Inflation act will fuel higher insurance premiums
The Senate is set to consider the Inflation Reduction Act, the Democrats’ massive budget reconciliation legislation.
President Joe Biden has stumped for the bill’s hundreds of billions in tax hikes on corporations as a way to ensure they “pay their fair share.” But many of those dollars will subsidize the purchases of people who hardly need help. In so doing, they’ll distort the market in ways that lead to higher prices for everyone.
A married couple with an income of up to $300,000 can look forward to a check from their fellow taxpayers to help pay for an electric vehicle costing up to $80,000. People shopping for health insurance on the exchanges can rest assured they’ll continue to pay no more than 8.5% of their income for coverage, no matter how much they make. In practice, that means a four-person household making eight times the poverty level (about $212,000 a year) would be eligible for a $12,000 handout from taxpayers to help with the cost of exchange coverage, according to research from the Paragon Health Institute.
It’s dubious to subsidize health insurance for households with incomes roughly three times the national median. But it makes even less sense when three-quarters of that spending goes to people who already had insurance before these subsidies came into being in 2021. In other words, Democrats are picking up part of the tab for people who were previously content to pay for coverage on their own.
This river of federal cash is driving up prices throughout the health sector. The Kaiser Family Foundation reports that insurers have proposed raising exchange premiums by a median of 10% next year. They can do so with relative impunity since taxpayers are effectively picking up the entire increase.
It’s mystifying that the Democrats can gift insurers $65 billion in taxpayer dollars over the next three years, watch as those insurers raise premiums, and crow about reducing inflation. Don’t be fooled.