Hayward: CBO’s Obamacare Failure Is a Devastating Blow to Socialism

The problem with former President Barack Obama was that he was more of a crowd pleaser than someone determined to take the right course of action. File Pool Photo by Olivier Douliery/UPI |
Olivier Douliery/UPI

The Centers for Medicare and Medicaid Services (CMS) released a little-noticed report last week that confirms what Obamacare critics said from Day One: the Congressional Budget Office (CBO) estimates for the cost and impact of the Affordable Care Act were off by enormous margins.

American voters should carefully consider this object lesson when evaluating all socialist promises. If socialists couldn’t predict the effect of Obamacare accurately, how can anyone trust their predictions for vastly larger and more complex government takeovers like “Medicare for All” or the “Green New Deal?”

The whoopsy-daisy analysis from CMS released last Wednesday would have been an atomic bomb dropped on Obamacare if it came out before the Affordable Care Act was signed, and it would have seriously derailed Democrat scaremongering during the Obamacare repeal battle of 2017, but as Philip Klein of the Washington Examiner noted, the truth was “literally a footnote” when it dribbled out in 2019.

The assumption all along was that repealing the individual mandate of Obamacare – that bizarre trans-Constitutional fine for failing to purchase health insurance that magically transforms from being a “tax” to a “penalty” according to the legal needs of Obamacare’s architects – would prod about 14 million Americans to buy health insurance. Therefore, repealing the mandate would “cancel” the insurance plans of 14 million people. Democrat rhetoric implied most of them would immediately drop dead.

According to the new CMS report, however, only 2.5 million people would “lose” their insurance in 2019 due to repeal of the mandate, and the number will become significantly smaller with every passing year. The report footnote notes that many of the enrollees affected by the mandate repeal “are expected to be somewhat younger and healthier than those who retain coverage,” which implies they won’t “lose” coverage so much as decide not to buy it once the government stops holding a gun to their heads.

Klein pointed out the power of the individual mandate was always wildly overestimated by CBO, which helped Democrats fight back the 2017 repeal effort by improbably estimating that 5 million people would fail to enroll in “free” Medicaid if they were not forced to sign up by the mandate.

“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,” wrote Klein, who noted Republicans got a little payback by using those absurdly high CBO estimates to overestimate the savings from reduced government subsidies when they passed their tax cut bill.

The individual mandate was a core element of Obamacare. The people who cooked up the scheme were convinced a huge number of people would fail to purchase insurance unless they were threatened by Uncle Sam. As Klein noted, Barack Obama himself was reluctant to include the mandate because he was desperate to pretend Obamacare was a wonderful system people would join voluntarily. He wanted to minimize the amount of heavy-handed coercion in the original bill to make it easier to pass, but he became convinced the mandate was necessary to generate enough revenue for the system to work.

In other words, the architects of the ACA concluded that in order to socialize the cost of health insurance, it would be necessary to force a very large number of people to buy insurance and minimize the “free rider” problem. That problem was always dramatically overestimated. Many people grudgingly supported Obamacare because they were convinced uninsured people were imposing backbreaking costs upon the health care system by flooding emergency rooms and obliging hospitals to treat them.

A system that forces everyone to buy insurance seemed like a reasonable solution to the problem… but little attention has been paid to studies that found the problem was much less severe than was widely believed, and it has arguably grown worse under Obamacare. The burden imposed on the old system by the uninsured was nothing to sneeze at, but there were far better ways to handle it than Obamacare, which made itself look reasonable by radically overstating the problem and underselling the cost of the “solution.”

This sort of thing happens all the time. CBO estimates are treated as a gold standard by policymakers, and if they make tax cuts look more expensive or Big Government programs less expensive, they are holy writ to the left-leaning media. In truth, CBO is dramatically wrong in many of its most politically influential estimates, often because it overestimates bureaucratic fidelity to legislation and underestimates how the American people will respond when the heavy hand of government descends upon them.

The core premises of socialism are invalid if the federal government cannot accurately estimate the cost or value of its programs. The very concept of “socializing” costs assumes central planners can measure those costs and predict the effect of controlling them with state power instead of market economics.

How can anyone trust the government to design and implement trillion-dollar schemes when its estimates are routinely off by billions, and even trillions, of dollars? The Obamacare individual mandate is merely the latest in a long series of examples that demolishes the assumption central planners are smarter than the markets. They don’t know what any of their Big Government machinery will actually do when switched on… and they trick us into forgetting there is no way to switch them off, no matter how badly they malfunction.


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