In his address to Congress last week, President Biden announced his plan to make permanent the new health insurance subsidies included in his American Rescue Plan, which was signed into law in March.
These subsidies, which are currently set to expire next year, reduce exchange premiums for everyone who makes less than 400 percent of the federal poverty level, or $106,000 for a family of four. They also cap what people who make more than four times poverty pay in premiums at 8.5 percent of income.
The tab for this bout of government largesse will reach $200 billion. And it won’t even make much of a dent in the uninsured rate. Nor will it do much for the poor.
All this spending is unnecessary. Nearly two-thirds of the roughly 29 million uninsured are eligible for Medicaid or subsidized exchange coverage. So the president and his allies in Congress could substantially reduce the uninsured rate simply by signing people up for programs and benefits already on the books.
According to a new analysis from the Kaiser Family Foundation, 38 percent of uninsured people already qualify for subsidized exchange coverage under the original terms of Obamacare. Another 25 percent could sign up for Medicaid, which is effectively free, if they were so inclined.
A previous study, also from Kaiser, found that 4.5 million uninsured Americans are currently eligible for zero-dollar exchange plans.
This suggests that many of the nation’s uninsured lack coverage by choice. They may prefer to spend even the modest amount they’d be expected to contribute on other goods or services. Or they may find the coverage on offer doesn’t provide much value.
In 2021, more than half the nation’s counties had two or fewer marketplace insurers to choose from. Most exchange insurers limit their beneficiaries to narrow provider networks, so patients may not be able to visit the doctor or hospital they’d like.
Then there are the sky-high deductibles marketplace customers must submit to. This year, the deductible for a typical individual bronze exchange plan is a whopping $6,992. If a patient must spend nearly $7,000 of their own money before insurance kicks in, then it’s only sensible to ask why to bother with coverage at all.
People eligible for Medicaid, meanwhile, may conclude that it’s little better than being uninsured. A landmark study of Medicaid expansion in Oregon found that patients enrolled in the program did no better on measures of health outcomes than a control group of uninsured people.
Medicaid patients also tend to wait longer for hospital care than their privately insured counterparts, according to a recent analysis published in Health Affairs. And they have a far harder time scheduling doctors’ appointments. A 2019 meta-analysis found that Medicaid enrollees are 3.3 times less likely to secure an appointment with a specialty physician than those covered by a private plan.
Even if we accept the progressive conceit that some coverage is better than no coverage, spending billions on new Obamacare subsidies is hard to justify. In 2022, the first full year in which the enhanced subsidies are in effect, the number of uninsured will decrease by just 1.3 million, according to the Congressional Budget Office.
And let’s not forget — the bulk of these new subsidies will go to people who already have exchange coverage. Those who make six figures will claim another significant chunk of taxpayer lucre.
Before the president spends another $200 billion in taxpayer money on something that won’t appreciably reduce the number of uninsured, he might consider enrolling those without coverage in programs for which they’re already eligible — and addressing the mistakes that have made coverage so unaffordable and unattractive in the first place.
Sally C. Pipes is president, CEO, and the 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.