The Wall Street Journal: Obamacare Subsidies Could Kill Your Plan

The Wall Street Journal: Obamacare Subsidies Could Kill Your Plan

WASHINGTON, D.C.-In an op-ed published by the Wall Street Journal, Chris Pope, a senior fellow at the Manhattan Institute, warned that extending the expanded Obamacare subsidies wouldn't just affect the small share of Americans who buy coverage on the exchanges-it could upend employer-sponsored health insurance for millions of working families. He argues that making the COVID-era expanded subsidies permanent would incentivize employers to drop health care coverage for American workers completely.

WORD ON THE STREET

From the Wall Street Journal:

The debate over renewing the expansion of Obamacare subsidies has focused on the 6% of Americans enrolled. But if you get medical insurance through your employer, you should worry. If Congress extends the subsidies, you could end up losing your plan.

The Affordable Care Act of 2010 set the subsidies at the highest level that would avoid creating an incentive for employers to eliminate medical benefits. Employers purchase 89% of all privately funded health insurance in the U.S. The ACA aimed to help low-income working households that lacked an offer of job-based benefits. But the ACA's reforms made policies unappealing to customers paying full price. Healthy Americans stopped buying plans, premiums more than doubled, and insurers hiked deductibles and stopped covering the best hospitals.

In 2021 Congress bailed out the market by greatly expanding federal aid. From 2014 to 2024, the proportion of enrollees receiving subsidized coverage leapt from roughly 47% to 86%. Federal funding surged from $13 billion to $110 billion.

An upcoming Manhattan Institute report finds that, whereas the ACA's original subsidies were on average worth $293 (5%) less to households than the value of the tax exemption for employer-sponsored insurance, the expanded subsidies would be worth $3,960 (65%) more. That creates a huge incentive for employers to stop offering health benefits. A Treasury analysis published last December suggested a similar conclusion.

If all employees currently receiving employer-sponsored benefits switched, these higher subsidies would cost federal taxpayers an additional $250 billion a year. Although some companies might still offer health benefits to avoid a $2,970-an-employee penalty, this would deter the elimination of benefits for only one-fifth of nonelderly Americans, as it doesn't apply to the coverage of spouses, children, or employees of small businesses or the government.

THE BOTTOM LINE

The COVID-era expanded Obamacare subsidies expire soon, as they should. Democrats designed these subsidies to be temporary yet demand Republicans extend them. These fraud ridden subsidies are already hemorrhaging taxpayer dollars to insurers and brokers and expanding the program would invite more waste, fraud, and abuse.

House Republicans will continue fighting to protect taxpayers, restore integrity to federal programs, and work towards real solutions to actually make health care more affordable for Americans.