Today I want to explain a hidden yet very serious hurdle to governance in America, a place where corporate-friendly technocrats have burrowed in to policymaking to prevent elected leaders from improving our lives. It’s about something called the Congressional Budget Office, or CBO, an institution with an anodyne-sounding name that ostensibly scores legislative proposals based on their likely spending and revenue costs. To the extent that anyone has heard of CBO, it is a source of information about the Federal budget deficit. But I’m going to explain why this institution is a key and hidden reason our democratic system is failing.

I’ll start with an experience I had a couple of days ago in a doctor’s office for a routine medical procedure. The doctor was late, because a bunch of appointments had jammed up in the schedule. When he came in, he was apologetic. “We don’t have enough time with patients anymore,” he said. He had a calm and methodical demeanor, but he was clearly frustrated at what he called “the McKinsey-style” management of the hospital.

While there used to be a few administrators to take care of the practice, now there’s an entire building of them. “They spend their time making us more efficient,” he said, “which is to say, thinning us out so they can pay for themselves.” He reserved particular scorn for United Health Group, which seems to put pressure on the entire system. I’ve seen many doctors in my life, with increasing eye-rolling about private equity, but this kind of outburst was new.

I’m reminded of that episode because of a column written by a colleague of mine, Hannah Garden-Monheit, who was the former head of policy planning at the Federal Trade Commission. She described how her father, suffering from cancer, had his leg amputated. That same United Health refused to pay for either rehab or a prosthetic leg, calling it medically unnecessary. He spent weeks longer in the hospital as a result, driving up expenses.

Her family desperately tried to get to someone who could help. “This is unreasonable, but I don’t know how I can fix it,” said one call center worker for the company. Eventually, they gave up, because it was simply too difficult to fight with the company while he was battling cancer. He died having spent his final time on earth in a wheelchair.

The only reason Garden-Monheit could tell this story publicly is because he died. While he was alive, he asked that she keep quiet, scared that the company would “retaliate against him while he still needed their coverage for his cancer treatments.” Imagine that, living in fear of corporate retaliation, without being able to walk, at the end of one’s life.

This cruel process of asking permission from vengeful insurers for treatment prescribed by a doctor, and being denied arbitrarily, is known as “Prior Authorization.” And it is something that has become routine in every part of the U.S. health care, except for traditional Medicare. (If you’ve encountered this situation, Garden-Monheit has set up a site where you can comment on your experience being denied care. She will use it for advocacy to end prior authorization.)

The rationale for this system is to control costs. Big insurers now send decision-making over medical care to third parties that can veto decisions by doctors. Increasingly, insurance companies have bought those third parties, as UnitedHealth has with a company called NaviHealth, and Cigna Group did with EviCore, a company that uses “advanced predictive AI algorithms” to adjudicate claims.

The rise of prior authorization is a part of history that I’ve written about, whereby economists, starting in the late 1960s, decided the problem with our health care system is that patients and doctors are wildly irresponsible consumers of medical resources. Health insurance, so went the argument, created a “moral hazard” whereby people could just use too much medicine, like it was an all-you-can-eat buffet. The policy solution was to put a financier in between patients and doctors to ration care, which we see in the form of co-pays, deductibles, coinsurance fees, and then prior authorization systems. At the same time, economists believed in leaving medical prices and profits unregulated, as well as fostering consolidation, to let the free market make things more efficient.

It’s an insane theory, and it has led to an excessively bureaucratic system organized around rent-seeking. Garden-Monheit, and a health care analyst I work with named Emma Freer, have come out with an excellent report on prior authorization, and how it should be banned. It’s chock-full of statistics on the harm and costs of this system. Private systems are full of this second-guessing of the judgment of doctors, and yet are very expensive.

By contrast, traditional Medicare allows doctors to prescribe treatments without much oversight, but it regulates price. On the rare occasions when a third party oversees a medical decision, that third party doesn’t have an incentive to deny care but simply to see if a treatment is medically necessary. The costs for this public system are far lower than for its private alternatives, like Medicare Advantage or commercial insurance.

What’s interesting are two things. First, prior authorization, which ostensibly should reduce costs, almost certainly does the opposite. There are a few industry-funded studies that argue otherwise, but nine of out of ten doctors say that prior authorization increases utilization of health care services. Patients have to try ineffective treatments, they get sicker and require costlier care, they need more office visits, and administrative bloat is expensive. Garden-Monheit’s Dad may not have gotten a prosthetic leg, but he did ultimately require a lot of extra and expensive time in the hospital instead of being at home. And that’s not to mention the significant administrative burden of denying care. Essentially, prior authorization is pure corporate empire building, and there’s no evidence it’s even good for Wall Street.

