The Tax Plans of the Republican Presidential Candidates Are Not Even Close to Serious

TPC Evaluations of Tax Losses in the Republican Tax Plans, 2016

A.  Introduction

There is a good deal in the current campaign of candidates seeking the Republican presidential campaign that is worrying.  When one of the main remaining candidates (Marco Rubio) tries to belittle one of the other candidates (Donald Trump) on national television by alluding to the size of his penis, one has to wonder.  This would be considered juvenile even in a campaign for a high school class president.  Yet one of these candidates will almost certainly receive the nomination of the Republican Party to be the President of the United States.

This blog seeks, however, to focus on economic issues.  And a key economic issue in modern day political campaigns is what the candidate would seek to do, if elected to office, about tax policy.  Major candidates have therefore set out detailed proposals while campaigning, with these proposals developed by teams of trusted advisors who are specialists in the area, and then put out by the candidate as what he (or she) would try to enact if elected.

The major Republican candidates have done this, and four of these (the proposals of Donald Trump, Ted Cruz, Marco Rubio, and Jeb Bush) have been analyzed in depth by the non-partisan Tax Policy Center (a joint center sponsored by the Urban Institute and the Brookings Institution).  (The Tax Policy Center has also just recently issued similar analyses of the tax plans of Hillary Clinton and Bernie Sanders.)

Among the issues examined by the Tax Policy Center was what the impact would be on revenues collected of the Republican plans.  This blog post will look at those estimates, and calculate what they imply for government expenditure cuts if, as each of the candidates insist, they would not allow deficits to rise.  And what they imply is that these plans, like much else in this campaign, simply are not serious.

B.  The Revenue Losses from the Republican Plans

The chart at the top of this post shows what the Tax Policy Center calculates the government revenue losses would be if the tax plans of the major Republican candidates were implemented.  Ten year totals (for fiscal years 2017 to 2026) are shown rather than year by year numbers to keep things simple, even though the plans would still be ramping up in 2017 with the full impact not seen until 2018.  The total revenue losses would range from $6.8 trillion for Bush as well as Rubio, to $8.6 trillion for Cruz, to $9.5 trillion for Trump.

To put this in perspective, the chart includes (on the right) the projected total government discretionary budget expenditures for all purposes other than defense over this same ten year period.  The figures are from the most recent (January 2016) ten year budget forecasts of the Congressional Budget Office, and will exclude defense as well expenditures for mandatory programs (two-thirds of which are for Social Security and Medicare) and for interest on public debt.

Forecast non-defense discretionary expenditures total $6.5 trillion over this ten year period.  This is less than what the revenue losses would be under any of the Republican plans.  That is, even with the total elimination of government discretionary spending on everything other than defense, the deficit would increase.  Yet these Republicans insist that their plans would not increase the deficit.

Cutting non-defense discretionary expenditures to zero is of course absurd.  For those concerned with security, one should note there would be no more federal prisons, no more prosecutors, no FBI, no more border control.  There would be no more federal disease control, no more federally funded medical research, no more federal support for infrastructure building or maintenance, no more NASA or supported science research, and so on.  Everything would be eliminated, not just cut.

Taking this a step further, one can look at how much defense spending would need to be cut, on top of the elimination of all non-defense expenditure, to make up for the lost revenues:

Implied Defense Reductions, FY2017 to 2026, TPC

The necessary cuts in the defense budget would range from 5% of forecast ten-year defense expenditures for Bush and Rubio, to 32% for Cruz, to 47% (!) for Trump.  Yet Cruz, Rubio and Bush have all also called for sharp increases in defense spending.  Ted Cruz has laid out an ambitious plan for a bigger military that an analyst at the conservative Cato Institute would cost an extra $2.6 trillion over eight years, an increase in defense spending of over 50%.  Bush and Kasich have each proposed increases in defense spending of $1 trillion over ten years, an increase of over 15%.  Rubio is also arguing for big (but unspecified) increases in defense spending.  Things are perhaps less clear for Donald Trump, who has asserted he is “gonna build a military that’s gonna be much stronger than it is right now”, but “for a lot less”.  How he would do this he does not say, and it is doubtful he would get a “much stronger” military if its budget is to be cut by close to half.

C.  Conclusion

The Republican candidates assert their tax cut plans would not, however, lead to deficit increases, nor that they would cut defense spending (at least other than Trump).  Rather, they would cut non-defense spending.  However, as seen above, even if non-defense spending were cut to zero, budget deficits would increase unless there were also sharp cuts in mandatory programs (which are mostly Social Security and Medicare).

