The Senate is expected to vote Friday on the $1.9 trillion coronavirus relief bill championed by President Biden. Dubbed the “American Rescue Plan,” it would focus on rescuing the wealthy and insurance companies — courtesy of ordinary taxpayers.
The bill would extend subsidies through Obamacare’s insurance exchanges to anyone who wants them — and make subsidies more generous for people who already receive them. No one would have to pay more than 8.5% of income toward their premiums. At present, only those with incomes below 400% of the poverty level can receive taxpayer-funded insurance coverage. And the maximum someone who receives subsidies can pay in premiums is 9.83% of income.
Citing research from the Congressional Budget Office, Galen Institute health policy scholar Brian Blase pegs the cost of these expanded subsidies at $34 billion over two years. That spending would boost the number of insured people by only 1.3 million by 2022. Many of those billions of dollars would go to people who don’t need a federal handout. About 75% of new subsidy spending would go to people who already have coverage. Of 1.7 million projected new enrollees in Obamacare’s exchanges, 40% would have incomes beyond 400% of the poverty level.
A 60-year-old couple with two children making $212,000 would receive more than $11,000 to buy insurance on the exchanges under Biden’s plan, according to Blase’s research. That five-figure subsidy would actually flow straight to the bottom line of a health insurer. It’s no wonder the healthcare industrial complex, from doctors to hospitals to insurers, supports these expanded subsidies. They’d represent a taxpayer-funded windfall.
At best, expanding Obamacare’s exchange subsidies is a wildly inefficient way to help struggling patients. Congress would be wise to resist the urge to funnel even more taxpayer money to upper-income households and the healthcare industry.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.
