Problems with CBO’s Analysis of the Coverage Impact of The One Big Beautiful Bill

On June 4, the Congressional Budget Office (CBO) sent a letter to ranking Democratic members of key committees responding to their request for projected coverage losses under the One Big Beautiful Bill (OBBB). I respect the role of CBO and admire many of their experts, but this latest analysis is replete with problems and its narrative about current health policy misses the mark.

CBO has a poor track record of assessing the coverage effects of proposed legislation. For example, they greatly overestimated the impact of the tax penalty on the uninsured, causing them to wildly miss on their estimate of the number of people who would gain coverage if the ACA passed and the number that would lose coverage if it was repealed. When Congress eliminated the tax penalty, the coverage effects turned out to be quite minimal. Any response from CBO about coverage gains or losses from legislative proposals should acknowledge major uncertainty and CBO’s recent problematic projections.

Perhaps most disappointing is that not once in the 13-page letter does CBO mention the enormous amount of improper enrollment in either Medicaid or the exchanges. The Centers for Medicare and Medicaid Services (CMS) just produced an analysis showing 4 to 5 million people improperly enrolled in the exchanges in 2024—specifically enrollees who claimed an income that was not accurate to qualify for a fully subsidized plan. (Later this month, Paragon will release an update to The Great Obamacare Enrollment Fraud showing that improper and fraudulent exchange enrollment grew significantly from 2024 to 2025.)

In addition, there are at least 5 million more people enrolled in Obamacare’s Medicaid expansion who are also not eligible for the program. Many of the OBBB provisions address these problematic policies by reducing improper enrollment and restoring some modicum of program integrity. CBO’s decision not to even mention the massive issue of improper enrollments in both the exchanges and Medicaid expansion is a troubling departure from its track record as Congress’s scorekeeper.

Recent history is critical for policymakers seeking to ensure Medicaid once again serves the most vulnerable. For the past four years, President Biden pursued a reckless enrollment-at-any-cost strategy. The administration decided to enroll applicants without verifying their income and opened a year-round enrollment period for anyone who claimed income within a certain range, among many actions that increase improper enrollment and wasteful expenditures. The OBBB wisely addresses these damaging Biden policies and puts in place commonsense requirements to verify applicant eligibility. CBO projects these policies will reduce enrollment by around 3 million people—and knowing that there are more than 5 million improper exchange enrollees would provide important context to this number.

CBO also makes no mention of the problem of enrollment in multiple types of coverage in the June 4 letter. We know from their past work that enrollment in multiple sources of coverage became a significant problem—up to 29 million people during the Biden administration—as people were enrolled in some combination of exchange plans, Medicaid, and employer coverage. So, if people lose coverage, they don’t necessarily become uninsured.

The most questionable part of CBO’s analysis pertains to its estimates of the community-engagement requirements for able-bodied, working-age adults enrolled in Obamacare’s Medicaid expansion. CBO expects that 18.5 million people will be subject to the requirements although some of them would be eligible for waivers. CBO assumes a decline in Medicaid coverage of 5.2 million people and that 400,000 of them would move to a workplace plan.

I think CBO assumes too much coverage loss from the community-engagement requirement. But the bigger issue is that CBO asserts that the remaining 4.8 million people would be without coverage. This means that CBO assumes zero improper enrollment in the exchanges despite the wide-ranging evidence to the contrary. CBO apparently assumes the law will be followed, which is a real problem for its estimates when there is such massive evidence of improper enrollment with people obtaining heavily subsidized exchange plans who are not eligible. CBO should factor in the loads of evidence that programs operate very differently in practice than what is written on paper in its estimates.

There are several other areas of concern. OBBB contains a provision that lowers the federal matching rate for the Medicaid expansion population from 90 percent to 80 percent for any state that uses its own funds to provide coverage to certain immigrants, including unauthorized ones. CBO estimates that this provision would reduce coverage by 1.4 million people. It adds that “their health insurance coverage does not involve federal funding.” This line suggests bias. While it is true that federal law prohibits Medicaid dollars from covering unauthorized immigrants in the program, it is well known that states use Medicaid financing gimmicks (which have surged in recent years) to obtain federal funds without any increase in state contributions. And some states, including California, have exploited the Medicaid money-laundering apparatus to use federal funds to expand health coverage to unauthorized immigrants.

There are also some concerns with a biased tone in CBO’s letter. Biden policies that reduced states’ ability to do more frequent eligibility reviews or that reduced the materials that applicants needed to submit for eligibility determinations are referred to as “reduc[ing] administrative burdens and barriers to enrollment.” The letter does not provide any context that the improper payment rate in Medicaid exceeded 25% in years when CMS conducted full-eligibility reviews. A more objective and accurate description would be “establishing procedures to ensure ineligible people are not enrolled in the program.”

Perhaps the strangest estimate of coverage loss is from the OBBB provision that freezes states’ ability to raise Medicaid provider taxes. As Paragon has documented, states use provider taxes to obtain additional federal funds without a commensurate increase in state spending and raise payments to providers. CBO estimates that such a freeze would increase the uninsured by 400,000 because it assumes states would “change enrollment policies and procedures to make enrollment more challenging to navigate.” It is unclear what CBO is referring to here, and there are no examples given. The provider-tax freeze is a moderate and commonsense policy that is unlikely to affect enrollment and if anything will put downward pressure on the growth in provider and insurer rates in Medicaid, which exploded during the Biden years and drove spending and corporate welfare in the program.

In addition to CBO’s estimate of 10.9 million people becoming uninsured from the OBBB, they also estimate 4.2 million people would lose coverage if Biden’s COVID credits expire after 2025. As a reminder, Democrats slated them to expire at the end of 2025 when they passed the Inflation Reduction Act. Biden’s COVID credits led to an enormous amount of wasteful and fraudulent spending, including massive, organized fraud rings. Paragon will write more about Biden’s COVID credits and the case for them to expire in the coming months.

CBO has a valuable role to play in the policy process. However, its estimates of Democratic and Republican health policy proposals over the past 15 years have been extremely favorable to Democrats and unfavorable to Republicans. The same issue is likely at play here and far fewer coverage losses will happen, assuming the OBBB becomes law, than what CBO predicts.

Finally, it is well past time for CBO to grapple with the massive amount of improper enrollment in both the exchanges and Medicaid expansion. Moreover, CBO should start incorporating both a discussion of those problems in its communications with Congress and perspective on how proposed policies would either exacerbate ineligible enrollment in Medicaid and the Obamacare exchanges or reduce such problems.