And that brings me to the second interesting nugget. It turns out, politicians hate prior authorization. And yet, despite the fact that it’s costly and loathsome, and may not even help Wall Street, they still can’t seem to pass legislation to do anything about it. There’s a very modest bill, called the Improving Seniors’ Timely Access to Care Act, that would require the standardization of transactions and include some reporting of prior authorization data to the government. This bill has an overwhelming majority of the House of Representatives as co-sponsors, at 290 members, and wide support in the Senate. It has been introduced in every session since 2019.

You’d think it would easily pass, as prior authorization keeps getting worse, especially with AI being introduced to make the process even more opaque. And yet even this bill, a mild corrective, can’t pass. Why not?

The answer is the Congressional Budget Office. In 2022, the House passed this legislation, but the Senate did not, because Senators were worried about the cost of the bill. Now, as I’ve noted, that’s a weird concern, because banning prior authorization would likely reduce health care costs and Federal spending. Fee-for-service Medicare, which doesn’t use prior authorization, is much cheaper to run than Medicare Advantage, which uses it extensively.

But that is only true in the real world. In the world of Congressional accounting, doing something to cut costs is actually expensive. The Congressional Budget Office is the one that does this accounting. Here’s the chart CBO put together for that mild legislation. It shows that if passed, costs to the Federal government go up by a billion dollars in year three, then two billion, costing sixteen in aggregate in the full ten year window.

How did CBO calculate this chart? We don’t know. There’s no transparency, and no modeling that I can find. But the rationale was exactly their acceptance of the discredited moral hazard framework that has ruined our health care system. “By placing additional requirements on plans that use prior authorization,” CBO wrote, “we expect H.R. 3173 would result in a greater use of services.” Essentially, consumers and doctors are wildly irresponsible and will overspend unless a financier is rationing care using prior authorization.

What CBO is doing is not calculating costs and revenues, but making a very specific political claim, hidden by opaque regression models the public doesn’t get to see.

And these kinds of decisions are routine. For most of the 2010s, CBO vastly overstated the costs of government spending, assuming in their base models that interest rates would rapidly rise to 6% for any dollar the government would borrow, even though they stayed at zero. Why? Well they were copying the assumptions of JP Morgan and Goldman Sachs. And that political choice, hidden in neutral-sounding charts, crippled policymaking. I have seen CBO score as costless models that move trillions of dollars of risk to the Federal Deposit Insurance Corporation. When I asked why, one of the staff told me “oh well we don’t know how to calculate the costs of a financial collapse so we score it at zero.” I mean, what?!?

Ask a competent staffer in Congress and most of them have similar stories, CBO’s choices are often political and opaque. Of course, someone gets to see these models and make decisions around them; the staff at CBO does, naturally. Perhaps committee chairmen, if they are aggressive, can sneak a peak. Indeed, fighting with CBO is one of the dark arts in Congress, and usually fruitless. But the main overseers of these models are outside advisors, basically a set of experts that CBO picks. There’s a list of their 15 advisors in health care as of 2025. I listed the six with corporate affiliations.

• Heather Dlugolenski, SVP at Cigna Healthcare

• Michael Chernew, Partner, VBID Health

• Sergio Santiviago, Government Relations, CVS Health

• Katherine Baicker, Board of Directors, Eli Lilly

• Anne Karl, Partner, Manatt, Phelps & Phillips (a big corporate law firm)

• Melanie Whittington, Center for Pharmacoeconomics at the investment bank LeeriIl

That’s a lot of conflicts of interest! Three of them represent monopolies or near-monopolies profiting from higher spending, and there is no one who represents the interests of employers, consumers, patients, or labor. And indeed, Chernew, who is also at Harvard Medical School, runs a consulting firm that designs systems based on the idea of consumer over-consumption of health care! He would never consent to let CBO assert that his business creates more cost bloat. But it does! Now, these people are no doubt experts in their field, but they are also the unelected people that oversee the economic models determining how Congress understands the effects of its legislative proposals.

And that is crazy.

