The CBO Isn’t Great at Predicting the Future
The Department of Health and Human Services (HHS) is excited that premiums on the exchanges ended up being roughly 16 percent below old Congressional Budget Office projections. While this is good news it is not really surprising. The CBO is simply not great at predicting the future. Its estimates have been significantly off on several new programs, like Medicare Part D. Its long term budget projections have also often proven to miss the mark substantially.
The problem is not with the CBO, the problem is that predicting the future is very hard. The CBO does its best to give us accurate estimates, but these are only educated guesses that point in a general direction. They can serve as a useful guide but they shouldn’t be treated as an all-knowing oracle.
Congress should be focused on trying to adopt good policy and only use the CBO as a gauge to make sure they didn’t create a serious financial issue. Instead, too often Congress is absurdly obsessed with getting a good CBO score or a deficit neutral score for a bill only to have the actual cost of the law being significant different from the projections.
During the health care fight Democrats wasted so much time and made several stupid changes to the Affordable Care Act to get the exact CBO score they wanted. Now it is clear how silly it was to make that a top priority since the actual outcome is noticeably different.
Image via Mira d’Oubliette under Creative Commons license