Open enrollment on most of Obamacare’s insurance exchanges ended this past Saturday.
Sign-ups have hit all-time highs across the country.
The Biden administration has been quick to pat themselves on the back for record-breaking exchange enrollment. But the main reason Americans have flocked to the exchanges is that the federal government is lavishing taxpayer money on them to do so — even those who are relatively well-off.
That Americans need to be bribed to purchase exchange coverage is yet more evidence of Obamacare’s dysfunction. By padding exchange enrollment in this way, the Democrats are accelerating many of our healthcare system’s most destructive and unsustainable trends.
As of just a few days before the Jan. 15 deadline, more than 14.2 million Americans had purchased exchange coverage for the 2022 plan year.
That’s up from just over 12 million in 2021.
This year’s enrollees are responding to billions of dollars in new subsidies provided by last March’s American Rescue Plan Act.
Previously, only those earning less than 400% of the federal poverty level — or $106,000 for a family of four — qualified for assistance.
The American Rescue Plan did away with that income cap and ensured that no American would have to pay more than 8.5% of their income for a marketplace plan.
The law also boosted subsidies for those earning below 400% of the poverty level.
These more generous subsidies are in effect through the end of 2022.
According to the Biden administration’s initial March 2021 estimates, these subsidies allow more than half of exchange enrollees to purchase a mid-level silver plan for $10 or less per month.
Consequently, it’s unsurprising that millions more Americans decided to sign up for marketplace coverage this year.
What’s truly concerning, however, is that Obamacare has made health insurance so expensive that even well-off Americans need federal assistance in order to afford it.
According to an analysis published by the Galen Institute, a health policy think tank, a single person earning $90,160 a year — 700% of the federal poverty level — qualifies for an annual subsidy worth $3,820 under the American Rescue Plan’s scheme.
The 45-year-old head of a four-person family making $208,000 a year qualifies for subsidized exchange coverage. In some parts of the country, a 64-year-old couple earning $500,000 a year are eligible for subsidies, too.
This means that the federal government is effectively paying well-off Americans to buy coverage that, under other circumstances, they might judge too expensive.
In doing so, this ignores the very flaws in our health system requiring most urgent actions.
For starters, this approach does nothing about the insurance market regulations that have made exchange coverage so expensive to begin with — regulations put in place by Obamacare.
Equally disturbing, Biden’s reckless use of federal subsidies will have massive unintended consequences for nearly every aspect of American healthcare.
For example, if Democrats succeed in making these enhanced tax credits permanent — as they have explicitly said they’d like to — employers would have far less reason to offer coverage to their workers.
Why take on the expense of insuring your workforce if heavily subsidized individual plans are available even to well-compensated employees?
As a result, Americans insured through their jobs, most of whom like their current health plans, would be forced to switch to an exchange policy.
They may find that their preferred doctors and hospitals are not covered by their new plan.
This is far from a hypothetical.
In the years following the launch of Obamacare’s exchanges, the share of employers offering health coverage dropped significantly, most of all for companies with 50 or fewer employees.
More generous subsidies will only fuel this trend.
At the same time, the Democrats’ higher subsidies will insulate insurers and beneficiaries from the true cost of medical care. This, in turn, will enable providers to charge more, contributing to inflation throughout the healthcare sector.
Progressives are interpreting the latest enrollment blitz as a success. Hardly.
The spike in sign-ups is a sign that Biden’s plan is creating a more wasteful, more homogeneous, and less sustainable healthcare system.