Magnitude and Direction

14 March 2017

Cogito Ergo Non Serviam

CBO Says 14 Million Will Lose Health Insurance if Trumpcare Passes

The Republican Party's proposal to allegedly repeal and replace the Affordable Care Act is a hodgepodge of right-wing wishes lumped together into a bill that is pretending to have enough intellectual rigor to pass for policy. That impersonation fell to the ground yesterday when the Congressional Budget Office, in conjunction with staff of the Joint Committee on Taxation, issued its scoring of the bill. They estimate that 14 million fewer people will have health coverage than do now if the bill is passed. By 2026, that number will grow to 24 million.

It is a case of getting what one pays for. "{E]nacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion," according to the CBO. Throwing 14 million off health insurance is the cost of saving that money.

Since that makes the legislation (one cannot use the word "plan") look bad, the Republican Party has started criticizing the capacity of the CBO to predict the future. "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."

Over on NBC's "Meet the Press," Health and Human Services Secretary Tom Price continued the attack. "CBO has been very adept in not providing appropriate coverage statistics," he said.

This is, of course, nonsense. The CBO's track record is quite good. While the analysts there are off by a couple percentage points when they look at the big picture, one cannot recall a single instance in which they were wrong about the direction a bill would take the country. That is, if the CBO said revenues would fall, for example, they did not rise. The error was in the magnitude not the direction.

Brookings Institute's Matthew Fiedler, who served as chief economist of President Obama's Council of Economic Advisers, told Talking Points Memo, "While the CBO was off on where people would get their coverage, they did pretty well on how many people would gain coverage overall. 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."

Douglas Elmendorf, the director of the CBO from 2009 to 2015 and now the Dean of Harvard's Kennedy School of Government, observed, "CBO was right that insurance coverage would rise sharply under the ACA, which a number of prominent people disagreed with at the time. 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. 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."

In short, this journal doesn't believe that exactly 14 million will lose health coverage nor will the savings amount to $323 billion. What is likely true is that millions of Americans will lose health insurance to save a few hundred billion. One can argue that the savings is worth the cost, but one cannot say that more people will be covered. That just isn't true.

© Copyright 2017 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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