CBO’s health insurance simulation model (HISIM) generates estimates of health insurance coverage and premiums for the population under age 65. HISIM is used to help develop baseline projections (which incorporate the assumption that current law generally remains the same) and also to model proposed changes in policies that affect health insurance coverage.
Currently, CBO is developing and testing a new version of HISIM to respond to continued Congressional interest in understanding the effects of legislative proposals that significantly affect health insurance coverage. The new model will be used to help develop CBO’s spring 2019 baseline projections and subsequent cost estimates.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, to the American Academy of Actuaries.
CBO's analyses of the distribution of household income rely on the Census Bureau's Current Population Survey (CPS) for information about receipt of government transfers, particularly means-tested transfers. CPS respondents underreport their receipt of those transfers, and that underreporting has increased over the past few decades. This presentation shows how CBO adjusts for the underreporting of means-tested transfers in its distributional analyses.
The Congressional Budget Office developed its Health Insurance Simulation Model (HISIM) in 2002 to model the effects of health insurance proposals on coverage levels. HISIM uses microdata to simulate individual and family coverage decisions and estimate the budgetary impacts of proposals over 10 years. It factors in economic forecasts and is regularly updated based on new data and research. HISIM models coverage through employers, Medicaid, ACA marketplaces, and the uninsured to help CBO prepare baseline budgets and estimate costs of new policies.
Une étude de la Commission européenne compare la générosité des systèmes de c...lesoirbe
This paper proposes a methodology for benchmarking unemployment benefit systems across EU countries. It assesses systems based on their effectiveness in providing income support, their impact on incentives to work, and overall generosity. The methodology considers dimensions like entitlement conditions, unemployment/inactivity traps, benefit duration and replacement rates over time. Countries are compared to EU averages and averages for relevant country groupings that share similar labor market institutions and flexicurity models. Applying this methodology allows for a more thorough evaluation of unemployment systems and identification of reform priorities.
Presentation by Julie Topoleski, Chief of the Long-Term Analysis Unit in CBO’s Health, Retirement, and Long-Term Analysis Division, to the Social Security Advisory Board.
Both CBO and the Social Security Trustees project a shortfall in Social Security’s finances, but they differ in their assessment of its magnitude. This presentation describes that difference and the major factors that contribute to it.
CBO makes baseline economic and budget projections covering the next 10 years and also the next 30 years. The projections incorporate the assumption that current laws generally do not change. To produce the 30-year economic projections, CBO uses its policy growth model, which relies on a standard economic framework that focuses on the inputs that drive growth in the supply side of the economy: the amount of labor, the productive services provided by capital, and total factor productivity.
Presentation by Wendy Edelberg, an Associate Director for Economic Analysis at CBO, and Jeffrey Werling, Assistant Director of CBO's Macroeconomic Analysis Division, at the 2019 Social Security Technical Panel.
Presentation by Bilal Habib, an analyst in CBO’s Tax Analysis Division, to the Committee on National Statistics of the National Academy of Sciences, Engineering, and Medicine.
This document summarizes key topics regarding public pension and other post-employment benefits (OPEB) costs for governments. It discusses that both pensions and OPEBs are long-term benefit promises that require estimating future costs. It also notes that OPEB costs in particular can be highly volatile and extend decades into the future. The document reviews factors like accounting standards, funding levels, investment returns, and benefit changes that impact pension and OPEB costs and sustainability over the long run.
This document summarizes a presentation given by Ben Hopkins of the Health Analysis Division to the International Microsimulation Association on December 2, 2021. The presentation discussed the methods used by the Congressional Budget Office (CBO) to construct synthetic firms in their health insurance microsimulation model HISIM2. Specifically, it described how CBO uses data from tax filings and health surveys to select traits like age, income, and health spending of synthetic coworkers for each individual modeled in HISIM2. This allows HISIM2 to realistically model employer decisions about offering health insurance based on the characteristics of their synthetic employee workforce.
CBO’s health insurance simulation model (HISIM) generates estimates of health insurance coverage and premiums for the population under age 65. HISIM is used to help develop baseline projections (which incorporate the assumption that current law generally remains the same) and also to model proposed changes in policies that affect health insurance coverage.
Currently, CBO is developing and testing a new version of HISIM to respond to continued Congressional interest in understanding the effects of legislative proposals that significantly affect health insurance coverage. The new model will be used to help develop CBO’s spring 2019 baseline projections and subsequent cost estimates.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, to CBO’s panel of health advisers.
