It has been said that Democrats never met a tax increase they didn’t like. The same can be said about a temporary government subsidy they want to be permanent.
The latest example of this is the ObamaCare extra subsidies that were approved in the American Rescue Plan, the first big bill passed by the Biden Administration – without a single Republican vote. This $1.9 Trillion bill was supposed to be about Covid relief – except it wasn’t. What it really was about was enhancing government handouts to Democratic voters.
Exhibit one was the increased subsidies for ObamaCare. The original legislation called for an income cap of $400,000 for those eligible to receive subsidies for ObamaCare premiums. But the American Rescue Plan changed all that – temporarily. It removed the cap on income and redefined eligibility. Under the current, temporary eligibility guidelines, a family of four with a 60-year-old head of household earning $265,000 could end up eligible for more than $7,800 in taxpayer subsidies.
On the lower end of the income scale, Democrats essentially started giving away insurance. Nearly five million enrollees with incomes below 150% of the poverty line pay no premiums at all for their plans in 2022, according to one analysis. Democrats like to pitch this as “free health care”, but the subsidies flow to insurers, who can then jack up premiums further, knowing that the government will cover the difference. Instead of lowering the cost of healthcare, as President Obama promised, this is raising the cost of healthcare significantly.(see Higher ObamaCare Subsidies Means Higher Healthcare Costs)
For those outside the eligibility of these subsidies, the costs keep rising. A family of four looking for a plan on the ObamaCare exchange without subsidies “can expect to pay about $25,000 for the year in premiums and deductibles” according to an analysis by eHealth. Moreover, you probably won’t be able to see the doctor of your choice since these plans tend to have narrow doctor and hospital networks. (another Obama promise broken!)
Naturally, the American taxpayer is expected to pick up the tab for these increased subsidies. The Congressional Budget Office predicted the pandemic subsidy provisions would cost about $34 billion, but that is only the beginning if these increased subsidies are made permanent. Last week CBO increased its estimate of spending on ObamaCare subsidies this year by 15%, or another $11 billion, over last year’s forecast, thanks to higher enrollment and higher premiums than anticipated. (Surprise!)
To make matters worse, companies will likely respond by sending more of their employees to the exchanges for coverage. Healthcare analyst Doug Badger notes that smaller firms that aren’t subject to the ACA’s mandate to provide insurance “will have strong incentives to discontinue job-based coverage.” This will only further increase the cost to taxpayers.
The editorial board of The Wall Street Journal says it is a time-honored political trick to pass “temporary” subsidies that people get used to and then cry hardship when the emergency program ends. That’s exactly what Democrats want to do now. More than two dozen Democrats wrote their leaders this month asking to include provisions to “permanently lower the cost of healthcare” in any reconciliation bill. These lawmakers are referring to expanded subsidies to buy ObamaCare plans, passed in 2021 and set to expire at the end of the year.
The letter warns that enrollees will soon see premium increases. WSJ says there’s no doubt Democrats are worried about the political consequences, but this is a subsidy cliff of their own design. This is just another example of Democrats trying to buy votes with government handouts.