CBO’s fixation on individual mandate found in faulty figures

Monday, the Congressional Budget Office (CBO) released its coverage projections for the Senate healthcare bill. According to the CBO, 22 million Americans would lose health coverage over the next decade under the Senate’s plan. According to the CBO’s analysis, the repeal-and-replace legislation would reduce the deficit $321 billion over the next 10 years.

The report estimates that in 2018, 15 million more people will be uninsured compared with the current law, increasing to 19 million by 2020 and 22 million by 2026. The primary reasoning underpinning these monumental projections is rooted in the proposed elimination of the individual mandate.

The CBO’s faulty coverage predictions

In recent years, the CBO has made several projections about important aspects of the Affordable Care Act (ACA) and various health care reforms. Time and time again, the CBO’s projections have differed significantly from the actual outcomes. Both the CBO’s cost and Medicaid expansion enrollment projections have been significantly below the actual results seen since the passing of the ACA.

In 2010, the CBO produced a report with predictions of expansions in Medicaid enrollment; these figures were revised up in 2014, and again in 2015. In reality, Medicaid expansion is much higher than the CBO expected after the passing of the ACA. In fact, roughly 50-percent more people have enrolled in Medicaid in the states that expanded than the CBO had assumed would.

The CBO’s 22-23 million ballpark figure

In 2015, the Restoring Americans’ Healthcare Freedom Reconciliation Act passed both the House and Senate, before being vetoed by the president. The CBO produced a report predicting changes in the numbers of uninsured resulting from full defunding of the ACA. Relative to baseline projections, the CBO stated that the repeal legislation would result in about 22 million additional uninsured Americans. 

Earlier this spring, the American Health Care Act passed in the House with the intention to gradually defund ACA and replace it with a flat tax credit system of health care. This bill, which includes $375 billion in replacement funding, compared to no replacement in the 2015 bill, received a CBO projection of 23 million additional uninsured relative to the number under current law.

This is where we begin to notice that the numbers just don’t add up; how does $375 billion in extra funding and a gradual repeal result in 1 million more uninsured Americans?

Yesterday’s report on the proposed Senate healthcare bill shows a similar number. The 22 million additional uninsured figure has been thrown around a lot in the past 24 hours, yet the Senate bill provides $241 billion more than the house bill and $616 billion more than the 2015 bill. So why do we keep hearing the 22-23 million uninsured figure?

Bad methodology or an obsession with the individual mandate?

It is important that we acknowledge the large degree of uncertainty, as well as key mistakes in the CBO’s past projections. It would be particularly useful to know what steps the CBO has taken to prevent mistakes in the future after overestimating the effects of the single mandate and failing to properly anticipate how people would react to changes in the healthcare market.

Perhaps the CBO could inform lawmakers exactly how it has adjusted its faulty models and assumptions. A more likely explanation for the CBO’s faulty modeling may be found in its obsession with the idea that the individual mandate is forcing swathes of the population to buy coverage that otherwise would not.

Jack Salmon is a Washington, D.C.-based researcher focused on federal fiscal policy. Salmon holds an M.A. in political economy with specializations in macroeconomics and comparative economic analysis from King’s College London.

The views expressed by contributors are their own and not the views of The Hill.