From: Edward P. Burke
9305 Forest Haven Drive
Alexandria, VA 22309
Analysis of Congressional Budget Office (CBO) Letter to Speaker Gingrich Regarding the Estimated Cost of H.R. 2020
On October 14, 1997, CBO Director June O'Neill forwarded a letter to House Speaker Newt Gingrich in response to his earlier request for an estimate of how much the Federal government would have to expend to implement the provisions of H.R. 2020, the Medicaid Community-Based Attendant Services Act (CASA). This letter concluded that the implementation of CASA "would be very expensive," and "could cost the federal government $10 billion to $20 billion a year." I believe that this estimate is seriously in error, for the following reasons:
1. Within the letter, there are phrases such as, "Although any estimates of costs is highly uncertain..."; "Although there are no reliable estimates of the number of individuals...". One would think that this would lead to caution on the part of the estimators regarding the validity of their conclusions. This is not the case: even though it is acknowledged that CBO does not have reliable data on either the costs or projected clientele, it boldly projects a $10 billion to $20 billion annual cost for the bill.
2. The letter assumes that there would be a huge new demand for services. Practical experience indicates that this would almost certainly not be the case. There are a finite number of people with severe disabilities in the United States. While improvements in medical and assistive technology (etc.) have allowed more people with severe disabilities to live in recent years, concurrent improvements in education, rehabilitation (etc.) have lowered the level of dependence of many. The letter uses a figure of "8 million low-income individuals living in the community [who] cannot perform major activities of daily living" as a basis for its estimates. However, data from the Survey of Income and Program Participation indicate that, if the criterion of "major limitations in three activities of daily living" were used as a basis, only 1.4 million people would be eligible for services. In the real world, probably less than half of these would use personal assistance services.
3. While the letter provides estimates of the "cost per person" of implementing personal assistance services, there is no mention of the cost of nursing homes or institutions. This glaring omission belies the validity of CBO's attempts at comparing costs. Most recent studies have placed the costs of institutionalization at approximately $75,000/year, nearly five times the costs associated with CBO's "high end" estimate of $16,000/person in the community. Unless we anticipate a 500% increase in the number of people applying for personal assistance (and given the rather stable number of those who have severe disabilities, we do not), it would seem obvious that we would be far better off with the personal assistance approach.
4. CBO's assertion that "only a small fraction of long-term nursing home residents could be diverted to home and community settings and their places would likely be filled by new residents," is puzzling. On what data do they base this conclusion? The population of persons with severe disabilities is rather stable. At present, some live in institutions, most live in the community. If a given number move out of institutions because of this bill, and those already in the community receive better supports to remain in the community, how will the nursing homes be "filled" with "new residents?" Also, the assertion, that "only a small fraction" would move to the community does not square with reality. Of the hundreds of people with severe disabilities I have spoken with who were either present and former residents of nursing homes, not ONE has stated that he or she wanted to live in a nursing home. If the nursing home beds are "re-filled," it will not be with persons with severe disabilities.
5. CBO mis-interprets the language of the bill concerning the aggregate annual spending limitations. Saying such a limit would be "difficult to apply," CBO labels the bill as "open ended." The bill is not "open ended," and its language regarding annual funding limitations is clear. People with severe disabilities and their families know all too well that the Federal government has no problem "applying" current limitations on an annual basis: this is why we have waiting lists and continued dependence.
6. The letter totally ignores the benefits that would be derived from this legislation. Virtually every study on the unemployment of people with disabilities over the past 20 years has found that the lack of personal attendant services is a major barrier to the employment. With even marginally adequate personal attendant services, thousands upon thousands of people with severe disabilities would be able to go to work, become less dependent on formal government services, and become taxpaying citizens. This is totally ignored in the CBO letter.
7. Another huge omission in the CBO letter is the impact that this legislation would have on family members, friends, and current care-givers. Today, hundreds of thousands of these people are unemployed or underemployed because of their care-giving responsibilities (a phenomenon CBO rather callously refers to as providing care "at no cost to the federal government"). With this legislation, these people would be able to increase their employment options dramatically, become far less dependent on government services, and add a significant increase to the tax base.
In short, a much better researched and valid estimate of the costs and benefits of this legislation is needed. People with disabilities and their families have been shocked to learn of the current estimates, and they deserve much better treatment than this. CBO needs to listen to them, develop an understanding of "who we are talking about," look at the real costs of institutions (as it suggests for the community), and provide a much more realistic estimate of the actual costs associated with this legislation. In the end, I believe policy makers will be pleasantly surprised with the results.