CBO Predictions Deeply Flawed

 

If the officials that referee the game are biased, it’s very hard to win.

In the game of politics, the Congressional Budget Office (CBO) calls the game. The CBO is supposed to be non-partisan, not subject to political favoritism, so their “scoring” of the impact of proposed legislation is important. But how accurate is their work and how non-partisan?

If you’re a regular follower of this blog, you know I’ve discussed this issue before (How Accurate is the CBO?). Today, I discuss it further because of its importance in the current healthcare debate and because there is more evidence of the CBO’s shoddy work.

Three Different Bills – Same Conclusions

Avik Roy, healthcare economist writing in Forbes, compares the CBO scores of three different Republican healthcare bills:

  • Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (RAHFRA)
  • American Health Care Act of 2017 (AHCA)
  • Better Care Reconciliation Act of 2017 (BCRA)

 

  1. RAHFRA – Full defund of ObamaCare and no replacement:

This bill passed both the House and the Senate in 2015, repealing the Individual Mandate, the ObamaCare Medicaid expansion, and all the subsidies for ObamaCare insurance exchanges including all of the ObamaCare tax hikes. No replacement of ObamaCare was in the bill (no funds to subsidize purchasing insurance). President Obama vetoed the bill.

The CBO scoring of the bill estimated 22 million fewer insured by 2026.

  1. AHCA – Gradual defund of ObamaCare and flat tax credit replacement:

The AHCA passed the House earlier this year and was sent to the Senate for deliberation. It varied from the earlier RAHFRA bill in that the repeals of ObamaCare’s Medicaid expansion and exchange subsidies are phased out over several years. The bill also repeals the regulations that tend to drive up ObamaCare premiums; overcharging young people through 3:1 ratio age bands, and actuarial value mandates. The system of new flat tax credits will cost $375 billion over 10 years.

The CBO scoring of the bill estimated 23 million fewer insured by 2026.

In other words, spending $375 billion more than RAHFRA would actually reduce coverage by a million more!

  1. BRCA – Gradual defund of ObamaCare and means-tested tax credit replacement:

The Senate alternative to the House AHCA bill replaces flat tax credits with means-tested tax credits. This benefits low income Americans more. The Senate bill spends $616 billion over 10 years compared to $375 billion for the AHCA. You would expect this $241 billion additional spending would lead to more people with insurance – right?

The CBO scoring of the bill estimated 22 million fewer insured by 2026.

In other words, the CBO believes the additional $241 billion spending buys coverage of only one million more. Even more ludicrous, if you compare these numbers to the RAHFRA, the CBO believes the additional $616 billion in spending for low-income Americans results in zero improvement in coverage! 

How can we explain these irrational numbers?

The answer seems to be the Individual Mandate. In the most recent scoring of the BRCA, the CBO estimates that 15 million people will voluntarily drop out of the insurance market if the Individual Mandate is lifted. This is expected in the first year after repeal of this mandate.

In other words, the CBO has “baked in” a 15 million reduction of the number of people insured with any repeal of the Individual Mandate – a government regulation that forces people to purchase a product they clearly don’t want.

It is ironic, if not tragic, that one of the most reviled portions of ObamaCare, the Individual Mandate – a new regulation so widely detested that it was challenged to the Supreme Court – has become the biggest obstacle in repealing and replacing ObamaCare with a new healthcare system that serves the people better. Somewhere on a golf course President Obama must be smiling.

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