"The clear intent of the tax credits is to make insurance more affordable, especially when you're mandating its purchase," says Topher Spiro, who worked as deputy staff director for health policy for the U.S. Senate Committee on Health, Education, Labor, and Pensions. "It's crazy to think of a mandate without subsidies. It just doesn't make any sense."The nonpartisan Congressional Budget Office (CBO) has always agreed. After all, for five years Congress's budgetary referee has been "scoring" versions of what ultimately became the Patient Protection and Affordable Care Act. Each and every time, CBO forecast the number of enrollees, the cost for the subsidies and the revenue raised from mandate penalties for all 50 states, regardless of their type of exchange. (Just as important, Congress's scorekeeper did take into account the number of states accepting or rejecting the expansion of Medicaid in revising its estimates for the number of people) to be newly covered by that program for low-income and disabled Americans.) And while Republicans complained that CBO had used "budget gimmickry" in repeatedly projecting Obamacare would reduce the national debt, at no time did GOP leaders in Congress protest the agency's forecasts for ACA tax credits in all 50 states.
Remember that throughout 2009 and 2010, elements of the ACA were in flux. For example, in reviewing proposals from both the House and the Senate, Director Douglas Elmendorf's agency had to account for addition and removal of a "public option" for insurance and the idea of state co-ops and regional purchasing alliances. For example, on November 18, 2009, Elmendorf informed Congress that a version of the ACA including a public option would reduce the debt by $130 billion over 10 years, while ensuring 25 million Americans through the exchanges by 2019. Another 15 million would gain coverage through Medicaid. CBO's one-paragraph summary of the PPACA read this way:
Among other things, the legislation would establish a mandate for most legal residents of the United States to obtain health insurance; set up insurance "exchanges" through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage; significantly expand eligibility for Medicaid; substantially reduce the growth of Medicare's payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs.And we'll see below the fold, CBO's job is to model the budgetary impact of legislation as directed by Congress.
And on March 30, 2011, the Congressional Budget Office updated its 10-year forecast for the Affordable Care Act passed the previous year. This time, CBO projected 32 to 34 million nonelderly Americans would gain coverage by 2021, with 17 million receiving benefits from Medicaid/CHIP and another 24 million through insurance purchased through the exchanges. Elmendorf's March 2011 analysis forecast savings to the U.S. Treasury of $210 billion over the ensuing decade. His summary of the law mentioned nothing about tax credits only being available to residents of states running their own exchanges:
Among other things, PPACA and the Reconciliation Act will do the following: establish a mandate for nearly all legal residents of the United States to obtain health insurance; create insurance exchanges through which certain individuals and families will receive federal subsidies to substantially reduce the cost of purchasing health insurance coverage; significantly expand eligibility for Medicaid; permanently reduce the growth of Medicare's payment rates for most services (relative to the growth rates projected to occur under prior law); impose an excise tax on health insurance plans with relatively high premiums; impose certain taxes on individuals and families with relatively high income; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs.If Republicans were upset that CBO was assuming Americans in all states would be eligible for subsidies, they never said so. What they were furious about, however, was CBO's unshakeable conclusion that Obamacare would reduce Uncle Sam's national debt.
In January, 2011, House Budget Chairman Paul Ryan asked CBO to score H.R. 2, the "Repealing the Job-Killing Health Care Law Act." At that time, the agency forecast that repealing Obamacare would increase the national debt by $230 billion over 10 years. Once again, CBO found that the revenues raised and money saved by the Affordable Care Act exceeded the outlays on expanded Medicaid coverage and subsidies in all 50 states. House Majority Leader Eric Cantor was livid about that inconvenient truth:
"I think what we do know is the health care bill costs over $1 trillion," Cantor told Hill. "And we know it was full of budget gimmickry. And it spends money we don't have in this country."CBO has been doing forecasts for Obamacare ever since. The numbers of enrollees, the cost of the subsidies and the impact on the national debt change as conditions (improving economy, state acceptance of Medicaid expansion, availability of new data, etc.) dictate. Those changing conditions included the Supreme Court's June 2012 decision upholding the ACA's individual mandate while making state Medicaid expansion optional. Coming just a month after the Internal Revenue Service announced that tax credits would indeed be available through both state and federally managed marketplaces, CBO updated its forecast again. And once again, CBO did not differentiate between states which opted to run their own exchanges and those that did not. As the Congressional Budget Office put it in its April 14, 2014 analysis:
The ACA allows many individuals and families to purchase subsidized insurance through the exchanges (or marketplaces) operated either by the federal government or by a state government.That hasn't changed since 2009. And as the agency's mission states, "Since its founding in 1974, Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process ... CBO does not make policy recommendations, and each report and cost estimate discloses the agency's assumptions and methodologies." Which means that for five years of forecasting tax credits for Obamacare insurance purchases for both state and federal exchanges, the CBO has reflected the intent of Congress.
UPDATE: As Matthew Yglesias points out, CBO made this point to Rep. Darrell Issa (R-CA) on December 6, 2012:
To the best of our recollection, the possibility that those subsidies would only be available in states that created their own exchanges did not arise during the discussions CBO staff had with a wide range of Congressional staff when the legislation was being considered. Nor was the issue raised during consideration of earlier versions of the legislation in 2009 and 2010, when CBO had anticipated, in its analyses, that the credits would be available in every state. CBO’s analysts reviewed H.R. 4872 and H.R. 3590 to try to ensure that the agency's estimate accurately reflected the legislative language, as they do for all legislation that they analyze, but that question did not arise in the course of that review, and CBO did not perform a separate legal analysis of that issue.