Conservatives can’t debunk the CBO’s blockbuster report.

One Conservative Wonk Tried Really Hard to Debunk the Blockbuster CBO Report. It Didn’t Go Well.

One Conservative Wonk Tried Really Hard to Debunk the Blockbuster CBO Report. It Didn’t Go Well.

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A blog about business and economics.
March 14 2017 5:31 PM

One Conservative Wonk Tried Really Hard to Debunk the Blockbuster CBO Report. It Didn’t Go Well.

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Even actual conservative wonks are straining to defend this guy's plan.

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Republican officials have been at a complete loss for how to handle the Congressional Budget Office's blockbuster report estimating that their plan to replace Obamacare would leave an additional 24 million Americans uninsured by 2026. Many are staying silent. Others have tried, unconvincingly, to wave it off. House Speaker Paul Ryan has mysteriously decided to embrace the results, which seems about as wise as a hiker trying to fend off a grizzly by hugging it.

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

Into this rhetorical vacuum steps Avik Roy, a conservative health care wonk known for his strident criticisms of the Affordable Care Act. Roy is no fan of Trumpcare, either; he recently wrote a post titled “GOP's Obamacare Replacement Will Make Coverage Unaffordable for Millions—Otherwise, It's Great.” But he does think the CBO is greatly overestimating how damaging the legislation would be. In the end, Roy suggests that as few as 5 million Americans could end up uninsured because of the Republican plan. In other words, he believes the official estimate could be off by a whopping 19 million.

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I don't think Roy's case is particularly strong. Unlike the attempts by Republican politicians to simply discredit the CBO in the run-up to its report, he is making a good-faith effort to question some of the assumptions underpinning its results, which is a fair and useful thing to attempt. But his own back-of-the-envelope math doesn't make a great deal of sense, in part because he conflates short-term issues the budget office identifies with long-term coverage declines.

Roy starts by noting a very technical but important point: The CBO's new report is unfortunately based on an outdated, overly optimistic assessment of how many Americans would buy insurance through Obamacare's exchanges if the law stayed in place. Specifically, the office starts from its March 2016 budget baseline, which forecast that within a couple of years 18 million people would enroll in health plans on the ACA's federal and state marketplaces. That's obviously not going to happen. If anything, the exchanges are shrinking right now (just 12 million people selected plans this year, down slightly from a year before) and in its most recent January update, the CBO lowered its expectations. It now thinks 11 million people will sign up for Obamacare coverage in 2018.

To be clear, there's no conspiracy here. The CBO did not decide to jump off from old, inaccurate numbers in order to undermine the GOP. The report says up top that it picked the March 2016 baseline in consultation with congressional committees, who were likely using it to craft their own legislation. But Roy thinks the decision massively distorts the office's forecast. The “baseline is off by 7 to 8 million in future exchange enrollment,” he writes, “hence, the impact of the [American Health Care Act] is also off by the same amount.”

That's probably wrong for at least a couple reasons, but the major one is this: Over the long term, the CBO doesn't actually think the individual market will shrink by much. Initially, many people would drop out after the individual mandate, which requires Americans to buy coverage or pay a tax penalty, was repealed. But over time, the availability of cheaper insurance would lure back more young people, so the individual market would shrink by just 2 million, on net. That's 2 million in a world where 24 million lose their coverage.

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The CBO “ended up with a baseline that’s demonstrably inflated,” former CBO Director Douglas Holtz-Eakin, now president of the conservative American Action Forum, told me. “That’s a little misleading in the eyes of some.” But, he added: “I don’t think that’s driving the results, by any means, especially if you get to 2026, 10 years out.”

Douglas Elmendorf, dean of the Harvard's Kennedy School and another former CBO director named Doug, told me something similar in an email. “The bottom line is that CBO's baseline is uncertain, and the estimated effects of the AHCA would be different under the new baseline than the previous one. But there is no reason to think that the differences would be substantial.” In other words, on this issue Roy is really quibbling.

Now on to Roy's second big qualm: He believes the CBO is exaggerating what will happen if Republicans kill the Affordable Care Act's individual mandate. By 2018, the office thinks Trumpcare will cause 14 million fewer Americans to carry insurance, with “most of the reductions” stemming from the mandate's death. This strikes Roy as unbelievable. “The CBO has long believed that Obamacare’s individual mandate has near-magical powers to compel people to buy health insurance. There is little evidence to support this claim.” He thinks the CBO is overcounting its impact on insurance by maybe 9 million enrollees.

There is a very active debate about how effective the mandate has been at making people buy insurance (my general take: not effective enough). It's certainly fair to question whether ending it will have the dramatic near-term effects the CBO expects. But if we look at the long haul again, the mandate just isn't as important a factor in the CBO's analysis. Most people would lose coverage in its Trumpcare model because of outright cuts to Medicaid, which come in later years, and because fewer people would get insured through their employers, who would no longer be required to offer their workers health plans. The demise of the mandate might fuel some of those declines—the CBO thinks some workers might be less likely to pay for an employer plan if they weren't forced to, for instance—but not all of them.

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Finally, Roy doesn't like how the CBO forecasts the future of Medicaid, because it assumes that were Obamacare to survive, about 5 million people would get coverage under the program's expansion, as more states decided to participate. This, he says, is also unrealistic.

“The states that haven’t expanded Medicaid have done so because they are concerned about exposing their taxpayers to significant and growing liabilities that the federal government may back away from over time. Those liabilities aren’t getting smaller as time goes forward, but larger,” he writes. “It’s equally, if not more likely, that Medicaid expansion in new states accounts for fewer than 2 million more enrollees by 2026.”

This is basically a political judgment. Maybe Roy has it right. But maybe he doesn't. Red and purple states like Louisiana and North Carolina that initially rejected Obamacare's Medicaid expansion have moved toward accepting it after electing Democratic governors (Republicans have tried to stop Roy Cooper's effort in the Tar Heel State). There's even a movement to make it happen in Kansas. If Florida alone were to take the expansion, it would make a huge difference. Roy's guess about how things would shake out is ultimately no better than the CBO's.

So Roy shaves 15 million uninsured from the CBO's estimate based on shorter-term issues that don't necessarily drive the office's 10-year outlook, and another 3 million based on his political instincts. This does not exactly strike me as a searing takedown.

Of course, the CBO's estimates aren't infallible. They involve a great deal of uncertainty, which the office admits up front, especially since some of the projections involve guessing how states will react to Trumpcare's various pieces. Will New York and California try to keep paying for the Medicaid expansion out of their own taxpayers' pockets once federal funding recedes? Will states use the money Congress would set aside to stabilize their individual markets for its intended purpose, or blow it patching up various budget holes? “There’s lots of room for reasonable disagreement on those things,” Holtz-Eakin told me. Indeed. I just haven't seen a compelling reason to disagree with the CBO's main point, which is that Trumpcare would leave a staggering number of people without insurance. And it's telling that so few conservatives are even trying to offer one.