Biden’s Fix of the ObamaCare Glitch

In a recent blog, I talked about the Biden Administration trying to buy votes by throwing more money at ObamaCare (Buying Healthcare Voters). It’s bad enough to shamelessly bribe voters with free government handouts, but it’s worse when that’s probably illegal.

The Wall Street Journal editorial board weighed in on this issue and I learned a lot more. Seems this idea dates back to the Obama Administration and even President Obama himself couldn’t fix this problem. But now Uncle Joe thinks he can do it just by executive order.

What’s the problem?

The problem, often referred to as the “family glitch,” concerns who qualifies for subsidies under ObamaCare. As currently defined in the legislation, a person is eligible if he doesn’t have an offer of “affordable” coverage at work, defined as one that costs less than roughly 9.6% of household income. This calculation is tethered to the cost of insuring only the worker, not the spouse and kids, and a family plan can be more expensive.

The Biden Administration is now planning to fix this by turning on the subsidy spigot for family members who aren’t currently eligible. The Kaiser Family Foundation estimates that 5.1 million are affected by the family glitch, but 4.4 million – 86% of these – have employer insurance. Only 9% (451,000) are uninsured. The White House predicts that 200,000 people who are uninsured will gain coverage on the ObamaCare exchanges once they’re subsidized under the new rule. About one million more will drop their current plan and move onto the exchanges. This government handout will cost $45 billion over 10 years according to the Congressional Budget Office.

The real question is why this didn’t happen before? “If the family glitch is such a big deal,” as economist Douglas Holtz-Eakin asked this week, and “can be easily rectified by a Treasury rulemaking, why didn’t President Obama and Vice President Biden fix it a decade ago?” The answer is that Team Biden is less concerned with the legal or policy merits than offering more “free” healthcare in an election year.

Brian Blasé, also writing in The Wall Street Journal, says the whole idea is illegal. He says, “Mr. Obama’s presence at the White House was ironic given that the IRS’ s proposed policy now reverses its decision from a decade ago when he was president. At that time, the IRS believed it had to follow the law as written. The reversal shows that the enforcement of the tax code has become deeply politicized. Through this rule, if finalized, the IRS will expand ObamaCare subsidies by billions of dollars a year beyond what Congress authorized.”

He notes the current provision of the law regarding subsidies was the result of compromises necessary to enact it. A decade ago, when the Obama administration was writing ObamaCare regulations, the IRS and Treasury department spent enormous time on the issue. Many progressives pushed a broader interpretation, with affordability measured on the cost of family coverage. But the IRS and Treasury stuck to the law. Blasé says, “IRS career staff are loathe to revisit settled tax policy questions, and they likely came under enormous pressure from the White House to renounce their decade-old position and disregard the law.”

Blasé also points out this is not only illegal but bad policy. Since nearly 9 of 10 of the five million people affected by this plan are currently covered by a spouse’s or parent’s employer plan, an illegal fix would mostly displace private spending (employers) with government spending as dependents replace employer coverage with subsidized exchange coverage. All this to increase coverage of the uninsured by only about 200,000 – at a cost of $45 billion over ten years.

If it’s good policy and legal, Congress should pass such a change in the law. If it’s bad policy and illegal, then leave it to the Biden Administration to do it on their own.

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