Four presidential elections ago, Barack Obama won the White House in part by promising that under his health care plan, “If you like your plan, you can keep it.” It ended up not being true, of course — so much so that Politifact made this claim its “Lie of the Year” for 2013.
Fast forward over a decade, and Joe Biden is promoting proposals that would again put millions of Americans’ health coverage in his sights. Democrats’ plan to extend a “temporary” increase in Obamacare subsidies would lead to significant amounts of new federal spending, even as it further undermines the system by which most Americans obtain insurance.
Employers Dropping Coverage
Just before the Independence Day holiday, the Congressional Budget Office (CBO) released a detailed estimate requested by two House committee chairmen about the cost of extending the increased Obamacare subsidies. The higher subsidies for Exchange coverage, first included in Democrats’ partisan “stimulus” bill in early 2021, were extended for an additional three years in 2022. As such, the subsidies now expire at the end of 2025 — at the same time as many provisions of the 2017 Trump tax relief package.
CBO found that the increase in Exchange subsidies would lead to a “3.5 million decrease in enrollment in employment-based coverage.” The budget office explained that “the decline in employment-based coverage would be larger under a permanent [subsidy] extension,” because “more employers would change their offers of health insurance if the policy became permanent.” In other words, if you like your plan, tough luck — your employer could cancel it for you.
Also worth noting: CBO concluded that, on net, extending the subsidies would increase the number of insured Americans by 3.4 million — a number smaller than the 3.5 million who will lose employer-based coverage under the proposal. In other words, more new people who already had insurance (albeit through an employer) will receive subsidies than will become newly insured. That’s the definition of inefficient government spending.
Welfare for the Wealthy — and Illegal Immigrants
The increase in employers “dumping” coverage comes in part because the increase in subsidies passed under President Biden eliminated the income-based cap on subsidy eligibility. From the Exchanges’ launch in 2014 through 2021, only households with incomes under four times the poverty level ($124,800 for a family of four this year) qualified for subsidies.
Eliminating the income cap makes it easier for employers to drop coverage because they know that even their affluent workers could qualify for subsidized policies on the insurance Exchanges. Indeed, the CBO analysis shows just that. The budget office concluded that should the increased subsidies become permanent, the federal government will spend $6.9 billion in the coming decade on insurance subsidies for households with income exceeding 750 percent of the poverty level.
For context, this year that 750 percent-of-poverty threshold stands at $112,950 for an individual, and $234,000. As someone who recently has had years with income below that level, there is no reason households this affluent should qualify for “low-income” subsidies for health coverage.
Another beneficiary of Biden’s proposals is illegal immigrants. The CBO analysis also put a cost estimate on the regulatory action taken by the administration to allow Deferred Action for Childhood Arrivals (DACA) recipients to qualify for subsidies. Unless undone by a future administration (and/or struck down by courts), that policy will cost $9 billion in the coming decade, plus an additional $1.6 billion in interest costs.
Congress: Just Say No!
All told, CBO concluded that making these “temporary” subsidies permanent — which Democrats wanted to do all along, despite including it as part of “Covid relief” in 2021 — would increase the deficit by a net of $335 billion over the next decade, plus an additional $48.3 billion in interest costs. All this for a policy that would, as noted above, spend billions subsidizing people who already had health insurance.
Recent weeks have also seen reports of potential fraud regarding the subsidies, with troubling data suggesting that recipients are lying about their income to qualify for “free” insurance. Because Democrats’ 2021 increases in subsidies created these “premium-free” policies, it doesn’t take a rocket scientist to realize that allowing the increased subsidies to expire as scheduled next year would eliminate an incentive that currently seems to be powering significant amounts of fraud.
And to save the best for last, our skyrocketing national debt also provides Congress with nearly 35 trillion reasons to just say no to an extension of these Obamacare subsidies. Here’s hoping lawmakers come to their senses and stop spending other people’s money that we do not have.
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