How the Congressional Budget Office Estimates Medicare’s Prescription Drug Costs : Planet Money : NPR

Chip Somodevilla/Getty Images

Chip Somodevilla/Getty Images

If you’re a congressman or a senator and you have an idea for a new piece of legislation, at some point someone has to tell you how much it’s going to cost. But how do you put a price on something that doesn’t exist yet?

Since 1974, this task has been handled by the Congressional Budget Office (CBO). The agency plays a key role in the legislative process: Whether a bill passes or not depends on the cost estimates provided by the CBO.

Yet economists and budget experts at the CBO are much more than number crunchers. Sometimes, when the job is really most interesting, they are essentially responsible for Predict the future. CBOs have to estimate costs for unreleased products and imagine markets that don’t yet exist—and there will always be people who hate the numbers they come up with.

On today’s show, we go inside the Congressional Budget Office and tell the twisty story behind pricing on a massive piece of legislation – the nation’s final decision to provide prescription drug coverage to seniors. At the time, some of the drugs the CBO was trying to price didn’t even exist yet. But the CBO still had to tell Congress how much the bill would cost – even though the agency knew better than anyone that its calculations would almost certainly be wrong.

Today’s show is produced by Willa Rubin and Dave Blanchard, with engineering by Josh Newell. Keith Romer is in charge of editing, and Sierra Juarez is in charge of fact checking. Jess Jiang is our acting executive producer.

We want to hear what you think about the show! We have a short anonymous survey we’d like you to fill out: n.pr/pmsurvey

Subscribe to Planet Money+ to help support Planet Money and get bonus episodes In Apple Podcasts or plus.npr.org/planetmoney.

These links are always free: Apple Podcasts, Spotify, Google Podcasts, NPR One Or wherever you get your podcasts.

Find more Planet Money: twitter / Facebook / Instagram / Tik Tok / We Weekly communication.

music: “Looking back“”What Da Vinci?” and”Parade floats“”.