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Latest Effort to Discredit CBO Health Coverage Estimates Falls Flat

July 6, 2017 at 10:15 AM

Congressional Republicans and the Trump Administration have repeatedly sought to discredit the Congressional Budget Office (CBO) findings that the House and Senate health bills would cause more than 20 million Americans to lose coverage. Previously, they disparaged CBO’s forecasting record, even though CBO’s estimates of coverage gains under the Affordable Care Act (ACA) were about right. Now, some Senate Republicans and Administration officials are making an even weaker argument. They claim that CBO is greatly exaggerating the number of people who would lose individual market coverage and become uninsured under the Senate health bill because its analysis starts from its March 2016 “baseline” estimates of health insurance coverage under current law, instead of its January 2017 baseline.

CBO’s 2016 baseline shows 25 million people enrolled in individual market coverage in 2026 under current law, versus 20 million people in the more recent baseline. Noting that, some Republicans argue it means CBO’s estimates of coverage losses under the Senate bill are comparably overstated. But, in fact, CBO’s estimated coverage loss from the Senate bill would be similar — and could easily be larger rather than smaller — under the January 2017 baseline. What’s more, CBO consulted the House and Senate Budget Committees in deciding which baseline to use.

How switching baselines would affect CBO’s coverage estimates. CBO’s analysis of the Senate bill notes, “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.” That’s because changes would go in both directions, and all of them would be small.

  • Starting from a lower estimate of individual market enrollment under current law would shrink coverage losses by 1-2 million at most. As noted, the 2017 baseline shows 5 million fewer people with individual market coverage in 2026 than the 2016 baseline does. But, overall, CBO estimates that 28 percent of people with individual market coverage would lose it under the Senate bill. So even if this were the only difference between the two baselines, CBO’s coverage loss estimate would likely change by at most 1 to 2 million people under the 2017 baseline (that is, 28 percent of 5 million). Claims that CBO’s estimates would change by the full 5 million implicitly assume that everyone with individual market coverage under current law would lose it under the Senate bill.
  • Other changes to CBO’s baseline could push coverage losses up. For example, CBO’s more recent baseline projects that more people would be covered through the ACA’s Medicaid expansion under current law in 2026. Most of these people would likely lose coverage under the Senate bill, increasing Medicaid coverage loses compared to the 2016 baseline. In addition, CBO’s more recent baseline projects higher individual market premiums under current law than the 2016 baseline. That means that people losing premium tax credits, or facing cuts to their tax credits, under the Senate bill would have to pay even more to maintain their current coverage, which could increase coverage losses further.
  • The coverage losses would likely be larger in the final year of the new baseline. If CBO had used the 2017 baseline, it would have provided coverage loss estimates through 2027 rather than 2026. Coverage losses in 2027 would likely be higher than in 2026, since the Senate bill’s Medicaid cuts grow over time and the bill’s funding to stabilize the individual market disappears after 2026, which would raise premiums and could increase coverage losses.

While CBO hasn’t provided estimates of the Senate bill using its 2017 baseline, estimates from a similar baseline are available from the non-partisan Urban Institute. Urban projects that about 19 million people would have individual market coverage under current law in the early 2020s, in line with CBO’s 2017 baseline. And, just like CBO, Urban estimates that more than 20 million people would lose coverage under both the House and Senate bills. In fact, Urban’s estimates of coverage losses under the Senate bill are slightly higher than CBO’s.

How CBO decided which baseline to use. CBO’s use of the 2016 baseline for estimating the House and Senate health bills is standard practice. Ordinarily, Congress would have passed the 2017 budget resolution in the spring of 2016, and all fast track “reconciliation” bills authorized under that resolution — including the House and Senate health bills — would be scored based on the March 2016 baseline.

But because Congress didn’t pass the 2017 budget resolution until this January, four months into the fiscal year, CBO apparently offered the budget committees (presumably the chairs) a chance to provide input on which baseline to use to score their health care reconciliation bills. CBO’s analysis of the Senate bill notes that it settled on the 2016 baseline “on the basis of consultation with the budget committees.” And not only did the committees apparently not object to using the 2016 baseline, Senate aides reportedly confirmed that “the CBO used the older data based on instruction by House GOP leaders.”