Obamacare subsidies offer welfare to the wealthy

This week, the House of Representatives will consider the $3.5 trillion budget resolution that passed the Senate earlier this month. The proposal includes a host of liberal goals, including permanently extending certain Obamacare subsidies that Congress had previously made more generous only through 2022.

These subsidies are already enormously expensive. Making them permanent would impose an immense burden on taxpayers while doing relatively little to cover the uninsured. As a part of its $1.9 trillion American Rescue Plan, Congress directed more than $34 billion toward reducing exchange plan enrollees’ premiums. But as Brian Blase of the Galen Institute recently estimated, about 75% of the people who received those expanded subsidies already had health insurance.

The plussed-up subsidies were only expected to extend coverage to just 1.3 million uninsured people over two years, according to estimates from the Congressional Budget Office — a staggering $26,000-per-person price tag, more than the cost of most family plans. Affluent families disproportionately received those taxpayer dollars. For instance, a 60-year-old couple with two children making over $200,000 annually became eligible for a subsidy increase nearly seven times greater than they would have received if they made only $40,000.

When it comes to extending health coverage to people who truly couldn’t afford it, the subsidies have been a poorly targeted failure.

But they’ve been phenomenally successful at enriching insurance companies. Cigna’s individual market business has grown 35% since the beginning of the year, thanks in large part to the Biden administration’s expansion of Obamacare subsidies, as well as the special enrollment period that ended on Aug. 15.

It’s senseless to force taxpayers to fork over hundreds of billions of their hard-earned dollars to fund generous health coverage for affluent U.S. residents. As the reconciliation process advances in the coming weeks, lawmakers would be wise to scrap this expansion and let the subsidies expire on schedule at the end of next year.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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