Baselines, CBO and administrative actions

@mayagoldman_ reports the Biden admin is considering expanding Medicare’s definition of medically-necessary dental coverage administratively—-this could reduce the $230b or so cost of adding the new dental benefit to Medicare via legislation.. https://t.co/MnPVaKBFB0

— Amy Lotven (@amylotven) July 19, 2021

We should expect proposals over the next several weeks that seek to expand the current policy baseline. These proposals may or may not be good policy on their own. We should expect these actions to occur because the Congressional Budget Office (CBO) scores a reconciliation bill off the combination of current law and current policy.

If there is a scenario where the reconciliation bill wants to do $250 billion dollars worth of stuff in a particular policy area but the Biden Administration is able to use administrative discretion to do $50 billion worth of stuff in that policy area, CBO will build that $50 billion of administrative discretion into the budget baseline so the same amount of stuff that the reconciliation bill writers were to spend $250 billion on can now get done with a $200 billion CBO score. That extra $50 billion dollars can either be used for other stuff in other categories of the reconciliation bill or be pocketed as CBO savings to hit the topline target numbers.

We should expect some weird policy announcements as well as policy freezes over the summer as a means of creating a favorable baseline for the CBO score of the reconciliation package. So when you see stuff that looks weird and unusual, take a breath and think if there are CBO scoring implications for the summer.