How do they believe they can do this?  Because they assert their tax plans would lead to big, indeed miraculous, leaps in growth.  Yet there is no evidence that such tax plans would do this.  Indeed, they are so large that the disruption in finances would almost certainly have large negative consequences for growth.

Economic theory does suggest that tax systems can affect growth.  The Tax Policy Center evaluations of the Republican tax plans, cited above, each have a balanced discussion of what they might be.  But as they point out, one would expect from economic theory that there would be both positive and negative effects, offsetting each other to at least some degree, and that in any case the overall impact in either direction is likely to be small. What the net impact will be, and in what direction, is then an empirical question, and careful studies of historical examples of tax reforms suggests that the overall impact on growth is, indeed, small.

One also does not find any evidence in the US historical data that tax cuts lead to more rapid growth.  As an earlier post on this blog found, federal taxes as a share of GDP were substantially lower in the decade following the Bush tax cuts of 2001 than for any decade in the previous half century, but this was not associated with higher GDP or jobs growth. Rather, it was associated with the lowest growth of GDP or jobs of any decade since at least the 1960s.  Furthermore, one cannot find any indication that a reduction of the highest marginal income tax rate (a focus of the Republican tax plans) led to higher growth.  The highest marginal federal income tax rate was 91 or 92% in the 1950s under Eisenhower, and always 70% or higher during the 1960s, but growth in GDP and in jobs during those periods were reasonably good, especially in comparison to what they have been since the Bush tax cuts of 2001.  High marginal income tax rates in the 1950s and 1960s did not kill growth.

One should not then expect miracles.  The Republican tax plans simply cannot be taken seriously.  But perhaps I am being silly to expect that in this campaign for the presidency.

The Leading Republican Presidential Candidates on Muslims and Syrian War Refugees

Republican Candidates photos.001The lead article on the front page of today’s Washington Post reported on what several of the Republican presidential candidates have said they would do in the face of refugees fleeing the war in Syria, and on Muslims (including US citizens) already resident in the US. David Farenthold and Jose DelReal were the authors.  While I do not normally put up posts on this blog that simply summarize other news reports, this article was especially telling. Those who did not see the article should find it of interest.

The first three paragraphs (where I have inserted the name of the candidate being referred to in parentheses; the article identifies them later) are:

One of the front-runners in the Republican presidential race [Donald Trump] said Thursday he would “absolutely” want a database of Muslims in the country and wouldn’t rule out giving them special ID cards that noted their religion.

Another top candidate [Ben Carson] likened Syrian refugees — who are largely Muslim — to dogs. Some of them might be rabid, he said, which was reason to keep them all out.

And a third [Ted Cruz] stood up in the Senate on Thursday and called for banning refugees from five Middle Eastern countries. He was explicit that the point was to keep Muslim refugees out while letting Christians from the same places in.

Expanding on Trump’s stated views, the article later noted:

Donald Trump, who has suggested closing down mosques and increasing surveillance of Muslims, said in an interview with Yahoo News published online Thursday that “we’re going to have to do certain things that were frankly unthinkable a year ago.”

When pressed on whether such measures might include tracking Muslim Americans in a database or noting their religious affiliations on identification cards, Trump said: “We’re going to have to — we’re going to have to look at a lot of things very closely. We’re going to have to look at the mosques. We’re going to have to look very, very carefully.”

Later Thursday, Trump told NBC News that he would “certainly” and “absolutely” create a database of Muslims in the United States, although it was unclear whether this system would track only newcomers to the country or all Muslims living in the country.

“There should be a lot of systems beyond databases,” Trump said. “I mean, we should have a lot of systems.”

Later in the article:

Sen. Marco Rubio (Fla.) said the attacks were part of a “clash of civilizations” — essentially casting the Paris attackers as products of Muslim society rather than a radical group apart from it.

And finally Jeb Bush (along with Ted Cruz again):

Two other candidates — Sen. Ted Cruz (Tex.) and former Florida governor Jeb Bush — suggested this week that the United States should accept Christian refugees from Syria but not some or all of the Muslim refugees.

According to today’s (November 20) Pollster results on the preferences of Republican voters (Pollster averages out the results from recent individual polls), these five candidates together account for 75% of Republican voter presidential preferences.  Trump is first by a substantial margin, followed by Carson, Rubio, Cruz, and Bush, in that order.  No other candidate seeking the nomination receives more than 3.3% of Republican voter preferences.  It is likely that one of these five candidates will receive the Republican nomination.

