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CBO Coverage Projections Have Been Wildly Wrong

06/27/2017

Winston Churchill once said, “It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.” The reality that the future is hard to predict, but that has not stopped men and women from trying to do just that. Perhaps one of the best examples of that is the Congressional Budget Office (CBO).

Despite being designed to analyze legislation to understand the likely impacts the policies would have on the American people, the CBO has developed a long history of being continually wrong on its projections, which has both ruined its credibility and made it a hindrance to legislating.

Perhaps some of its more prominent incorrect predictions involved the implementation of ObamaCare. In 2013, the CBO projected that 24 million people would have effectuated enrollment, these are people who’ve actually paid their premiums, by 2017. In reality, that number ended up being only 10.3 million.

The CBO’s coverage estimates also suffer from another problem. Buried in its cost and coverage estimate of the Better Care Reconciliation Act, the Senate version of H.R. 1628, is an explanation of the use of the older baseline on which it based the coverage projections.

Now, this is not necessarily the CBO’s fault. The nonpartisan agency consulted with the House and Senate budget committees and used the March 2016 baseline for its projections. But the March 2016 baseline is a faulty model because it doesn’t show more recent coverage projections. The January 2017 baseline, however, tells a different story.

The March 2016 baseline (page 4) shows that 12 million people would receive subsidized coverage through the ObamaCare exchanges and 3 million people would receive unsubsidized coverage, a total of 15 million.

The January 2017 baseline (page 4) more accurately reflects reality. It shows that 9 million people would have subsidized coverage and 1 million would have unsubsidized coverage, a total of 10 million. As noted above, the effectuated enrollment for 2017 is 10.3 million, far below the May 2013 projection of 24 million (page 3) and the March 2016 projection of 15 million.

CBO Coverage Estimates: May 2013, March 2016, January 2017

What does this mean? Well, with the CBO’s coverage estimates being highlighted by literally every major mainstream media outlet, the narrative that 22 million people will lose their health insurance coverage is likely very wrong. Moreover, the cost savings are likely higher.

The CBO noted in its most recent cost estimate of H.R. 1628: “If this legislation was evaluated relative to the January 2017 baseline rather than the March 2016 baseline, it is unclear how different categories of insurance would be affected and whether the budgetary effects would differ noticeably.”

The coverage estimates are flawed for another reason. The CBO places a lot of faith in the coercive power of the individual mandate. The CBO and Joint Committee on Taxation (JCT) project that “15 million more people would be uninsured under this legislation than under current law—primarily because the penalty for not having insurance would be eliminated.”

In plain terms, the CBO believes that main driver for the decline in the insured is the lack of the individual mandate, essentially that people would voluntarily go uninsured because there is no initiative measure in place. Keep in mind that 13.7 million fewer people have coverage in 2017 compared to the CBO’s 2013 coverage estimates.

Here's a look at the CBO's coverage estimates since February 2013:

CBO's ObamaCare Coverage Estimates

It is not just on ObamaCare coverage estimates that the CBO has gotten its projections wrong. During the Clinton administration, it predicted a continual GDP growth of about 2 percent throughout the decade with 1.3 percent growth predicted in 1995, 2.1 percent growth in 1996 and 1.9 percent in 1997. However, the actual growth rates for those three years were 2.7 percent, 3.6 percent, and 4.4 percent respectively. Each year that number was completely off.

Similarly poor projections have been made about the nation’s finances as well. Case in point, the CBO initially predicted that Medicare Part D would cost $400 billion, but it instead ended up costing $530 billion. Similar problems have come up with cost projections, as the 2002 farm bill ended up costing $137 billion more than projected and the 2008 farm bill cost $308 billion than projected.

Needless to say, the CBO’s track record is pretty poor. Of course, that won’t stop the media from seizing on the CBO’s coverage estimates to hammer Republicans’ efforts, however short they may fall of actually repealing ObamaCare, to address the problems that the 2010 health insurance reform law has created.

Brett Heinisch, FreedomWorks' policy intern, contributed to this post.