GOP Launches Preemptive Strike on CBO

In the heat of the debate over Obamacare in 2010, the economists at the Congressional Budget Office gazed into their crystal ball and forecast that by 2017, 23 million Americans would have health insurance through government-run exchanges.

The actual figure is about 12.2 million.

“You’d think this would discredit them. But it hasn’t seemed to.”

The massive misfire is a humbling reminder that even the best economic forecasts about topics as complex as health care over a time horizon of a decade are just guesses.

“You’d think this would discredit them,” said Jeffrey Anderson, a senior fellow at the Hudson Institute. “But it hasn’t seemed to.”

Anderson compared the Congressional Budget Office to someone predicting the outcome of a horse race.

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“The CBO never looks back,” he said. “No one ever checks to see who won the race.”

It is more than an academic matter. The budget office is the official referee for competing claims about the fiscal impact of legislation. Members of Congress craft bills to get the proper “score” from the office, and both sides in legislative debates try to spin the results.

Some experts believe that without a projection by the CBO that the Affordable Care Act would reduce the deficit — despite a number of dubious assumptions about the law the forecasters had to accept in their model — Democrats would not have been able to cobble together enough votes to pass the far-reaching health care overhaul.

The CBO projections almost certainly will play a central role again this year as Republican leaders in Congress attempt to pass a replacement health care bill.

[lz_table title=”CBO vs. Reality” source=”Department of Health and Human Service”]Projected and actual enrollment through government exchanges
|Year,CBO,Actual
2014,8M,8M
2015,13M,11.7M
2016,21M,12.7M
2017,23M,12.2M
[/lz_table]

White House press secretary Sean Spicer sought to lower expectations this week for the forecast the CBO will eventually make.

“The irony of the score is that the CBO was way off last time,” he told reporters. “I don’t think that that’s a big issue to us right now.”

Spicer said cost matters, but added, “If you’re looking to the CBO for accuracy, you’re looking in the wrong place. They were way, way off last time in every aspect of how they scored and projected Obamacare … Anyone that can actually do basic math can understand that their projections for Obamacare the last time were way, way off the mark.”

Douglas Holtz-Eakin, a former CBO director who now serves as president of the conservative-leaning American Action Forum, defended the agency’s work.

“The credibility of the CBO has never risen or fallen based on whether the White House press secretary admires their work or not,” he told CNN Thursday.

Veronique de Rugy, senior research fellow at George Mason University’s libertarian Mercatus Center, said there are too many unknown factors that the CBO cannot account for. For instance, a major recession in the middle of a 10-year forecast would have obvious impacts on the results, but the CBO must assume current conditions will continue.

“It’s hard to even say what economic growth is gong to be next year,” she said.

The CBO cost projections misfired in the opposite direction. The 10-year cost of providing subsidies to insurance customers on the exchanges now is on track to come in well below the original $442.4 forecast. But the American Action Forum notes that only is because so many fewer people signed up.

The cost per enrollee is about $1,200 more than originally estimated because a higher-than-anticipated share of customers qualified for government assistance, according to the Washington-based think tank.

Rachel Bovard, director of policy services at The Heritage Foundation, said the rules and practices of the CBO are biased toward big government.

“They don’t think anybody will do anything unless government mandates it,” she said. “The thing that needs to change is the treatment of the CBO as the gold standard, as sacrosanct.”

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But Holtz-Eakin told CNN that much of the blame for faulty projections rests with Congress itself.

“They are literally bound by law to take at face value claims like, ‘In 10 years, we’re going to cut the deficit by $500 billion,'” he said. “OK. That’s what’s in the law. You and I might not think it’s gonna happen, but the CBO has to score it that way. You don’t criticize the CBO for that. That’s the underlying legislation.”