This is scary.  Perhaps the statements were not fully thought through.  We will see whether and to what extent the candidates seek to “walk back” the statements in the coming days. But these gut reactions (if that is indeed what they are) to the tragedy in Paris, on the treatment of those whose religion is Islam, and how they see refugees from the Syrian war, should at a minimum make us wonder how they would respond if they were faced by a major crisis as president.

The Problems in Congress Come Not from Gridlock, But from Roadblocks

Republican Party Now.png


Gridlock, as originally defined, refers to a severe traffic jam in a grid of intersecting streets, where cars backed up on the intersecting roads block each other from moving.  No individual car is to blame, but rather all of them together are to blame.  The term is now also commonly used to refer to the inability of Congress to get things done.

But the problem in the US Congress is not really gridlock.  As will be clear from several examples discussed below, a majority in Congress exists for moving important legislation forward.  The problem, rather, is that congressional leaders, who decide what will be voted on and when, have acted to keep such legislation from coming to a vote.  But this is not gridlock.  Rather, it is deliberately placed roadblocks.

Events over the last month show what might be done when such roadblocks are removed. The resignation of John Boehner as Speaker of the House in late September created a narrow window when he could call up legislation for a vote while not being threatened by a minority of just 30 Republican congressmen on a motion to remove him from the Speakership.  He had already removed himself.  As discussed in the previous post on this blog, the traditional practice of straight party line votes for the position of Speaker means that a small group in the majority party (equal to just 30 in the current Congress) could deny the majority party candidate of this post.  A small group of the Republicans in Congress threatened to use this against Boehner should he move legislation forward that they opposed.

Boehner struggled to lead his party under such constraints, and eventually gave up and resigned.  But with that resignation, he was able to negotiate and push through to passage, with strong bipartisan support, a bill that addressed the immediate threat of default on the US debt (current borrowing authority limits would have been reached on about November 2), provided an overall budget framework for fiscal years 2016 and 2017 (with the sequester restrictions eased by $50 billion in FY16 and $30 billion in FY17, equal to a total of just 0.2% of GDP over the two years), and addressed immediate issues arising on Social Security Disability Insurance and on Medicare premiums.

The bill was approved 266 to 167 when put to a vote.  All Democrats voting approved, as did about a third of the Republicans:

Budget and Debt Ceiling Bill – House



Not Voting














The bill then went to the Senate, where it was also approved by a strong majority (again with all Democrats in favor and about a third of the Republicans):

Budget and Debt Ceiling Bill – Senate



Not Voting














In perhaps an even more surprising example of what can be done to get around the roadblocks being imposed, the House membership used a discharge petition to force a vote on renewing the US Ex-Im Bank charter.  Successful discharge petitions are rare: Only three times in recent history (since 1985) have they been approved and then led to new legislation.  They require the public signature of 218 congressional members (half of the chamber), and thus require the support of at least some in the majority party even if all of the minority party are willing to sign.  Such maneuvering to force a vote against the wishes of the congressional leadership can and does lead to retaliation by the leadership against the members.  The petition was filed on September 30, with the support of 176 Democrats and 42 Republicans.

The Ex-Im Bank’s charter authority lapsed on July 1.  Reauthorization is required periodically, and never before in its 81 year history has Congress failed to approve this.  A strong majority voted in favor in the Senate in a vote on July 27, with bipartisan support:

Ex-Im Bank Reauthorization – Senate



Not Voting














Once the vote in the House was forced (it took place on October 27), a strong majority came out in favor, including not only almost all Democrats, but a majority of the Republicans as well:

Ex-Im Bank Reauthorization – House



Not Voting













The bill, however, is not yet fully passed.  The Senate will now need to reconsider the bill, and despite the earlier strong vote in favor, it is not clear a vote will be held now. Republican Senator Mitch McConnell, the Majority Leader, has said he will not allow a vote to take place, at least on the stand-alone bill passed by the House.  And by attaching the Ex-Im legislation to some other bill McConnell would force it to be returned to the House again, where the leadership could again try to block any vote from being held.

Paul Ryan has now been elected to be Speaker of the House, succeeding John Boehner. Despite these examples of legislation that can move forward in the current congress with bipartisan support provided votes are held, the prospects that Ryan will act differently from Boehner are slim.  Ryan still faces the challenge that just 30 members of his party can choose not to vote for him in future votes for the Speakership, and he would then lose the office.  Indeed, nine members of his party voted for another candidate in the October 29 vote.  And while Ryan at first said that as a condition of becoming a candidate for the Speakership, he wanted agreement to change the House rules so that no future such votes on the Speakership could be held until the start of the next Congress in January 2017, he was not able to secure such a commitment from those who had brought Boehner down, and Ryan then backed down from this demand.

