Confirmed: CBO Estimates on Obamacare Repeal Consequences Were Disastrously Wrong

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Posted: Feb 22, 2019 10:35 AM
Confirmed: CBO Estimates on Obamacare Repeal Consequences Were Disastrously Wrong

Source: Screenshot via C-SPAN

I realize that Republicans' failed "repeal and replace" adventure feels like ancient history at this point -- especially with Democrats increasingly embracing their next reckless healthcare scheme -- but going back to review the record can occasionally be quite illuminating.  You may recall that one of the rhetorical lynchpins of the Left's anti-repeal fear mongering was the ubiquitous assertion that "millions" would "lose healthcare" if the GOP had succeeded in their legislative effort.  I spent quite a lot of energy during that debate debunking various claims and checking facts.  One of the major points I emphasized was that the projections of "lost coverage" relied on extremely questionable analyses from the nonpartisan Congressional Budget Office:

Fully 73 percent of "lost" coverage would arise from individuals making a choice to exit the marketplace after the federal government ceased requiring every American to purchase insurance.  CBO analysts apparently believe the mandate has mystical influence over consumers' decisions, unlike other incentives built into Republican bills -- such as a surcharge for non-continuous coverage, or a six-month waiting period to obtain plans for people with nonexistent or lapsed coverage.  The folly of this approach is exposed by the second factor Roy mentions, which accounts for almost all of CBO's remaining coverage differential between Obamacare and various replacement plans: The "outdated baseline."  What does that mean?  Put simply, CBO has always vastly overestimated how many people would be compelled by the individual mandate tax to purchase plans.  Even as their projections have been disproven by actual Obamacare sign-ups, CBO hasn't sufficiently updated their expectations to reflect, well, reality.  They've instead rooted their latest analyses in 2016 projections that have already been debunked by real-life results, to the tune of millions of people.

My point was that of the big, scary "lost coverage" number (in the ballpark of 23 million people), almost all of it was based on a combination of (a) estimates of people choosing to forego Obamacare plans if they weren't required to buy them, and (b) CBO's wildly and provably inaccurate enrollment projections. In the excerpt above, I reference "Roy," as in healthcare wonk Avik Roy, who'd been beating the drum on this very same issue.  Another flaw he raised was CBO's bizarre assumption that if Obamacare's individual mandate tax were repealed, millions of people would supposedly drop their Medicaid coverage, which was costing them nothing out-of-pocket.  Anyway, I've rehashed these arguments because new government data confirms that CBO's number crunchers were, indeed, catastrophically wrong:

A new report from government actuaries has revealed that the Congressional Budget Office was scandalously off in its estimates of the impact of Obamacare's individual mandate, a miscalculation that has had significant ramifications for healthcare and tax policy over the past decade. CBO estimates about the importance of an individual mandate to a national healthcare scheme prodded President Barack Obama into including the unpopular provision into the law in the first place. The mandate projections also played a key role in President Trump's two major legislative initiatives. The fact that the CBO assumed 14 million could lose coverage mainly due to the elimination of mandate penalties helped kill the effort to repeal and replace Obamacare...the CMS report revealed that 2.5 million more people would go without insurance in 2019 due to the repeal of the individual mandate's penalties, and the impact would be "smaller" thereafter...Medicaid enrollment is [now] assumed to be unaffected.

In guessing the enrollment impact of axing the individual mandate tax on both the exchanges and Medicaid, CBO was off by more than...15 million people. "While any CBO analysis of the Republican bills was likely to project large coverage losses due to the cuts to Medicaid and subsidies, if CBO had more realistic assumptions about the mandate, the numbers would have been significantly smaller, and perhaps left more room to convince centrist Republicans to get on board," Klein writes.

He also points out how CBO's absurdly inaccurate analysis actually helped the GOP make the math work on tax reform. The tax law repealed Obamacare's central mandate, which created new (on-paper) revenues to play with. Between Obamacare's passage, the unsuccessful repeal fight, and tax reform, CBO's flagrant misjudgment on this crucial issue has now reverberated in significant ways, for years. Klein concludes, "given the outsized influence that the CBO has on policymaking in Washington, the CBO's misfire on the individual mandate should be a major story."  Yes, it should be, especially as it pertains to the pressing question of how we move forward from here:


While the CBO fulfills a vital role in the realm of American governance, it's clear that some reforms are desperately needed.  Some of these suggestions seem like a good place to start.