The Man Who Thinks Medicaid Cuts Won’t Cut Medicaid

The Trump administration’s “Big, Beautiful Bill” will reduce Medicaid spending by about $800 billion over the next decade by kicking some 8 million Americans off the program’s rolls. That is, if you listen to the Congressional Budget Office (CBO), the hospital industry, or the basic intuition that any plan to spend drastically less money on giving health care to poor people will result in those people ceasing to have health care.

But the Trump administration’s own projection is that the giant cuts in Medicaid will result in nobody losing coverage. If true, this would be astonishing, the fiscal equivalent of the immaculate conception. Fortunately, the administration has just the man to explain this economic miracle to the public: Kevin Hassett, the director of the National Economic Council and a professional soothsayer of implausible events that Republicans hope, or at least claim, will occur.

Appearing on CBS’s Face the Nation over the weekend, Hassett made his sales pitch. “It’s sound budgetary politics,” he said. “And I think that nobody’s going to lose their insurance.” Sadly for those Americans at risk of losing their access to medical care, and unsurprisingly for those familiar with Hassett’s track record as an economic forecaster, his explanation was not particularly convincing.

If the Trump administration’s estimate is based on an alternative model, Hassett did not share it. Instead, his argument was a purely negative one. The CBO, he explained, cannot be trusted, because it has been wrong in the past—specifically, during the debate over legislation to repeal the Affordable Care Act (ACA) during the first Trump administration. “Go back to 2017, when we had work requirements for Obamacare: They said that we’d lose about 4 million insured between 2017 and 2019, and about double that over the next 10 years,” he said. “And in fact, the number of insured went up.”

This sounds like a devastating indictment of CBO’s ability to measure the effect of work requirements on the uninsured rate. It becomes less impressive when you recall that the bill in question—Donald Trump’s attempt to repeal Obamacare—never became law. Trump proposed a national Medicaid work requirement in 2017, and Republicans passed a bill including that provision in the House, but it died in the Senate. (John McCain? Thumbs-down? Remember?)

Trump did, however, sign executive orders designed to undercut Obamacare. One of those orders allowed states to implement requirements for Medicaid. Arkansas took Trump up on the offer. The new requirements proved very hard for users to navigate, and caused significant coverage losses without any evidence of having increased employment. This real-world experiment informs the CBO’s model of the One Big Beautiful Bill Act.

Annie Lowrey: Annoying people to death

Now, it’s possible that other states will design systems for verifying employment status that work more smoothly than Arkansas’s. If that happens, however, it will defeat the Republican Party’s purpose for implementing them. The whole point is to save money, and the only way to save money is by kicking people off the program so that the government doesn’t have to pay for their medical treatment. (In addition to those who will lose their health insurance because of Medicaid cuts, the CBO projects that another 8 million people will lose their insurance by 2034 because of changes to the ACA private marketplaces.)

Hassett has not only made up a history of CBO being wrong about work requirements; he argues that this imagined sequence discredits the agency. “They should look back at all the things they got wrong, and explain what they’re going to do to get it right in the future and to do a better job,” he said on Face the Nation. “And if they do that, we’ll take them more seriously.”

If the administration wishes to hinge its defense of its signature domestic legislation on the premise that sources of inaccurate historical predictions cannot be trusted, it has picked an especially unfortunate spokesperson. Hassett comes from the “supply-side economics” wing of the Republican Party, a school of pseudo-economic thought once famously derided by George H. W. Bush as “voodoo economics” for its unlikely claims that cutting taxes can yield higher government revenue. In 1999, Hassett co-authored Dow 36,000, which asserted that the stock market was wildly undervalued and was poised to more than quadruple in a few years. In fact, it would be more than two decades before the Dow Jones hit 36,000.

Hassett proceeded to serve as chair of the Council of Economic Advisers in the first Trump administration, where his capacity for optimistic projection again proved useful. During the first weeks of the coronavirus pandemic, in 2020, Hassett designed a “curve-fitting exercise” indicating that deaths from the virus would peak in April and trail off to almost zero by mid-May. That is not, in fact, what happened.

In a normal administration, an episode like that, let alone two of them, would kill an economist’s career. But it is perhaps because of, rather than despite, these absurd predictions that Hassett has found his way into an even more influential role in Trump’s second term. Now here he is arguing that people should refuse to take the Congressional Budget Office seriously, because the Congressional Budget Office has made some embarrassing predictions in the past. Instead, we should believe that the CBO’s projection of 8 million people losing Medicaid is 8 million too high. Can we at least see the model that arrived at this amazing conclusion? No, we can’t. But we should trust the proven track record of Kevin Hassett.