Government grossly overestimated the need for individual mandate in Obamacare
A new report from government actuaries has revealed that the Congressional Budget Office was scandalously off in its estimates of the impact of Obamacare's individual mandate, a miscalculation that has had significant ramifications for healthcare and tax policy over the past decade.The CBO projections were the primary reason the Republicans failed in their effort to repeal and replace Obamacare. It is too bad there is no remedy at this point for there incompetence. It will take a Democrat defeat in the House to make the necessary changes now. Unfortunately, the current Democrats want to impose socialized medicine that would eliminate private health insurance and result in rationed healthcare.
CBO estimates about the importance of an individual mandate to a national healthcare scheme prodded President Barack Obama into including the unpopular provision into the law in the first place. The mandate projections also played a key role in President Trump's two major legislative initiatives. The fact that the CBO assumed 14 million could lose coverage mainly due to the elimination of mandate penalties helped kill the effort to repeal and replace Obamacare, while its later assumption that 13 million fewer insured individuals would mean less spending on subsidies from the federal government helped get the 2017 Republican tax cut across the finish line by improving the budgetary math. Yet those incredibly influential estimates now appear to have been wildly off.
In what was literally a footnote in its annual report on national health spending projections, actuaries for the Centers for Medicare and Medicaid Services on Wednesday estimated that the elimination of the individual mandate would have a significantly smaller impact than the CBO has long estimated. Specifically, the CMS report revealed that 2.5 million more people would go without insurance in 2019 due to the repeal of the individual mandate's penalties, and the impact would be "smaller" thereafter.
When Obamacare was being debated in 2009, CBO and other outside experts believed that the mandate was a necessary tool for convincing younger and healthier individuals to purchase insurance to offset the cost of covering older and sicker enrollees in any kind of national healthcare scheme. So important was the mandate to CBO's analysis that Obama was forced to embrace the idea, even though he opposed it during the 2008 campaign and it made the legislation less popular. It also would eventually imperil the whole law at the Supreme Court.
Over time, as Obamacare was implemented, experts began to question the importance of the mandate. But when Republicans sought to repeal and replace Obamacare in 2017, the CBO did not adjust its assumptions about its power. For instance, in one version of the House bill, the CBO found that before any cuts to actual spending went into effect, 14 million fewer people would be insured and that, "Most of the reductions in coverage ... would stem from repealing the penalties associated with the individual mandate." Incredibly, the CBO estimated that 5 million fewer people would enroll in free Medicaid mainly due to the elimination of the penalties. This number accounted for more than half of the 24 million the CBO said the Republican plan would reduce coverage for overall over a decade.
While any CBO analysis of the Republican bills was likely to project large coverage losses due to the cuts to Medicaid and subsidies, if CBO had more realistic assumptions about the mandate, the numbers would have been significantly smaller, and perhaps left more room to convince centrist Republicans to get on board.