Blue Horseshoe Loves the Individual Mandate
A little background on the CBO score
As you may have gleaned from my uncharacteristic silence, I am in the middle of a 40 day respite from a certain social media platform. [As an aside, I highly recommended a break- it lends a pretty good window into the distortions of our frenetic 140 character bubble. Wife approved.] But given that I can almost smell the tire fire in the wake of the CBO report, I wanted to make a point that might not otherwise be noted.
The Congressional Budget Office’s model loves the individual mandate.
Loves it. It’s part of the reason the ACA ended up with one in the first place, despite Candidate Obama going so far as to run attack ads excoriating Secretary Clinton for it during the 2008 primary.
It helped that Clinton’s position on the mandate was shared by most Democrats; but, as Ryan Lizza noted in a 2012 New Yorker piece on Obama’s evolution, the CBO consideration was a major and explicit part of the calculus. Discussing a memo from top Obama health care aide Nancy DeParle, Lizza writes:
DeParle does not frame the case for the mandate strictly on the merits of the idea. Instead, she points out — somewhat grudgingly — that Obama would almost have to reverse his campaign position because of the way the Congressional Budget Office would treat a health-care bill without an individual mandate:
Based on our policy analysis, we believe that a weak requirement for all Americans to have insurance may come close to achieving the maximum coverage that can be achieved through aggressive outreach and auto-enrollment. Unfortunately, however, the Congressional Budget Office (CBO) will likely take the position that without an individual responsibility requirement, half of the uninsured will be left uncovered. This reduces federal costs — by roughly $270 billion over 10 years — but also reduces coverage (insuring that only 28 of the projected 56 million uninsured in 2014). Those left uninsured tend to be either low cost (e.g., young adults) or have high income.
So if we know that the model gave generous treatment to the individual mandate in the first place — overly so, based on actual enrollment figures — it should come as no surprise that it judges repeal of the mandate quite harshly. It can’t help that the replacement mechanism inserted by Republicans, a 3o percent lapse surcharge ostensibly meant to incentivize continued coverage, logically has the opposite effect. (If I’m a young, healthy individual, the relative savings of foregoing insurance promises to far outstrip a nominal 12 month penalty in the event of its necessity.)
This is not to say that the CBO is a biased scorekeeper or bad faith arbiter — merely that their black box is subject to the same quirks as any that relies on assumptions of economic behavior. For instance, it is well-known in the tax policy community that the Tax Foundation’s dynamic model smiles on full expensing of capital investment. There’s a reason every major GOP presidential hopeful included this feature in their plan — and it isn’t supply side catechesis.
Nor should it be read as a defense of the political wisdom or health policy efficacy of the current bill- I have my doubts about both, as I wrote at National Review a few days ago.
It is, however, to point out that the eye-popping 24 million headline number you’ll read about for the foreseeable future should be taken with a grain of salt. They overestimated the impact of the mandate’s presence by as much as 100 percent; the model may be overstating the implications of its absence as well.
That said, the precise number almost doesn’t matter from a perception standpoint, which is really all that matters at the moment. It’s not as if reducing coverage by 10 million or even 5 million sounds much better in the inevitable attack ad. In that sense it’s another political cut for the beleaguered AHCA, but not something that should make or break it. Or, put another way, if this is a death knell, it wasn’t going to get particularly far in the first place.