Presentation by Adebayo Adedeji and Heidi Golding, analysts in CBO's National Security Division, at the Annual Conference of the Western Economic Association International.
Presentation by Xiaotong Niu, an analyst in CBO's Health, Retirement, and Long-Term Analysis Division, at the Biennial Conference of the American Society of Health Economists.
The consequences of any change to Medicare for different socioeconomic groups depend on the distribution of taxes paid to and benefits received from the current system by each group. However, only a few studies have estimated that distribution, and they offer conflicting views. This presentation describes an analysis of the distribution of Medicare taxes and spending using a unique dataset with information on beneficiaries’ lifetime earnings and Medicare spending. The dataset includes more recent cohorts of beneficiaries than earlier studies, and the distribution of Medicare taxes and spending is projected based on demographic and economic projections from CBO’s long-term microsimulation model.
The Medicare system is progressive. For people born in the 1950s, lifetime Medicare spending net of both premiums and dedicated Medicare taxes, as a share of lifetime earnings, tends to be lower for beneficiaries with higher lifetime household earnings. Almost all of the variation in lifetime Medicare spending net of premiums by lifetime household earnings can be explained by the variation in life expectancy. Medicare is projected to become more progressive for later cohorts because lifetime earnings are expected to grow faster for those with higher earnings.
Compensation, also known as employee remuneration, is what employees receive in exchange for their contributions to an organization. It is influenced by both external factors like the labor market, cost of living, labor laws, and unions as well as internal factors like compensation policies, job analysis, and individual employee attributes. A 2010-2011 compensation survey found that after declines in 2009, most companies' salary budgets were projected to rise in 2011 with average global salary increases expected to jump from 2.59% to 3.14%. Specific regions and sectors like South Asia, technology, and energy were expected to see above average increases.
This slide deck describes how CBO used a Markov-switching model to assess the uncertainty of the economic forecast presented in CBO’s Current View of the Economy in 2023 and 2024 and the Budgetary Implications (November 2022).
To prepare its spring 2019 baseline budget projections, CBO is using new sources of data as inputs and has completely revamped the way it models consumers’ and employers’ behavior. To that end, it has developed HISIM2, a new version of the model CBO uses to generate estimates of health insurance coverage and premiums for the population under age 65. The model is used in conjunction with other models to develop baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
HISIM2 incorporates new base data, including data from surveys and administrative data. It changes the way individuals and families are projected to choose among coverage options. And it changes the way firms are projected to take workers’ preferences into account when deciding whether to offer employment-based coverage.
Canada’s small- and medium-size enterprises
(SMEs) are collectively the largest employer in
Canada, employing about 55 per cent of
Canadians (based on Statistics Canada’s Survey
of Employment, Payrolls and Hours 2008).
When you take into account the fact that they
contribute 1.4 times the premiums their
employees do, this makes them the single
largest employer-stakeholder group in the EI
system today. SMEs employ Canadians in every
province and in every sector of the economy,
from the retail and service sectors to
manufacturing and primary industries. This
broad range of industries and employee
requirements make SME owners an excellent
judge of the efficacy of the EI system.
EI is becoming a more and more important
issue for SMEs. In fact, EI is one of the top
priorities for CFIB members across the nation.
This was highlighted in a survey conducted in
the first half of 2009, which found that 48 per
cent of CFIB members listed EI reform as a
priority for their business, behind only the
total tax burden and regulations and paper
burden, both of which are also directly related
to the EI system.
Presentation by Julie Topoleski, the director of CBO’s Labor, Income Security, and Long-Term Analysis Division, at the NBER’s Summer Institute 2023: Economics of Social Security.
Income Replacement and Data Analytics: Retirement Planning for the FutureCognizant
While governments and financial institutions work to achieve long-term stability, the unstable economic landscape threatens to significantly reduce the working population's retirement income and assets. The Income Replacement Ratio (IRR), supported by data analytics, is becoming an important factor in structuring future retirement products and helping more plan participants achieve their retirement goals.
Similar to CBO’s Projection of the Distribution of Wage Earnings (20)
Presentation by R. Derek Trunkey, an analyst in CBO’s National Security Division, at the 2024 Conference of the Western Economic Association International.
Presentation by Edward G. Keating, CBO’s Deputy Director of National Security, at the 2024 Conference of the Western Economic Association International.
This slide deck highlights CBO’s key findings about the outlook for the economy as described in its report "An Update to the Budget and Economic Outlook: 2024 to 2034."
