3 Million More Uninsured by 2019 – CBO Updates Its Predictions from September


June 11, 2018

A report released in May by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) found that about 3 million more people will be uninsured in 2019 than originally projected in September 2017. According to the report, the CBO revised its methods for estimating the impact that elimination of the individual mandate would have on the uninsured rate. The update was prompted by a decline in the number of people who don’t have health insurance and the reasons they gave for not being covered.

Changes Reported

The CBO indicted that the number of consumers who are enrolled in subsidized and unsubsidized nongroup coverage has declined and the number of people who are uninsured has increased. Enrollment in Medicaid has declined, but enrollment in employer-provided coverage has increased. By 2027, the CBO estimates that those who receive subsidized coverage through the ACA marketplace will fall by 3 million over the September predictions. Overall, approximately 35 million people will be without health insurance by 2028 per the new estimates.

Possible Explanation for Changes

In December 2017, Congress passed a tax bill that eliminated the individual mandate. Under the mandate, individuals without health coverage were required to pay a tax penalty. The CBO believes that the elimination of the mandate would lead to fewer consumers enrolling in health insurance. In October 2017, cost-sharing reduction payments to insurers were cut. These payments were designed to compensate insurance companies if they provided lower-income people with reduced cost-sharing rates on silver plans. The elimination of cost-sharing reduction payments and concerns among health insurers that healthy people will decide not to purchase insurance have led to predictions of significant premium increases in 2019.

How Accurate is the CBO?

Over the years, the CBO’s accuracy and credibility has been called into question by members of both major political parties. The Congressional Budget Office uses a wide range of economic forecasting tools that can be impacted by economic changes. In the recent report, the CBO identifies four key sources of forecasting errors: business cycle turning points, changes in productivity trends, crude oil fluctuations and historical data revisions.

There have been times when sudden changes in the economy have led to the CBO’s projections being incorrect. In 2008, the CBO reported that the gross domestic product (GDP) would slow in 2008 but remain positive for 2009. In addition, the agency predicted that unemployment would rise but plateau at just above 6 percent. One week after the report, Lehman Brothers collapsed, intensifying the financial crisis that severely impacted the economy. In both 2008 and 2009, economic growth turned out to be negative, and the unemployment rate didn’t drop below 6 percent until September 2014.

CBO Economic Forecasting Record

Over the past 40 years, the CBO has prepared economic forecasts used to make projections for the federal budget. The agency evaluates the quality of their forecasts on a regular basis in order to determine if they need to make changes to their methods as well as to calculate the errors in the forecast. The errors can then be used to approximate a range of error, or the uncertainty, in current forecasts.

Recent updates to the number of uninsured Americans released by the CBO and JCT were prompted by changes to the ACA made by the Trump administration. The report indicates the margin of error, explaining where errors may occur and what the CBO used to reach their conclusions.

Why Did CBO Update Numbers?

The CBO decided to update the numbers due to a decline in the number of uninsured people since 2012. The CBO and JCT have historically attributed a portion of this decline to financial reasons that reduced the cost of coverage or increased the cost of being uninsured. The expansion of Medicaid coverage and the availability of insurance subsidies through the marketplace as well as the impact of the individual mandate were all considered factors that encouraged consumers to obtain health insurance.

There were also nonfinancial reasons that the CBO attributed to the decline in uninsured people. These included simplified procedures for enrolling in Medicaid, the ability to purchase insurance in the marketplace, advertising and the tendency of the American people to comply with laws like the individual mandate. In the most recent report, the CBO and JCT discovered that the effect of nonfinancial factors is less than they originally believed. Nonfinancial factors associated with the individual mandate don’t affect enrollment as much as direct financial concerns.