An example where important reform would probably pass with bipartisan support if a vote were held is immigration reform.  The Senate passed a bill on immigration reform (written in part by Senator Marco Rubio, who later denounced his own bill following conservative criticism) by a 68 to 32 majority (with 14 Republicans voting in favor) in June 2013.  But with the conservative criticism, Speaker Boehner refused to bring it up for a vote in the House.  And while it is now more than two years later, with the 2014 elections in between, it is likely that a majority of members in both chambers would still be in favor of immigration reform along the lines of the bill passed in the Senate in 2013.

However, Paul Ryan has publicly announced that he will not allow any such bill to come up for a vote.  And he insists it is Obama’s fault!  In an interview Sunday on CBS’s “Face the Nation”, Ryan said it would be “a ridiculous notion” to work with President Obama on the issue, because Obama is someone they “cannot trust”.  But there is no basis for such a charge.  Obama’s executive orders on immigration have been no different in nature from orders issued by Reagan and the first Bush when they were president.  And no such accusations were leveled against Reagan and Bush then.

But regardless of what one concludes on that issue, why such actions should preclude a vote in the legislative chamber is not at all clear.  Rather, the basic disrespect of the presidential office by Ryan appears to signal that Ryan intends to follow the same path as his predecessor, and allow a minority of about 40 congressmen to dictate what legislation will be brought to a vote, and what will be blocked.  As noted before, the problem is deliberately placed roadblocks, not gridlock.

Jon Huntsman for Speaker of the House!

Jon Huntsman.001


Congress should elect Jon Huntsman for its next Speaker.  Well, perhaps not Jon Huntsman specifically, but some moderate Republican (there are a few) who would appeal not only to those in the Republican Party who want to get things done in Washington, but also to most Democrats, who also want to get things done.  Perhaps Ray LaHood, a former Republican congressman who served as Secretary of Transportation under President Obama, would be a good choice, or even former New York Mayor Michael Bloomberg.  But we are getting ahead of ourselves.  First, we need to discuss why this has come up.

Under pressure from the far right in his party, Speaker of the House John Boehner announced on September 25 that he would resign as Speaker effective the end of October.  Boehner still clearly enjoyed the support of a substantial majority of his party’s members in the House.  But to understand why he ultimately decided he would need to resign or face an embarrassing vote that would remove him, one must understand the rules and customs followed in the House.

Traditionally, the congressional members of each party (Democrats and Republicans) vote in a unified fashion for whomever has been elected the leader of their respective party in the House.  The election of party leader might well be subject to a competitive election among the party members.  But once a party leader is chosen, 100% of the congressional members from that party have traditionally then voted for that leader in the election for the Speaker position.  Thus whichever party has a majority in the House, will elect its leader to the Speaker post.

But there is no rule that one must follow this tradition.  Members of a party can vote for someone else as leader.  And that has become increasingly common in recent years.  Ten Republicans did not vote for Boehner as Speaker in January 2013, and 25 did not in January 2015.  While those numbers seem small, and indeed are small, not many are necessary.  By House rules, the person to be voted Speaker must receive an absolute majority of the “votes cast for a person by name” (thus excluding those absent, as well as excluding those voting “present”).  If the majority party in the House has a majority of only a relatively small number of seats, then a few renegades who decide not to vote for their party’s chosen leader can deny that person the Speakership.

In the current 114th Congress, which was elected in November 2014 and took office in January 2015, Republicans enjoy a quite substantial majority, with 247 seats vs. 188 seats for the Democrats, or a majority of 30 seats.  This is indeed the largest Republican majority in Congress since 1929, when Herbert Hoover was elected president.  But had just 30 Republican members decided not to vote for their party leader (Boehner) to become the Speaker, then he would have been denied the position (assuming all House members are present and vote for a person).

Thus the revolt that led to 24 Republican members to vote for someone other than Boehner (plus one voting “present”) in the January 2015 vote for the Speakership, was significant.  It was, and was clearly intended to be, a warning to Boehner that the minority of the Republican members on the far right of the party were willing to vote against their own leader, if that leader did not act as they wished.

Following up on this threat, Representative Mark Meadows of North Carolina (one of the Republicans who voted for someone other than Boehner) introduced a motion on July 28 to “vacate the chair”.  This could have acted as a vehicle to force a vote on Boehner as Speaker.