Presentation by Julie Topoleski, CBO’s Director of Labor, Income Security, and Long-Term Analysis, at the 16th Annual Meeting of the OECD Working Party of Parliamentary Budget Officials and Independent Fiscal Institutions.
Presentation by Rebecca Sachs and Joshua Varcie, analysts in CBO’s Health Analysis Division, at the 13th Annual Conference of the American Society of Health Economists.
Presentation by Jared Jageler, David Adler, Noelia Duchovny, and Evan Herrnstadt, analysts in CBO’s Microeconomic Studies and Health Analysis Divisions, at the Association of Environmental and Resource Economists Summer Conference.
Presentation by Mark Hadley, CBO's Chief Operating Officer and General Counsel, at the 2nd NABO-OECD Annual Conference of Asian Parliamentary Budget Officials.
Presentation by Daria Pelech, an analyst in CBO’s Health Analysis Division, at the Center for Health Insurance Reform McCourt School of Public Policy, Georgetown University.
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Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
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CBO’s Projection of the Distribution of Wage Earnings
1. Presentation at the NBER Summer Institute 2024:
Economics of Social Security
July 24, 2024
James Pearce
Tax Analysis Division
CBO’s Projection of the
Distribution of Wage Earnings
For more information about the conference, see www.nber.org/conferences/si-2024-economics-social-security.
2. 1
CBO uses its projection of the earnings distribution to help keep its various
models, projections, and estimates consistent with one another.
Those models include:
§ Individual tax model: income and payroll taxes;
§ Social Security model: payroll taxes and benefit projections; and
§ Health insurance simulation model (HISIM): premium tax credits, Medicaid, and
employer-sponsored health insurance.
CBO’s macroeconomic and population projections are also used throughout the
agency to help keep models, projections, and estimates consistent.
How Does CBO Use Its Projected Wage Earnings Distribution?
3. 2
As defined by CBO, wage earnings equal the sum of federally taxable wages and
employee-paid retirement contributions.
The Social Security Administration (SSA) calls this “net compensation” and
reports detailed distributions for the prior year’s earnings every October.
Wage earnings exclude:
– Employee-paid premiums for employer-sponsored health insurance;
– Employee contributions for flexible spending accounts;
– Employer contributions to retirement accounts; and
– Employer-paid premiums for employer-sponsored health insurance.
Those types of income are generally not observed in W-2 data and are excluded
from the federal income tax and payroll taxes.
How Does CBO Define Wage Earnings?
4. 3
SSA net compensation data can be found online at www.ssa.gov/oact/cola/netcomp.html.
A. B. Atkinson, “Top Incomes in the UK Over the 20th Century,” Journal of the Royal Statistical Society, Series A: Statistics in Society, vol. 168, no. 2 (March 2005), pp. 325–343,
https://doi.org/10.1111/j.1467-985X.2005.00351.x.
SSA Net Compensation Data, 2022
CBO interpolates the shares
of net compensation that
accrue to various parts of
the distribution assuming a
Pareto distribution as
described in Atkinson
(2005).
•
•
•
5. 4
The GDP gap is the ratio of GDP to potential GDP.
CBO projects earnings shares for three subgroups of the top decile of wage
earners:
– The top percentile of earners (P100);
– The next four highest percentiles of earners (P96-99); and
– The remaining five percentiles of earners (P91-95).
CBO uses basic time series regression models that include a time trend and a
measure of the GDP gap to control for cyclicality in the economy.
The share of wage earnings accruing to the bottom nine deciles is a residual.
CBO holds the relative wage earnings shares for each of those deciles constant
in its projections.
CBO’s Projection of the Distribution of Wage Earnings
6. 5
Percent
Share accruing to P100
Share accruing to P96-99
Share accruing to P91-95
Projected
0
10
12
14
16
18
2054
2049
2044
2039
2034
2029
2024
2019
2014
2009
2004
1999
Data source: Congressional Budget Office, using data from SSA.
CBO’s Projection of the Distribution of Wage Earnings, Spring 2024
7. 6
Percent
Projected
0
80
85
90
95
2054
2044
2034
2024
2014
2004
1994
1984
Data source: Congressional Budge Office, using data from Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2023 (November 2023), table
4.B1, www.ssa.gov/policy/docs/statcomps/supplement/2023/.
CBO’s Projection of the Social Security Taxable Ratio, Spring 2024
The Social Security taxable
ratio is the share of work-
related earnings that are
subject to Social Security
taxes and are below the
Social Security taxable
maximum.