Up Front: TO ERR IS...

NEW MATH ON CAPITOL HILL

Q: How can a congressman tell when no one is taking his ideas seriously?

A: When he lowballs the cost of his prize legislation

by $210 billion and no one

notices.

Representative Jim McDermott (D-Wash.) insists he's a key player in health-care reform. His bill to create a Canadian-style health system in the U.S. boasts the largest single block of sponsors in Congress (page 82). And, he says, it's the only one with the seal of approval from the Joint Committee on Taxation.

But BUSINESS WEEK has learned that the tax estimators based their work on faulty numbers--provided, Hill sources say, by McDermott's staff. Under the plan, states would pay 14% of health costs. McDermott's staffers took the Congressional Budget Office's estimates of federal spending needed to pay for the plan, then subtracted 14%. Trouble is, CBO had already deducted the states' share.

The error shrunk the cost by $210 billion over three years. Worse, for six weeks, until BUSINESS WEEK found it, no one cared to see if the numbers added up. A McDermott spokesman admits mistakes were made, but blames the Joint Committee and says the gap may be less than $210 billion. He insists the error doesn't reduce McDermott's clout: "We still have 92 co-sponsors." None of whom, apparently, paid any attention to the money.

TABLE:

EST. TOTAL NATIONAL

HEALTH COSTS, 1997-99: $2,981

MINUS STATES'CONTRIBUTION: -14%

MINUS FEDERAL HEALTH

SPENDING UNDER EXISTING

PROGRAMS: -$1,066

NET NEW FEDERAL COST: $1,498

NET COST: S1,498

OOPS... MINUS STATES'

CONTRIBUTION: -14%

NET NEW FEDERAL COST: $1,288

UNDERESTIMATE

OF COST: $210

DOLLAR AMOUNTS IN BILLIONS

EDITED BY WILLIAM D. MARBACH AND JULIE TILSNER by Mike McNamee