Faced with this, Boehner faced the choice of either caving into the demands of the extreme right in his party, or gotten critical legislation passed to allow the government to continue to function from October 1.  Failure to pass such legislation would have been an embarrassment.  The legislation was necessary so that government departments could continue to spend funds with the start of the new fiscal year (as the Congress has not yet passed a budget for the year – a common occurrence).  Democrats supported keeping the government open, as did a substantial share of the Republican majority.  Together they could pass such a bill.  But they are only allowed to vote on measures in Congress that the Speaker chooses to bring up for a vote.  This is what makes the Speakership such a powerful position.  But if Boehner brought up such a bill, members on the extreme right wing of his party made clear that they would vote against Boehner in a vote on the Speakership.  With only 30 such votes necessary for Boehner to lose such a vote (amounting to just 12% of the 247 Republican held seats in the Congress), Boehner was in a bind.  He was being held hostage by a small minority within his party.

Boehner has of course faced this dilemma before.  So far he has chosen to try to work with the extreme right wing.  But as this became more and more difficult, as their demands became more extreme and as their criticism of Boehner grew, ultimately Boehner decided all he could do was resign.  Losing such a vote for the Speakership would be terribly embarrassing.  Better to resign first, and at least go out on your own terms.

Following his resignation, Boehner did indeed bring to a vote a bill to fund the government for almost two and a half months (until December 11).  And it passed easily, by a majority of 277 in favor and 151 opposed.  It received 186 votes in favor from the Democrats (all Democrats who voted) and 91 votes in favor from the Republicans (with 151 opposed).

It appears now that the current Majority Leader Kevin McCarthy will succeed Boehner, through the traditional process.  McCarthy appears in most respects to be similar to Boehner in his approach, although somewhat closer to the right-wing of his party than Boehner was.  But Boehner’s resignation and the expected selection of McCarthy to the Speakership changes little if anything.  There will be the need to pass a budget to fund the government by December 11, or we will once again be in the same situation as this past week.  The extreme right of the Republican members have made clear that they still want what they want, and that if that means shutting down the government, then that is a price they are willing to pay.

Even before December 11, it appears that the government will hit the debt ceiling. Congress sets the debt ceiling, and Treasury Secretary Lew stated in a letter to Congressional leaders on October 1 that they now expect to hit the current ceiling on or about November 5.  Unless Congress acts by then, the US would be forced to default on its financial obligations.  Once again, a broad majority in the Congress, made up of Republicans and Democrats together, would certainly vote in favor of a bill to address this. But they can vote on such a bill only if the Speaker allows a vote on it, and the extreme right wing of the Republican members see this as leverage to get what they want.  By threatening to vote out the Speaker if he does bring up such a bill, they can hold the Speaker hostage to their demands.

Thus there is every reason to expect gridlock to continue, despite Boehner’s resignation and the election of a new speaker such as McCarthy.  Can anything be done?

Yes, the members of congress have it within their power to address this.  Platitudes (such as we will all work together, or will work harder together) will not suffice.  Rather, one needs to address the traditional practices of the current system that empower a small minority within the majority party to hold hostage the Speaker to their demands.

This can be done by going outside the traditional system in the choice for Speaker. There is nothing in the Constitution that requires the Speaker to be a member of Congress.   While the Speaker has historically always been a member, the Constitution does not require this.  All the Constitution says on the institution is in one line at the end of Article I, Section 2, where it states the “House shall choose their Speaker and their Officers”. Anyone can be so chosen.

To change the dynamics, one needs a Speaker who will draw support from the large majority of members who do not represent the extremes of either party.  The Speaker role would change from highly partisan party leader, to a more balanced mediator who seeks a consensus that may well cross party lines to move needed legislation forward.  With Republicans in the majority, the person chosen should be a Republican.  But he or she should be someone who can work with both sides to try to reach a consensus that spans the broad middle ground, thus ending the current system that allows a small minority to hold the Speaker hostage to their demands.

Jon Huntsman might be such a candidate.  He might in particular be appropriate given his recent work as Co-Chair of “No Labels”, a bipartisan group that has proposed a set of process reforms not only to get congress to work, but also the presidency and government more broadly.  I would not necessarily endorse all of these proposals (and some are pretty broad and vague), but thinking along such lines will be necessary if we are to see an end to gridlock in Washington.

The new role of the Speaker would be to seek a broad consensus on issues, crossing party lines, and bringing to the floor measures that will be endorsed by a majority rather than voted up or down on strict party lines.  Voting solely on party lines is a characteristic of parliamentary systems, such as that of the UK.  Such a system works fine to move an agenda forward when the chief executive (the Prime Minister in a parliamentary system) is the head of the majority party in the parliament (or of a coalition that constitutes a majority). But the US Constitution did not establish a parliamentary system.  Rather, it established a system with a separately elected chief executive (the president), who runs the executive branch of government and where the government is made up of three equal and separate branches:  the executive, the legislature, and the judiciary.

