“The Congressional Budget Office’s math doesn’t add up. Faulty Numbers = Faulty Results.”
— Tweet by the White House Twitter account, July 12, 2017
The venerable Congressional Budget Office is under attack. Established in 1975 by Congress to provide independent analyses of legislation, the nonpartisan agency is under fire for its estimates of the effect of Republican proposals to repeal and replace the Affordable Care Act.
This is not a new position for the agency. The CBO’s refusal to credit much budget savings to Hillary Clinton’s 1993 health-care plan is one of the factors that killed her effort during the Bill Clinton administration. But the rhetoric attacking it this time around certainly seems sharper. All eight previous CBO directors issued a joint letter last week to congressional leadership “to express our strong objection to recent attacks on the integrity and professionalism of the agency and on the agency’s role in the legislative process.”
A recent video posted by the White House is a case in point. Titled “Reality Check,” it claims the “Congressional Budget Office’s math does not add up.” In particular, it makes two key claims — that the CBO “inaccurately measures health coverage” and that it uses “faulty assumptions and bad numbers.”
How valid is the White House case?
“Inaccurately estimates health coverage”
This claim is based on the fact that the CBO, in its initial estimate of the ACA, projected that in 2017, 25 million people would be enrolled in the Obamacare exchanges; today, 10.3 million are. It sounds like a big miss, but the White House is playing a shell game here, highlighting a subset of the data.
The key focus of the CBO’s estimates in 2010 (which had to be revised in 2012 after the Supreme Court ruled that states could not be forced to expand Medicaid) was to estimate how many people would gain insurance under the law. On that score, CBO basically aced it, doing much better than other forecasters at the time, according to a 2015 analysis of various projections by the Commonwealth Fund.
The CBO estimated that the number of nonelderly people without insurance would drop to 30 million in 2016. The actual figure in 2016, according to the Centers for Disease Control and Prevention: 28.6 million. That represented a drop of 20 million from 2010, when the ACA became law.
This top-line estimate is what is important, because it helps determines how various health-care policies affect the federal budget. More people in employer-provided plans will drain tax revenue because of tax breaks given for employer-provided insurance, while more people on Medicaid or receiving tax subsidies for policies bought on the exchanges will boost federal spending.
CBO got the mix of types of insurance incorrect, underestimating the number of people joining Medicaid and overestimating how many employers would require employees to join the exchanges. The agency also did not predict (understandably) the website problems and slow rollout that affected enrollment from the start (and probably made employers reluctant to stop providing their own insurance).
Here’s an analogy: A farmer tries to predict how many animals would be in his barnyard 10 years from now. He gets the overall number right, but the ratio of chickens, goats and pigs is different than he expected.
The projections for the subcategories are always going to be prone to more error than overall estimates. The margin of error in polls, for instance, increases as you dig deeper into certain voting groups. But what matters most is if the poll predicts the actual margin of victory.
So, although the video claims that the CBO inaccurately measures health coverage, the CBO just about nailed the most important figure from a budget perspective. That’s relevant because, in the video, the White House is trying to undermine an equivalent figure in the CBO’s estimate of Senate GOP plans — that 22 million fewer people than under the current law would have health insurance a decade from now.
“Faulty assumptions and bad numbers”
In the second section of the video, the White House mentions that 22 million figure and says it’s wrong because the CBO “falsely assumes” that 18 million people would be on the Obamacare exchanges in 2018. The video says that this is because of “faulty baseline estimates” since only about 10 million are in the exchanges as of 2017. The video suggests that, thus, the effect of the GOP proposals is overstated.
It’s correct that the CBO baseline indicates 18 million people would be on the exchanges in 2018 — but that’s because Republican leaders in Congress told the CBO to use this particular baseline. It’s a baseline from March 2016, not the more recent January 2017 baseline, which scaled back the figure and estimates that 11 million people would participate in the exchanges in 2018. So the White House is trying to fault the CBO for a decision made by its congressional allies.
Here’s what happened: The GOP-led Congress in January was in such a rush to repeal Obamacare that it moved forward before the CBO could complete an updated baseline, as it does regularly during the year. So budget instructions for the year were based on the March 2016 baseline, and the CBO was ordered to do its analysis of health-care proposals based on the old baseline.
Since then, the CBO has released an updated baseline in January and another in June. Even so, the CBO is still being told by GOP congressional leaders to calculate off the old March 2016 dateline. Close readers of the CBO estimates would note that the agency is upfront about this problem, highlighting in its estimates that it is using the March 2016 baseline.
The problem for Republicans in Congress is that switching to a more recent baseline might actually not change the bottom-line effect on the number of uninsured — while it could reduce the projected budget savings that lawmakers are counting on to use a parliamentary procedure that thwarts a Senate filibuster requiring 60 votes. (Fewer people in the exchanges could mean the savings from repealing much of the law are lower.) The whole reason for using this procedure, known as reconciliation, is to avoid having to negotiate with Democrats on the legislation. So switching to a more accurate baseline might make passage in the Senate even more difficult.
In other words, it’s rather hypocritical for the White House to blame the CBO for using a baseline mandated by Republicans as part of an effort to cut Democrats out of the process. If given a choice, the CBO presumably would prefer to offer calculations based on the most recent baseline, as then estimates of the potential effect on the budget would be more accurate.
We sought a comment from the White House but did not receive a response.
The Pinocchio Test
This is yet another misleading bit of health-care spin issued by the White House. The CBO obviously is not perfect, but it is nonpartisan and tries to do the best analytical work possible.
The CBO got the overall impact of the ACA on the number of uninsured largely correct, giving credibility to its estimates on the effects of the GOP proposals. Moreover, even the CBO concedes that the baseline it is using is not ideal, but it has to use this baseline because of orders by Republicans in Congress. So if the White House has a complaint, it should contact its allies in Congress, not blame the CBO.
This video earns three Pinocchios.
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