conversation around Medicare for All by reducing support among Beltway elites and painting the plan as something only backed by a small group on the far left, according to internal documents published by The Intercept. The coalition laid out a “Beltway narrative” strategy in 2018 with a goal to “influence key thought leaders” through regular updates on health care issues, engagement with Beltway organizations, and digital ads targeted at a D.C. audience.
Hospital Corporation of America (HCA) is a member of PAHCF, and its president of clinical services and chief medical officer Jonathan Perlin serves on the CBO’s health advisory panel. HCA is the largest United States-based health care system, with 185 hospitals in the U.S. and the United Kingdom. The company spent $680,000 lobbying the government in 2018 and disclosed lobbying on the Medicare for All Act, which it opposes, in each quarterly report it filed that year.
The hospital industry is a key driver of health care costs under the current for-profit health system. Patients and insurance companies are often charged exorbitant amounts for basic treatments and services, and individuals who believe they have insurance coverage for the care they receive are hit with surprise medical bills when treated by out-of-network providers without their knowledge. Hospitals would likely have to charge less under Medicare for All because the government would have much more negotiating power. In addition to HCA, PAHCF counts among its members several other hospital groups, including the Federation of American Hospitals, American Hospital Association, Ascension Health, and Tenet Healthcare.
Health insurance companies, which would be virtually eliminated under a single-payer health care system and oppose Medicare for All, have representatives on the CBO panel.
Panel member Lewis Sandy is executive vice president of clinical advancement at UnitedHealth Group, which offers health insurance and information technology services and is the largest health care company in the world by revenue. UnitedHealth Group is not a member of PAHCF, but its CEO, David Wichmann, made the company’s opposition to the proposal clear in April on a post-earnings call with investors. Medicare for All would “jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best,” Wichmann said.
Blue Cross Blue Shield Association, a health insurance conglomerate that includes subsidiaries like Anthem, CareFirst, and Health Care Services Corporation, is a member of PAHCF. A senior vice president and chief data and analytics officer of its subsidiary Blue Cross and Blue Shield of North Carolina, Patrick Gezen, is a member of the CBO advisory panel. Blue Cross Blue Shield Association and its subsidiaries spent nearly $24 million on federal lobbying last year. According to data tallied by the Center for Responsive Politics, the company sharply increased its lobbying on the Medicare for All Act in recent quarters. So far in 2019, it has reported lobbying on the bill in 11 filings, while in 2018 it did not report lobbying on that session’s version of the bill at all.
Another industry that generally opposes Medicare for All is pharmaceuticals, which, like hospitals, would likely see the prices they can charge decrease because of the government’s strengthened negotiating power.
Eli Lilly and Company, which raised the price of its popular insulin drug, Humalog, by 700% over a 20-year period, is a member of Pharmaceutical Researchers and Manufacturers of America (PhRMA), a prominent drug industry trade group and member of PAHCF. Elil Lilly Board of Directors member Katherine Baicker is on the CBO health panel. Baicker is also a dean at Harris School of Public Policy at the University of Chicago.
Washington University law professor and government ethics expert Kathleen Clark told Sludge that the advisers’ ties to PAHCF members don’t necessarily undermines the panel, but there may not be sufficient disclosure of their positions.
“The ability to participate on such a panel no doubt is valuable, not just to the individuals but to the organizations that they are a part of,” Clark said. “Baicker is the dean of the public policy school, and she’s on the board of Eli Lilly. Is it clear enough when she’s speaking? Should there be an asterisk next to her so that it’s clear that Eli Lilly or PhRMA has taken a position on Medicare for All? It may not be obvious, particularly with her, because her primary affiliation may be seen as the dean of the public policy school.”
PhRMA also provides substantial funding to one of the academics on the CBO panel through its foundation. PhRMA Foundation made a three-year grant worth $500,000 in February 2019 to establish a new Center for Enhanced Value Assessment at the Tufts University Medical Center that will be led by Professor Peter Neumann, a member of the CBO panel and PhRMA Foundation board member. The PhRMA funding of Neumann’s center and his position at the PhRMA foundation is not disclosed on the CBO webpage.
“With regard to the academics, I really do wonder whether the disclosures of affiliation are adequate,” Clark said. “[Neumann] may not get paid more money because of the grant, but nonetheless, he’s the director of it and arguably there should be additional disclosure. This raises questions about their personal conflicts of interest and the institutional conflicts of interest.”
Panel members do have to disclose financial or political conflicts of interest to the agency, but the disclosures are not made public and, because CBO is part of Congress, they are likely exempt from the Freedom of Information Act.
In addition to their academic positions, several other CBO panel members are affiliated with health care consultancies that work for PAHCF members and other companies opposed to Medicare for All. Harvard professor and CBO panel member Leemore Dafny is an academic affiliate at economic consulting firm Bates White, which has worked for Blue Cross Blue Shield Association subsidiaries Anthem and Highmark, as well as UnitedHealth Group. Michael Chernew, a CBO panel member and professor who holds a position at Harvard named after former Wellpoint Health CEO Leonard Schaefer, is a partner at VBID Health, which has worked for Blue Cross Blue Shield Association subsidiary Blue Shield of California. Panel member David Lansky is president at Pacific Business Group on Health, which has worked for the drug company McKesson, a member of PAHCF member the Healthcare Leadership Council.
The CBO has not yet issued a complete score of Sanders’ Medicare for All Act, but in its recent scoring of a drug pricing bill, H.R. 3, it included language that closely echoes drug industry talking points. CBO wrote that the bill “would result in lower spending on research and development” and “lead to a reduction of 8 to 15 new drugs coming to market” over a 10-year period. PhRMA chief operating officer Lori Reilly told reporters a day earlier at a press conference, “We rely on capital investment to develop our R&D to produce new medicines. If you do diminish the return element, or the profitability element of that, you take away the incentive for many investors to put money in here.”
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