Voting solely along party lines, as has become common in recent years in the Congress, works fine in a parliamentary system but not in the system of government established by the US Constitution.  This will not change as long as the Speaker sees his role as primarily that of a partisan leader of his party, rather than as a mediator seeking to produce a consensus on needed legislation with this then passed by a majority of members from both parties representing the middle rather than the extremes.  As long as an extreme can hold the Speaker hostage, he or she will not be able to act as such a mediator spanning the parties.

With such a change to this new type of Speaker, one can foresee a large set of measures passing soon, as a majority in the Congress have been in support.  These include not only necessary upcoming legislation such as for the budget and a bill to raise the debt ceiling, but other items as well.  For example, the previous federal highway funding bill expired in 2009, but since then Congress has not been able to pass any long term extension. Rather, Congress has passed 34 different short term extensions to keep road funding going, and with just these numerous short term extensions, states and localities could not plan in any reasonable way.  The Senate finally passed a longer term (six year) reauthorization this past summer, but the House has yet to act.  There is also a broad consensus on the need for immigration reform, and the Senate passed such a bill in 2013. And if one aimed at achieving a consensus in the middle, rather than appealing solely to one side or the other, one could envisage progress on bills that would address the underfunding and poor management of the VA health system.  One could even see measures to address the high cost of health care (instead of seeking to score political points by calling Obamacare an abomination despite its success in extending insurance cover).

None of this is realistic, of course.  I have no expectation that Washington will change. The point, rather, is that gridlock is not a necessary outcome of the system, but rather a choice that has been made.  Members of Congress have it within their power to change how their Speaker is chosen, and thus ensure the Speaker will abide by the interests of a majority in the Congress rather than a minority in one party.


The Success of Obamacare: A Sharp Reduction in the Number of Americans Without Health Insurance

Health Insurance, % Without Coverage, 1999 to 2014, with 2013 -2014 scaled to US totals, ver 2 with gapA)  Introduction

The US Census Bureau released on September 16 its 2014 report on “Health Insurance Coverage in the United States”.  It provides the best estimate available on the share of the US population that is covered by health insurance, drawing on figures from both its Current Population Survey and its American Community Survey. The graph above was calculated from the underlying data used in the report (released by the Census Bureau along with it).

The new figures confirm that Obamacare has succeeded in sharply reducing the number of Americans who must suffer from lack of health insurance.  The results are consistent with those released earlier by other organizations, including from the commercial polling firm Gallup and from the non-profit Health Policy Center of the Urban Institute.  But the Census Bureau results are derived from larger and more comprehensive surveys than a commercial outfit such as Gallup or a nonprofit such as the Urban Institute can mount.

Gallup, the Urban Institute, and now the Census Bureau, have all found that health insurance coverage improved sharply in 2014, the first year in which the health insurance exchanges set up under Obamacare came into operation.  Also important was the expansion from the start of 2014 of Medicaid coverage in 26 of the 51 states plus Washington, DC.  The expansion, an integral part of the Obamacare reforms, raised eligibility from what had previously generally been 100% of the poverty line (there was some variation across states), to now include also the working close-to-poor who earn between 100% and 138% of the poverty line. Those earning more than 138% of the poverty line are eligible for federal subsidies (phased out with rising income) to purchase privately provided health insurance on the Obamacare market exchanges.

The improvement in health insurance coverage in 2014 (the decrease in the share with no insurance) is clear from these multiple sources.  And it should not be a surprise: The primary purpose of Affordable Care Act (aka Obamacare) was precisely to make affordable health insurance available to all.  Yet prominent political figures opposed to the act (such as the Republican Speaker of the House John Boehner, and Florida Senator Marco Rubio, now a candidate seeking the Republican presidential nomination) claimed that the Affordable Care Act had actually increased the net number of uninsured.  It was clear at the time that they did not understand some basics of insurance enrollment, and it is absolutely clear now that they were dramatically wrong in their assessments.  But I am not aware that any of these political critics have had the courage to admit that they had in fact been wrong.

There are some technical issues that arise in the Census Bureau numbers that should be understood, and these will be discussed below.  But the basic numbers are clear. Between 2013, before the Obamacare exchanges were in operation, and 2014, there was a sharp reduction in the share of the American population who had no health insurance cover.

This blog post will first review the basic results on improved health insurance cover with the start of the Obamacare reforms, and will then discuss some of the technical issues behind the numbers.

