A new report from government actuaries has revealed that the Congressional Budget Office was scandalously off in its estimates of the impact of Obamacare's individual mandate, a miscalculation that has had significant ramifications for healthcare and tax policy over the past decade.

CBO estimates about the importance of an individual mandate to a national healthcare scheme prodded President Barack Obama into including the unpopular provision into the law in the first place. The mandate projections also played a key role in President Trump's two major legislative initiatives. The fact that the CBO assumed 14 million could lose coverage mainly due to the elimination of mandate penalties helped kill the effort to repeal and replace Obamacare, while its later assumption that 13 million fewer insured individuals would mean less spending on subsidies from the federal government helped get the 2017 Republican tax cut across the finish line by improving the budgetary math. Yet those incredibly influential estimates now appear to have been wildly off.

In what was literally a footnote in its annual report on national health spending projections, actuaries for the Centers for Medicare and Medicaid Services on Wednesday estimated that the elimination of the individual mandate would have a significantly smaller impact than the CBO has long estimated. Specifically, the CMS report revealed that 2.5 million more people would go without insurance in 2019 due to the repeal of the individual mandate's penalties, and the impact would be "smaller" thereafter.

When Obamacare was being debated in 2009, CBO and other outside experts believed that the mandate was a necessary tool for convincing younger and healthier individuals to purchase insurance to offset the cost of covering older and sicker enrollees in any kind of national healthcare scheme. So important was the mandate to CBO's analysis that Obama was forced to embrace the idea, even though he opposed it during the 2008 campaign and it made the legislation less popular. It also would eventually imperil the whole law at the Supreme Court.

Over time, as Obamacare was implemented, experts began to question the importance of the mandate. But when Republicans sought to repeal and replace Obamacare in 2017, the CBO did not adjust its assumptions about its power. For instance, in one version of the House bill, the CBO found that before any cuts to actual spending went into effect, 14 million fewer people would be insured and that, "Most of the reductions in coverage ... would stem from repealing the penalties associated with the individual mandate." Incredibly, the CBO estimated that 5 million fewer people would enroll in free Medicaid mainly due to the elimination of the penalties. This number accounted for more than half of the 24 million the CBO said the Republican plan would reduce coverage for overall over a decade.

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.

On the flip side, the CBO's wild assumptions about the mandate benefited the GOP when it came to passing the tax law in 2017. Then, the CBO estimated eliminating the penalties would mean 4 million fewer people having coverage in 2019, and 13 million fewer overall. The CBO said this would save $338 billion, mainly due to lower spending on Medicaid and insurance subsidies, giving Republicans more paper savings to work with to provide a more substantial tax cut and secure final passage.

But the CMS actuaries, while acknowledging that the elimination of the mandate penalties would have some effect on enrollment in private coverage, write in footnote #2 toward the bottom of their report on national health projections, "By 2019 the individual mandate repeal is anticipated to result in about 1.5 million fewer direct-purchase-market enrollees, who are expected to be somewhat younger and healthier than those who retain coverage, as well as about 1.0 million fewer employer-sponsored-insurance-market enrollees, than otherwise would have been projected. After 2019 the enrollment effects are expected to be smaller. Medicaid enrollment is assumed to be unaffected."

This is consistent with other data we've received since the mandate was repealed as part of the 2017 tax law suggesting a relatively modest impact. For instance, after all the warnings of massive fallout from the elimination of the penalties, 8.4 million signed up for coverage on the federal Obamacare exchange for 2019, down just slightly from 8.7 million a year earlier, when the mandate was in place.

Given the outsized influence that the CBO has on policymaking in Washington, the CBO's misfire on the individual mandate should be a major story.