No, The CBO Was Not ‘Way, Way Off’ On Scoring Obamacare

White House press Secretary Sean Spicer speaks during the daily White House briefing, Monday, Jan. 23, 2017, in the briefing room of the White House in Washington. (AP Photo/Evan Vucci)
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Aiming to erode public trust in the non-partisan Congressional Budget Office ahead of its report this week expected to show that the GOP’s Obamacare repeal bill will cause millions of people to lose their health insurance, Republican lawmakers and Trump administration officials are rewriting the history of the CBO’s analysis of the Affordable Care Act.

“If the CBO was right about Obamacare to begin with, there’d be 8 million more people on Obamacare today than there actually are,” White House budget director Mick Mulvaney told ABC on Sunday. “So I love the folks at the CBO, they work really hard, they do, but sometimes we ask them to do stuff they’re not capable of doing.”

On Sunday’s “Meet the Press,” Health and Human Services Secretary Tom Price piled on. “CBO has been very adept in not providing appropriate coverage statistics,” he said.

But in interviews with TPM, budget experts – including the CBO director during the conception and implementation of Obamacare – paint a very different picture.

They argue that the office’s projections of how many total people would gain coverage under Obamacare and of the average cost of health insurance premiums turned out to be quite close to the eventual reality. The office missed the mark in some areas, they said, due to unpredictable developments like the Supreme Court ruling that allowed states to refuse to expand Medicaid.

“The CBO’s predictions were not as accurate as we would have liked, but they were more accurate than the uninformed guesses of a lot of people at the time, and more accurate than the informed guesses of many other organizations,” Douglas Elmendorf, the director of the CBO from 2009 to 2015, told TPM. “I wish we had done better, but I am proud of what we did.”

A report by the Commonwealth Fund comparing the CBO’s 2010 predictions to how the ACA played out over the next five years found the agency was “reasonably accurate,” with estimates “closer to realized experience than those of many other prominent forecasters.”

Yet ahead of the CBO’s score of the GOP repeal bill—which could come as soon as Monday—Republicans in Congress have sought to discredit the non-partisan agency, calling its work “inconsistent,” “way, way off,” and “wildly inaccurate.” They have particularly harped on the four-decade-old agency’s handling of the Affordable Care Act (ACA), noting correctly that about half of the people the CBO projected to enroll in Obamacare’s individual health insurance exchanges ended up doing so.

That, says Brookings Institute’s Matthew Fiedler, who served as chief economist of President Obama’s Council of Economic Advisers, is missing the point.

“While the CBO was off on where people would get their coverage, they did pretty well on how many people would gain coverage overall,” he explained to TPM. “They expected the uninsured rate to fall roughly by half, in the long run, from where it was in 2010. If you look at the actual data we have today, the uninsured rate has fallen by about 43 percent. It’s a fairly modest error, and there’s probably more room to make progress if the law is left in place.”

Elmendorf, now the Dean of Harvard’s Kennedy School of Government, agreed that on the big questions surrounding the ACA, the CBO has been vindicated.

“CBO was right that insurance coverage would rise sharply under the ACA, which a number of prominent people disagreed with at the time,” he told TPM. “CBO was right that employers would not stop offering health insurance in large numbers. The CBO was right, roughly, about the level of insurance premiums today.”

“Premiums came in below CBO’s forecast, but they’ve since caught up,” he clarified. “CBO estimated what insurers would need to charge in order to cover their costs. But in fact, for the first few years, insurers charged less and suffered losses. Now they are charging closer to what CBO expected.”

Former CBO Director Douglas Elmendorf.

Elmendorf was similarly candid about what the agency got wrong.

The overall cost of the law to the federal government has turned out to be a full third less than originally predicted. The CBO also overestimated enrollment in the exchanges by about 30 percent, and underestimated Medicaid enrollment by about 14 percent, according to the Commonwealth Fund.

Elmendorf pointed to three main factors for the inaccuracies.

1. The Supreme Court ruled in 2012 in National Federation of Independent Businesses v. Sebelius that the Medicaid expansion provision of Obamacare was optional, leading more than a dozen Republican-controlled states to refuse to expand the federal coverage to millions of low-income people.

“Obviously, more people are uninsured because of that decision,” said Elmendorf.