B)  The Reduction in the Number of Americans Without Health Insurance Following the Start of the Obamacare Reforms

The graph at the top of this post shows the Census Bureau numbers, as percentage shares of the population with no health insurance over the period 1999 to 2014. Unfortunately (and as will be discussed further below), the Census Bureau changed its methodology in 2013, so the 2013 and 2014 figures are not directly comparable with the figures for 1999 to 2012.  However, the 2013 and 2014 figures are directly comparable to each other, and show the sharp drop in the share of the population without health insurance in 2014 (the first year of the Obamacare market exchanges) compared to what it was before.

The share of the population without health insurance cover at any point in the calendar year fell from 13.3% in 2013 to 10.4% in 2014.  In terms of absolute numbers, the number of Americans without health insurance cover fell from 41.8 million in 2013 to 33.0 million in 2014, a reduction of 8.8 million or 21%.  The number of Americans with health insurance cover rose by 11.6 million, with this number different from the reduction in the number with no insurance cover (the 8.8 million) because the overall US population is growing. Furthermore, this was not (as some politicians have charged) solely a result of the Medicaid expansion.  While the Medicaid expansion was important, with an increase of 6.7 million enrolled in Medicaid (both under its prior program conditions, as well as under the expanded eligibility rules), the total number of Americans with some form of health insurance rose by well more than this.

The chart also shows the shares without health insurance separately for the group of states that as of January 1, 2014, had chosen not to take the federal money to expand Medicaid coverage to include the working close-to-poor (those earning between 100% and 138% of the poverty line).  Twenty-six states (all with a Republican governor or state legislature or usually both) decided not to expand Medicaid coverage to allow this segment of the population to obtain health insurance, despite the fact the additional costs would be covered 100% by the federal government for the first several years, with this then phased down to a still high 90% ultimately.  Even at the 90% federal cost share, the net cost to the state would not simply be small, but in fact negative.  Due to the higher state tax revenues that would be gained from what Medicaid would be paying hospitals, doctors, and nurses to provide health services to these close-to-poor, plus the lower state subsidies that would be needed at hospitals to cover a share of the cost of emergency room care that the uninsured must use when they have no alternative, the states would in fact come out ahead financially by accepting the Medicaid expansion.  Yet for purely political reasons, the Republican governors and legislators in these states refused to permit this Medicaid expansion, leaving this segment of the population with no health insurance cover.

It is also interesting to note from the chart at the top of this post that actions in this group of states to limit (or at least not facilitate access to) health insurance cover appear to have begun much earlier.  The shares of the population without access to any health insurance cover in those 26 states which as of January 1, 2014, had chosen not to expand Medicaid coverage, are shown as the red line in the chart.  The shares in the 25 states plus Washington, DC, that did decide to expand Medicaid coverage are shown in the blue line. In 1999 (the first year with comparable data in this series) and 2000, there was no such a discrepancy in health insurance cover between these two groups of states.  Indeed, in 1999 a slightly smaller share of the population had no insurance cover in the red states than in the blue states.  In 2000 the shares were almost identical.

But this then changed.  Starting in 2001, a consistent gap started to open up in the shares between the two groups of states, with fewer covered by insurance in the red states than in the blue.  The overall national trend for the share of those with no insurance cover was also upwards.  Why the gap between the two groups of states started to open up in 2001 and remain to this day is not fully clear, but it may reflect the trend to more conservative politics that started at that point (including the start of the Bush administration in 2001). The refusal to accept the Medicaid expansion (even at a cost to themselves), and other measures aimed at blocking Obamacare or at least make access more difficult (such as refusal to operate market exchanges at the state level), is in keeping with the observed deterioration in access to health cover in these states well prior to Obamacare ever being debated.

C.  Some Technical Notes

Estimates of the share of the population with or without health insurance cover come from surveys, and thus have the strengths and weaknesses of any surveys.  The accuracy of the results will depend on how well those being surveyed recall and answer correctly what they were asked.  The results will often depend on the way the questions are worded, and sometimes even on the sequence in which the questions are asked.  The Census Bureau recognizes this, continually tests its questionnaires, and periodically will change the way they ask their questions in a survey in an effort to obtain more accurate results.

Unfortunately, when there is such a change the new survey results will not be strictly and directly comparable with the responses provided in the past.  Often the Census Bureau will use various methods to try to link the different data series into one consistent whole, but this is not always done.  One way to do this, for example, would be to conduct two parallel surveys when there is to be a change, one following the old method and one following the new, and then with statistical methods to control for sample characteristics, seek to determine by how much the old series would likely need to be adjusted to become consistent with the new.

