The health reform debate has had its share of key players. Many of them have been elevated to star status (Snowe, Baucus, Stupak), although the meaning of “star” would depend on whom you asked. Perhaps a more apt term would be a “highly influential” player, or a “significant game changer”. All of these monikers could also apply to a collection of individuals who, over the course of the debate’s more interesting and contentious moments (think House debate), seem to be setting the fiscal parameters on which the key Senate debate is being issued — the Congressional Budget Office.

The CBO’s cost-setting results have been fodder for many media outlets, as they have seized on the big number — the lofty amount usually expressed in the hundreds of billions that’s sure to grab headlines and is ripe for the spinning from both sides in the debate. HHS Secretary Kathleen Sebelius puts her spin on the CBO’s influential numbers by showing how they support the Obama administration’s argument that cost controls from its vision of health reform will benefit the small business owner. How? By using the proposed healthcare exchanges to lower administrative overhead by increasing competition with other private and government run plans (public option provision).

I suppose that, magically, this can happen. However, Sebelius’s fact sheet explaining these reform benefits for business doesn’t really take into account how the government subsidized players in the exchanges will behave. Depending upon how much subsidy is piped into the public plan, how can the quality of what private plans offer avoid oversimplifation of their services in order to compete with the public plan? Will employers get fewer choices and be forced to spend more on coverage outside of the healthcare exchange, rendering Sebelius’s claim of lowered administrative costs irrelevant? Will even more potential patients migrate to government plans as a result?

Sebelius:

CBO attributes savings to “providing a centralized marketplace in which consumers could compare the premiums of relatively standardized insurance products.” This includes competitive pressure from a public health insurance option.

How much “pressure” will the public option place on the ability for plans to rein in costs? The CBO estimates by the year 2019, 30 million people will be insured through insurance exchanges, while about 20% of that number will go the route of the public option — a substantial number. Insurance exchanges may be hard pressed to keep plans’ premiums from being, essentially, regulated by the effect of government subsidies within that healthcare marketplace.

Congressional Budget Office data, cherrypicked by lawmakers on both the Left and Right, is no stranger to (mis)interpretation; the final version of the merged reform bill will rely more on the spin surrounding it than the reality upon which it is based.

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