2. Opponents of the Affordable Care Act argued at the time of its passage that it would push millions of business owners to dump their workers off employer-sponsored insurance plans, knowing the employees could get federal subsidies to enroll in the individual exchanges. The CBO analysis at the time also predicted this would happen. But the vast majority of companies, especially large ones, opted to keep their workers covered.

3. The success of the ACA hinged on the individual mandate, the requirement that all Americans buy insurance or pay a (relatively small) tax penalty. The CBO overestimated the power of the mandate’s tax threat, believing it would spur more people into buying insurance than ended up doing so.

“The mandate and penalties were less effective in moving people into the insurance market than we expected,” Elmendorf said. “That’s one of the key things we got wrong.”

Elmendorf said that his office read all the research they could find on tax compliance, but in applying those theories to health care, they ventured into uncharted territory.

“Most Americans pay their taxes even though very few are audited. They don’t just pay them because they won’t get caught, but because there is a social expectation that people will pay their taxes,” he explained. “This law set a social expectation that people would take up health insurance, but it had less of an effect than we expected.”

As for the inaccurate predictions on individual market enrollment, Fiedler says it comes down to the unpredictability of human behavior. “It’s more challenging to figure out which of two coverage options someone will take than to determine whether they will take any coverage option at all,” he said. “If some can choose between a subsidy on the individual market and an a subsidized employer plan that’s basically equivalent, it’s hard to know which way they’re going to jump.”

The current head of the CBO is Keith Hall, a conservative, anti-regulation economist who worked for the Bush administration. Still, the CBO analysis of the Republican bill to repeal the ACA is expected to find that between six and 15 million people will lose their health insurance if it is passed and implemented, due to a combination of cuts to Medicaid, reduced subsidies for lower income people to buy private insurance, and the repeal of the individual mandate.

As Republican lawmakers attack the agency’s reputation, budget experts from across the political spectrum have been rallying to its defense.

“The office is genuinely non-partisan and seeks to make sure its estimates are grounded in research literature,” said Douglas Holtz-Eakin, who led the agency under President George W. Bush, worked on Mitt Romney’s 2008 campaign and now leads the conservative American Action Forum. “Both Republicans and Democrats have led the office, and the work is always of the same high quality.”

“They’re the ultimate budget wonks,” added Stan Collender, a former top staffer on the House and Senate budget committees who worked for both Republicans and Democrats. “They produce the closest thing you’re going to get to facts in Washington. The Office of Management and Budget is good, but it’s in their interest to protect the White House. The CBO is only there to get the numbers right.”

Collender noted that Republicans sang a different tune when the CBO produced a report critical of President Bill Clinton’s health care plan in the early 1990s.

“Newt Gingrich was the one applauding them during when they said that Clinton’s health care plan would balloon the deficit,” he said. “So this criticism is total B.S. The Republicans like the CBO when it says things they want, and they hate it when it doesn’t.”

Though Democrats have openly disagreed with the office’s findings, Collender said, “They haven’t gone out of the way to discredit them. They’ve never said they’re going to ignore the CBO and come up with their own numbers.”

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Notable Replies

  1. So the CBO was off because they knew employers wouldn’t be assholes, and because they didn’t know the GOP would be such big assholes? Yeah, that destroys my confidence in them.

  2. Avatar for sanni sanni says:

    “Newt Gingrich was the one applauding them during when they said that
    Clinton’s health care plan would balloon the deficit," he said. “So this
    criticism is total B.S. The Republicans like the CBO when it says
    things they want, and they hate it when it doesn’t.”

    Not to overlook the critical review of hits and misses (and explanations) of the 2010 CBO review of the ACA, but I think that this is a critical point. To counter the Trump/GOP attempts to preemptively discard awaiting for CBO scoring on TrumpRyanCare, it is easy to make parallel to Spicer’s jokey way of relaying the President’s “Faith” in the truth of the jobs report last week, as opposed to all other previous job reports (which in various colorful ways Trump called bogus).

  3. Most Americans pay their taxes even though very few are audited. They don’t just pay them because they won’t get caught, but because there is a social expectation that people will pay their taxes

    Now who does that remind me of?

  4. “They produce the closest thing you’re going to get to facts in Washington. …” Stan Collender

    Kiss of death right there.

  5. They assume the CBO report is going to be bad for them. It is really bad because Price designed the plan to hurt older rural people in particular. That is the average Trump voter is hammered by the bill. When that becomes common knowledge the Republican base could lose faith in Trump.

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