The Census Bureau did this when methodological changes were made in the series tracking health insurance coverage in 2007 and again in 2011.  When the 2007 changes were made, they went back and adjusted figures from 1999 onwards to approximate what they would be following the 2007 approach.  And when the 2011 changes were made, they again went back, to 1999 again, to produce a consistent series that eventually covered the period 1999 to 2012.

However, when the changes implemented in 2013 were made, the Census Bureau did not go back to adjust previous figures for consistency with the new approach.  I have found no explanation for why they have not, but would guess it might well be linked to budget cuts.  But for this reason, one cannot assume that the figures showing a reduced share of the population without health insurance in the 2013 figures compared to those in 2012, are necessarily due to more people enrolling in health insurance in 2013 relative to 2012. Hence the gaps in the lines in the graph as drawn above.

Indeed, other evidence suggests that coverage in 2013 was similar to that in 2012. Specifically, the Gallup numbers  previously cited indicate that share of uninsured in 2013 was actually a bit higher than where they were in 2012 (averaging what are quarterly estimates).  There was then a sharp fall in 2014 in the Gallup figures following the start of the Obamacare exchanges and the Medicaid expansion, consistent with the Census Bureau numbers.

It is unfortunate the Census Bureau did not try to work out a consistent series of estimates for health insurance coverage for this critical period.  But for whatever reason they did not (at least not yet).  But what we do know from the Census figures is that the share of the uninsured in the population was trending upwards over the 1999 to 2012 period, and that there was a sharp reduction in the share uninsured in 2014 compared to what it was in 2013.  And that is therefore all we could work with in this post.

Another issue is that the state by state figures were determined by the Census Bureau under one survey for the 1999 to 2012 period (the Annual Social and Economic Supplement to its Current Population Survey, or CPS-ASEC), but then a different survey for 2013 and 2014 (the American Community Survey, or ACS).  Both are large surveys, asking questions on a variety of issues.  But they ask somewhat different questions on the issue of health insurance coverage.  Specifically, the CPS-ASEC, which is undertaken between February and April of each year, asks the respondents whether they had had health insurance coverage at any point in the previous calendar year (separately for each household member).  The ACS survey, in contrast, is undertaken on a rolling basis throughout the year, and the question asked in that survey is whether each household member had health insurance cover at the time they were being interviewed.

These are of course different questions.  And by simple arithmetic, it should be clear that the responses to whether they had insurance at any point in the year will, for the sample as a whole, always be a higher figure than the share in response to the question of whether they have health insurance at the time of the interview.  Someone might not have health insurance at the time of the interview, but could have had it earlier in the year (or will obtain it later in the year).  The shares uninsured will be the mirror images of this.

The national figures for 2013 and 2014 were:



No insurance at any

time in the calendar year

No insurance at the

time of the interview







The figures in the graph at the top of this post are based on the estimates of coverage at any point in the calendar year.  There was, however, a problem in determining on a consistent basis the underlying state figures, from which one could compute the shares for the states that had expanded Medicaid coverage and for those who had not.  The figures at the state level that the Census Bureau made available on its web site for the 1999 to 2012 period were from the CPS-ASEC series.  However, for some unexplained reason, but as part of the changes introduced with the new 2013 numbers, the state level figures for 2013 and 2014 were only made available under the ACS series.  I do not know why they did this, as it introduces another element of inconsistency when making comparisons across time.

Since the bulk of the state level series, for 1999 through to 2012, were published under the CPS-ASEC series, I used those as published.  But for 2013 and 2014, I determined the state totals for the Medicaid expansion and Medicaid non-expansion groups based on the ACS numbers (as they were the only ones available), and then rescaled the figures to fit the published national totals (working in terms of the underlying numbers, and then computing the shares).  The figures should be very close to what would have been worked out directly from the CPS-ASEC figures if they had been made available at the state level. One would expect the ratio of the figures of those without health insurance under the two different definitions (throughout the year or at the time of the interview) would not differ significantly between the two groups of states (those with and without the Medicaid expansion).

D)  Conclusion

Technical issues exist with any data set, and it is important to recognize what limitations such issues place on what one can infer from the figures.  Unfortunately, the Census Bureau numbers as published do not permit us to compare directly the 2013 and 2014 results to those of 1999 to 2012.  However, the 2013 and 2014 results are directly comparable to each other, and they clearly show that there has been a major improvement in health insurance coverage in 2014 after the Obamacare exchanges and Medicaid expansion came into effect.