Waste of the Day: Expanded Obamacare Coverage Could Cost $128 Billion More Than Expected
Topline: An expansion of Affordable Care Act subsidies was supposed to cost $64 billion for three years. But Obamacare plans are now so cheap that demand has skyrocketed, and the Wall Street Journal estimates that the actual price tag will be $192 billion or more.
Key facts: President Joe Biden passed the American Rescue Plan Act in 2021 to address the financial impact of Covid-19. The law temporarily extended the eligibility requirements of the Affordable Care Act, allowing those living at more than 400% above the poverty level to purchase health insurance with a discount from the federal government.
The law also increased Obamacare’s average monthly tax credit to $527 in 2023.
Obamacare now often costs even less than employer-provided insurance, according to the Wall Street Journal. Some middle-class Americans are opting to take federal money to buy Obamacare rather than use the insurance given by their workplace.
The most recent Obamacare enrollment opened on November 1, 2023, and ended Jan. 16. A record 21.3 million people enrolled, including five million new subscribers, according to the Department of Health and Human Services.
The Wall Street Journal “conservatively” estimates that this will cost the federal government three times the initial $64 billion, for a total of $192 billion, including a $70 billion this year alone. Health policy think tank KFF is less optimistic, estimating that Obamacare cost $90 billion in 2023.
When Sens. Chuck Schumer (D-NY) and Joe Manchin (D-WV) helped extend the subsidies through 2025, they claimed it would cost only $21 billion per year. The price tag now seems to be triple or quadruple that number.
Background: Obamacare is administered by the HHS, whose massive payroll isn’t helping the taxpayer burden.
The HHS sent pay checks to almost 90,000 people in 2022, according to auditors at OpenTheBooks.com. There were 3,583 employees making more than $200,000 and 13 people making more than $400,000.
Critical quote: “When it comes to the Manchin-Schumer so-called ‘inflation reduction’ proposal, another shoe has just dropped,” Sen. Lindsey Graham (R-SC) said before the Inflation Reduction Act passed.
“[Congressional Budget Office] indicates that the Obamacare subsidies can go to a family of four earning $304,000 a year. This is, by any reasonable definition, people who are doing well and not in need of subsidies from the government.”
Supporting quote: “Numbers do not lie: Not only is demand for Marketplace insurance coverage at an all-time high, but the Marketplaces are delivering on the Affordable Care Act’s promise to provide the peace of mind that comes with having health insurance to millions of Americans,” Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure said in a January press release.
Summary: The Affordable Care Act is succeeding at insuring millions of Americans, but the cost to taxpayers is skyrocketing as families who likely don’t need government assistance join Obamacare.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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