Why is CBO so powerful? It’s because it is institutionally designed to serve as a chokepoint for legislation. For a few years, I worked on the Senate Budget Committee, which oversees the Congressional Budget Office, so I learned a fair amount about it. The CBO was founded in 1975, as part of a broad institutional elevation of neoliberal economists. The Nixon administration had the Office of Management and Budget, which could overwhelm Congress with economic analysis, and so Congress decided they needed an institutional counterweight. Thus was born the CBO and the Budget Committees.

The first director of CBO was a Wall Street-friendly Democrat named Alice Rivlin, and she insisted upon “independence” of CBO from Congress, asserting that economists would make important policy determinations about how to measure costs and revenues. This decision is much like the creation of the “independence” of the Federal Reserve, another 1970s invention. Yet far from building a Congressional counterweight to the Presidency, Congress ended up creating a self-contained and self-interested network of budget experts who passed back and forth between OMB and CBO. It looked like pushback against Nixon, but was in fact the erection of a chokepoint for economists to veto legislative proposals they didn’t like in both the executive and legislative branches of government.

I saw this dynamic up close when I sat, as a Senate aide, in on one of these advisor sessions. It was a very strange experience, as CBO staff meekly presented their models to the economists who sat around a U-shaped table pontificating loudly and obnoxiously about politics. The Budget Committee staff, who worked for the actual elected officials that were ostensibly in charge, had seats in the back, and we were not allowed to speak.

I was there for a CBO session modeling trade legislation. One economist, Justin Wolfers, was discussing how the CBO simply had to get Congress to pass a free trade agreement, the Trans-Pacific Partnership, because, he claimed, the TPP might cure cancer and bring world peace. Two other economists bickered about whether the harm to domestic workers from trade was concentrated among the children of the rich. And this session was supposed to be about budgeting for costs and revenues! It was truly surreal. This session happened in 2016, just before Trump got elected due to public revulsion at precisely these kinds of secretive sessions.

CBO has enormous power over the flow of legislation. Formally, it doesn’t necessarily seem that way. The Budget Committees don’t control spending or taxation, they are process oriented and just create ways for legislators to raise points of order if legislation increases deficits. These could be voted down, but politicians don’t like being called out as increasing the deficit, and can’t explain that the process for determining these numbers is all based on fake models making political claims about the future. Moreover, there’s also the issue of timing; committees and leaders will often tell members their bill can’t get a vote “until there’s a CBO score,” and guess who decides whether to actually score a bill? Yes, those same nerds, who have enormous and secretive power.

As a result, most members of Congress tend to accept the word of the CBO as gospel, and most legislative deals require some sort of budget neutrality as determined by the CBO. To “spend” money requires a “pay-for,” meaning that if the CBO decides a reform costs money then it does, and you need to find something that the CBO decides brings in money. In other words, if you want to cut prior authorization and save money, you have to find tax revenue or other spending cuts to to “pay for” it. That makes no sense, but there we go.

There’s one last point about the CBO and the political parties. The Republicans pay close attention to how these models work, and are constantly pushing the CBO to change its frameworks, to do things like making it so tax cuts for the rich don’t cost as much because presumably they actually bring in more revenue. Lots of corporate money goes into fighting over budgetary assumptions, whereas the left basically doesn’t know the CBO exists. And because of that, the CBO scores have an especially strong psychological hold on Democrats, who desperately want to trust institutions, even when those institutions are structurally dishonest.

And that is why, despite the fact that prior authorization is costly, cruel, and unpopular, and probably doesn’t even increase corporate profits, it is very hard to stop. Congress has delegated its thinking around political economy to people with insane assumptions about the world, but who clothe their assumptions in the look of technocratic budget charts conveying authority.

The populist solution here would be to simply acknowledge that budget modeling is inherently political, and split the CBO into majority and minority institutions. Then the Democrats and Republicans could come up with their own arguments for why something costs what it does, and fight about it, instead of having elected officials beg secretive nerds to soften their assumptions slightly. Regardless, when someone scoffs at experts, know that, well, they’re not wrong. And if you get sick or need care, that automated process on the other side that tells you and your doctor what treatment is right for you, well, that’s the voice of an expert speaking, distantly, from the cold and dysfunctional logic of the CBO.

Thanks for reading! Your tips make this newsletter what it is, so please send tips on weird monopolies, stories I’ve missed, or other thoughts. And if you liked this issue of BIG, you can sign up here for more issues, a newsletter on how to restore fair commerce, innovation, and democracy. Consider becoming a paying subscriber to support this work, or if you are a paying subscriber, giving a gift subscription to a friend, colleague, or family member. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.

cheers,

Matt Stoller