How A Group Of Coders And Economists Created A Machine To Predict Future Health Care Costs

Oct 15, 2019

This is the first part of a three-part series diving deep into the heart of the debate dividing Democrats in their efforts to fix the U.S. health care system. It was reported by the team at Tradeoffs, a new podcast exploring America’s confusing, costly, and often counterintuitive health care system.

Tonight, Democrat presidential hopefuls square off in Ohio for their fourth debate of the primary. When they get to health care, they will likely go heavy on rhetoric but light on details. As soon as tomorrow morning, though, these politicians may be drowning in data.

The Urban Institute, a center-left think tank, will publish the first report of the 2020 election cycle to price out popular reforms like “Medicare for all” and a so-called public option.

Just 25 years ago, estimates like these would have been near-impossible.

Disappointed But Determined

Linda Blumberg’s desk sits two feet from failure. 

“That whole shelf down there are files from when I worked on health care reform for the Clinton administration," she said, motioning toward a line of manila folders and faded papers.

In 1993, President Bill Clinton built a team to deliver on his promise to provide health care coverage for every American. Twenty-seven-year-old economist Linda Blumberg was thrilled to sign on.

“It was a baptism by fire,” she laughed.

Blumberg was one of hundreds of staffers tasked with formulating the president’s health reform bill. Her group was in charge of estimating the bill’s cost and impact on everyone from individual families to the federal government.

They struggled mightily – but they were in good company.

Everyone in Washington struggled to pinpoint just how much the president’s plan would cost. Even the Congressional Budget Office, considered the ultimate authority on calculating policy costs, was stumped. Their director, Robert Reischauer, bluntly admitted to members of the House Committee on Ways and Means: “There’s certainly a great deal of uncertainty that surrounds our numbers and every other set of numbers.”

A lawmaker pressed Reischauer to defend his staff’s estimates, asking “Are you quite sure you’re within the ballpark?” Reischauer shot back, “We’re within the town the ball park’s in, I’m sure of that.” The gallery laughed, but it was increasingly clear the uncertain estimates had become a serious problem for the Clinton health reform effort.

“We saw that as a fatal blow to a process of getting health insurance to all Americans,” said Len Nichols, an economist who worked alongside Blumberg in the Clinton administration.

Months later, the reform effort was declared dead by Senate Majority Leader George Mitchell.

Nichols and Blumberg agreed they needed to be ready the next time Washington got serious about health reform.

“We can’t change the politics,” Nichols said. “But what we can do is improve the numbers so that the next generation of politicians can make better decisions.”

Together, the two left the White House, disappointed but determined.

Pioneers In Predictive Power

The pair convinced the Urban Institute, a center-left think tank in Washington, D.C., to pioneer a cutting-edge tool that could simulate health policy ‘what-ifs.’ They invested deeply in data, computing power and a crack team of PhDs, mathematicians and programmers.

Soon, they had created this thing lawmakers didn’t have before: a machine to predict—in detail—the costs and benefits of complex health proposals.

It was more precise. It was more trustworthy.

Before long, everybody was using their numbers.

Chief Justice John Roberts cited the Urban Institute in an opinion preserving Obamacare. Two years later, with Obamacare on the ropes again, the Urban Institute was the first to show that 30 million people would lose coverage if Republicans repealed the law without immediately replacing it. Conservative lawmakers were forced to change course.

Now, as the Urban Institute team watches the Democratic debate bump along, heavy on rhetoric but light on details, they see a need for new numbers.

How Will 'Medicare For All' Measure Up?

Economist Doug Holtz-Eakin, who also ran the Congressional Budget Office, said their timing is perfect. 

“People have been saying ‘single payer is wonderful.’ ‘A public option is wonderful.’ Of course, they're all wonderful in the abstract," he said. "Now let's put them head to head and see where they are similar, where they are different.”

Some believe the public option is drastically different from “Medicare for all.” Some believe the plans are actually more alike.

Trying to better understand both – by comparing their cost and impact – is why the Urban Institute wrote the paper, said Blumberg.

“There is a spectrum out there of things that you can do, depending upon how you evaluate these different tradeoffs," she said. "We have to decide as a society: where on the spectrum are we collectively? But we should understand that we've got a lot of strategies and options."

Tomorrow, in the second part of our series, the Tradeoffs team dives deep into the Urban Institute's new numbers. What do they reveal about the pros, cons, and price tags of the two proposals polarizing leading Democrats?