CBO Releases Letter Defending Its AHCA Analysis and Integrity

In response to the questions raised about its objectivity and the methodology of its projections, the Congressional Budget Office (CBO) has released a letter defending the impartiality of its work and explaining how it estimated the impact of House Republicans’ proposed healthcare bill.

The letter, published Thursday, is addressed to Representative Tom MacArthur (R-New Jersey) and references a meeting between MacArthur and CBO director Keith Hall that took place in July. MacArthur had played an instrumental role in crafting the compromise that allowed the American Health Care Act (AHCA) to pass the House.

CBO’s score of the House bill with MacArthur’s amendments was released on May 24, after the House had passed the bill to repeal and replace the Affordable Care Act (ACA). It found that the AHCA would shave $119 billion off the federal deficit through 2026, but that 23 million additional Americans would lose health coverage over the next decade relative to current law.

In response, MacArthur raised questions about the CBO’s impartiality and how it had formed its projections of the bill’s effects. "I respect the CBO's role but just because a group of auditors down the block has created a model that has a lot of 'if's,' 'ands' and 'maybes' looking out 10 years doesn't make that the gospel. That is somebody's opinion at CBO. I have a different opinion," he said, according to CNN.

He also noted that the CBO had previously been off by 120% in its projections of 2016 enrollment in the ACA exchanges. It had predicted 22 million when there were actually only 10 million, which MacArthur called "a staggering error."

In the meeting and the letter, Hall outlined the office’s response to MacArthur's questions, though it did not mention its inaccurate ACA projections. First, he stressed the steps the CBO takes to ensure that its work is “objective, impartial, and nonpartisan.” Experts develop the analyses with input from numerous sources with differing perspectives, and the resulting analyses are then stringently reviewed by CBO employees at all levels and by outside specialists. The agency’s policies limit its workers’ political activities and enforce strict prohibitions on conflicts of interest.

Further, Hall wrote, the CBO meets regularly with 2 expert panels who “are selected to represent a range of views” while taking into account any financial interests that could influence the experts’ perspectives. The work produced by the CBO clearly specifies its methodology for outside analysts to scrutinize and never contains policy recommendations.

“I can report that all of the people at CBO are tasked with maintaining a culture of objectivity, impartiality, and nonpartisanship,” Hall stated in the letter. “Employees prize those attributes that bolster the integrity of their analysis, and their interactions continually reinforce the culture.”

In the specific case of the AHCA analysis, Hall’s letter delved into the methods the CBO had used to project the number of insured Americans in 10 years under current law and under the proposed legislation. He explained that the agency used the March 2016 cost estimate baseline so the projections for the AHCA would be consistent with the baseline used for all legislation involved in the 2017 budget reconciliation process.

The letter also answered MacArthur’s question about why the CBO’s report did not estimate the average change in premiums for people living in states that would obtain waivers for both the essential health benefits and community rating requirements as permitted by the AHCA. According to Hall, “such an estimate would be too imprecise,” due in part to uncertainty surrounding how high insurers would increase premiums for the few people no longer protected by those requirements.

Instead, the CBO’s report had assessed the likelihood of several possible outcomes instead of trying to predict exactly which states would obtain which waivers. States’ decisions would not only be affected by current market conditions, but also by competing pressures from insurers, hospitals, and consumers, contributing to CBO’s decision to release an analysis representing the likely proportions of states seeking waivers instead of specific states.