Last week, President Joe Biden unveiled a new social spending framework that omitted many of the healthcare provisions Democrats have been calling for.
One provision that has survived is a massive and wasteful expansion of Obamacare . In March, Congress made federal tax credits available to those shopping for coverage on the exchanges with incomes above 400% of the federal poverty level — about $106,000 for a family of four. Those tax credits cap what they’d have to spend on a benchmark health plan at 8.5% of income through 2022.
Previously, this group of relatively well-off people did not receive federal handouts. Congress also temporarily increased premium subsidies for those making less than 400% above the poverty level. Those more-generous premium subsidies will cost $34.2 billion over the next decade — even though they’re only in force until the end of next year. Now, Biden wants to expand the subsidies until 2025 .
Those billions would subsidize care for the disproportionately wealthy. As the Galen Institute’s Brian Blase has explained, a family of four led by a 60-year-old couple making $159,000 would receive a new $16,845 subsidy under the expansion. Meanwhile, the subsidy for the same family with a household income of $53,000 would only increase by $2,396, according to Blase.
These subsidies wouldn’t actually bring down the cost of insurance. They’d simply obscure it. In fact, with taxpayers picking up an ever-greater share of people’s premiums, insurers would have little incentive to bargain fiercely with providers to keep their own costs down. They’d just raise rates and pass the bill to taxpayers.
These wasteful subsidies for the wealthy would only further entrench the government’s role in healthcare.