The CBO Takes Another Look at the Mandate and Deficit

by Jibran Khan

The Congressional Budget Office released its updated estimate on the effects of repealing the ACA’s individual mandate last night. Its differences from the previous report, issued in December, have raised eyebrows as they show a smaller deficit reduction and loss of coverage as a result of the proposed policy.

The new report estimates mandate repeal would decrease the deficit by $338 billion over a decade, compared to $416 billion in the old report. It is worth noting that the 2016 and 2017 estimates look at slightly different time periods, each one staggered by a year, so they do not overlap exactly.

Per Keith Hall’s blog post at the CBO website, as noted by Yuval Levin yesterday afternoon, because the new calculations are incomplete and policy changes are being considered, the “the agencies are publishing this update without incorporating major changes to their analytical methods.”

The different prediction between these two reports seems to be down to the change in baseline predictions of subsidy costs, updated calculations of the policy’s phase in time, and the cost of Medicare.

We should expect significantly larger changes to the estimate as the CBO process continues, as the report itself notes:

“the preliminary results of analysis using revised methods indicates that the estimated effects on the budget and health insurance coverage would probably be smaller than the numbers reported in this document. The agencies are continuing to work on those methods, and they expect to complete and publish an estimate including and explaining the revisions at some point after the current budget reconciliation process is complete or along with a future update to the baseline.”

As yesterday’s estimate uses the same methodology as before, with changes tied to baseline differences between now and December, I don’t think that this is a political move.

It does feel like a half-measure, though, to incorporate updated ‘facts on the ground’ while continuing to use old calculations. I understand that the budget reconciliation process requires that a report get produced, but it is at the very least odd to release one that notes within itself that the numbers are likely incorrect by their latest research.

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