Politics & Policy

The CBO’s Flawed Forecast

(Reuters photo: Eric Thayer)

Anyone who tells you that the Congressional Budget Office has found that 14 million Americans would lose their health insurance in 2018 under the House Republicans’ health-care bill has either misunderstood the organization’s report or is trying to spin you. The report actually concludes that most of the people who would leave the insurance rolls would do so voluntarily, because under the Republican bill they would no longer be fined for taking that step, as they are under Obamacare.

Moreover, the projection cannot inspire confidence. The CBO has long believed that Obamacare’s individual mandate has a powerful effect on enrollment in health insurance — more powerful than a dispassionate look at the evidence can sustain. As enthusiastic a champion of Obamacare as Jonathan Gruber has found that the fines have so far had little noticeable effect on the number of people with insurance. The CBO’s overconfidence helps to explain why its projections about enrollment in Obamacare’s exchanges have been so wrong for so long.

The CBO has also long believed that gentler methods of encouraging people to get coverage — such as giving them tax credits they could use for the purpose, as the Republican bill does — would not do much to increase coverage. Insurance companies could devise and market policies with premiums equal to the credit, so that individuals could arrange to protect themselves from large health expenses at no direct cost to themselves. CBO would have us assume, instead, that both the companies and their customers would prefer to leave a lot of the money on the table.

The organization may very well be full of fair-minded professionals who are doing their best, but their model is systematically biased. It deserves no deference.

None of which is to say that House Republicans should be satisfied with their bill. The CBO’s analyses themselves suggest that a more aggressive attack on Obamacare’s regulations would increase enrollment by making coverage cheaper. House Republicans have refused to take that step because of a misguided fear that the Senate parliamentarian will rule that a bill with regulatory changes must be subject to a filibuster.

If Republicans did that, the numbers in the CBO’s report on their bill would improve. But the real reason to do it is that the policy would too. 

The Editors comprise the senior editorial staff of the National Review magazine and website.

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