CBO Forecasts Keep Getting Worse
Chris Jacobs summarizes the deterioration:
- The Congressional Budget Office (CBO) estimated in May that the employer mandate would raise $10 billion in revenue in its first year. (Because the employer mandate is a tax penalty, firms will pay the penalties the following year…) That $10 billion in employer mandate revenue projected for fiscal year 2015 will almost certainly disappear.
- In its most recent economic forecasts in February, the CBO estimated that unemployment would average 7.8 percent in 2014. That number is nearly three percentage points higher than the CBO’s estimate of 2014 unemployment at the time of ObamaCare’s passage.
- The CBO now projects that, if firms do drop health coverage, insurance subsidies on exchanges will average $5,290 per enrollee next year. By comparison, shortly after ObamaCare passed, the CBO projected subsidies would average $3,970 in 2014.
- As we documented last week, since ObamaCare’s enactment, the CBO has increased the number of projected uninsured and decreased the number of individuals projected to retain their employer coverage.
Remember all of those White House visits with the CBO head while this stuff was being formulated?
Are you suggesting foul play?
I think that it is possible. Although, the way that these projections are done focuses on current conditions and shouldn’t be completely trusted. The real lesson is here is that we should take the projections of organizations like the CBO with a grain of salt.
If we can’t trust them, then how do we make decisions in the public as well as private sector? I understand that they often need revision, but we need something to go on.
Well, first of all, government organizations like the CBO are not subject to market forces, I would trust private projections much more. But you’re overall point is correct, there will always be error. I guess what I’m trying to say is that we need to be more careful. As already mentioned, I would like to see more reliance on competitive, private projections.
That’s why we have hundreds of other think-tanks that analyze these types of things. So we don’t have to listen to the government’s possibly tainted information.
Disappearing revenue is disturbing
“That $10 billion in employer mandate revenue projected for fiscal year 2015 will almost certainly disappear.”
This confuses me somewhat. How are they projecting it will disappear? Because there will be less penalties issued?
Because the employer mandate, from which the 10 billion would be derived, is being delayed for a year. It will now supposedly commence in 2015, with penalty revenue for 2015 collected in 2016. This leaves the program a cool $10 billion short in its first year of full implementation.
“The CBO now projects that, if firms do drop health coverage, insurance subsidies on exchanges will average $5,290 per enrollee next year. By comparison, shortly after ObamaCare passed, the CBO projected subsidies would average $3,970 in 2014.”
Wouldn’t this be necessary by default? This is probably one reason why revenue is projected to decrease.
This is news? All the analysts critical of the PPACA were saying this back when the PPACA was initially being debated.
Assume that the $5,290 number is some average of single and family coverage subsidies.
The early projections of the ACA projected only 7 million persons in the exchanges.
If the exchanges are screwed up, that may be the case.
If the exchanges get some bugs worked out, and applicants can lie about income, the participants could total a LOT more than $7 million.