Problems With The CBO’s Analysis Of The American Health Care Act

by Avik Roy

The initial media coverage of the Congressional Budget Office’s analysis of the American Health Care Act—House Republicans’ Obamacare replacement—has played out along predictable lines. Liberals are trumpeting the CBO’s top-line estimate that the AHCA would lead to 24 million fewer U.S. residents having health insurance in 2026 than would under current law (i.e., Obamacare). Republicans, including senior members of the Trump administration and Congressional leadership, have expressed criticism of CBO’s estimates, leading to gravely intoned commentary from Thought Leaders that Republicans are attempting to “delegitimize” this important, non-partisan institution.

And it’s true that the CBO is non-partisan, that its personnel are sincerely motivated to do credible work, and that it’s an important institution. But none of those things make the CBO infallible.

Indeed, the CBO has already revised its projections of enrollment in Obamacare’s exchanges several times, as illustrated in the chart below. They’ll have to revise them again, because their current (March 2016) baseline predicts that exchange enrollment will skyrocket to 18 million by 2018. There’s, in fact, no evidence that exchange enrollment will be significantly higher than current levels going forward, given rising premiums and a worsening risk pool.

That the CBO is working off its March 2016 baseline is extremely important, because it’s AHCA’s performance relative to that rosy scenario that leads to the dramatic 24 million number. CBO assumes that there will be 18 million people enrolled in the exchanges under current law; hence, the CBO’s view of the difference between current law and the AHCA is off by at least 7 million on that basis alone. 

All in all, there’s reason to believe that the real decrement in coverage of the AHCA relative to the ACA is closer to 5 million, not 24 million. Furthermore, that 5 million decrement can be fixed with a few technical changes to the bill. I detail all of this in a new piece over at Forbes, for those who’ve had their morning coffee.

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