Wall Street Journal Editorial Board: The Government Shutdown Stakes for the GOP

Wall Street Journal Editorial Board: The Government Shutdown Stakes for the GOP

WASHINGTON, D.C.- The Wall Street Journal Editorial Board warns that Democrats are using Biden's COVID-era subsidies to pressure Republicans into extending costly entitlement expansions. The editorial emphasizes these "turbocharged" subsidies-originally passed during the pandemic-have been expanded to high-income households and are projected to cost taxpayers nearly half a trillion dollars if extended. It also notes that letting the subsidies expire would not dismantle the Affordable Care Act and could encourage more Americans to maintain employer-sponsored coverage.

From the Wall Street Journal:

Democrats are warning of higher premiums if the GOP doesn't extend turbocharged ObamaCare subsidies that expire at the end of the year. GOP leaders are already hinting that they are open to negotiating, and some are floating ideas that would give Democrats much of what they want. "I don't love the policy, OK?" Speaker Mike Johnson said recently. "But I understand the political realities." Oh, oh.

Mr. Johnson is correct that the subsidies are bad policy, though it would help if Republicans told the public the reasons. The super-charged subsidies first passed in 2021 for a Covid-19 emergency that ended long ago. Democrats juiced the subsidies for everyone, while also opening up the spigot to those earning above 400% of the poverty line.

Democrats set a 2025 expiration date to make the Inflation Reduction Act look less expensive over a 10-year budget window but fully expecting that Congress would extend the subsidies again. No Republican voted for that bill, but now some are too frightened to let the super-subsidies expire.

Despite what you may read, letting them expire wouldn't gut the Affordable Care Act. Someone at 100% of the poverty line would still on average pay merely $3.45 a week in premiums for the cheapest middle-tier plan, according to Brian Blase of Paragon Health Institute and Trevor Carlsen of the Foundation for Government Accountability (FGA). Taxpayers would still pay 98% of the premium.

The cost would run roughly $52 a week for a person at 250% of the poverty line, with taxpayers picking up more than two-thirds of the premium. These are reasonable contributions to a health plan, as most people who get insurance from private employers understand. Nearly three in four ObamaCare enrollees are below this income level.

Making these plans "free" has allowed insurers to get paid for people who may not even know they're enrolled. Some 40% of those in fully subsidized plans had zero claims in 2024, Paragon and the FGA estimate, a number that can't be explained merely by healthy people not using their insurance.

Extending the subsidies would cost roughly $450 billion over a decade, even if Congress disguises the cost with another phony expiration date. The Trump Administration is wasting its time cutting a few billion dollars in foreign aid if it acquiesces to a half-a-trillion-dollar transfer to health insurers.

THE BOTTOM LINE

The editorial notes that the enhanced Obamacare subsidies, initially created as temporary COVID relief, were expanded to households earning above 400% of the poverty line. Democrats set a 2025 expiration date but are pushing Congress to extend them permanently.

Even if the subsidies expire, coverage remains largely intact:

• Individuals at 100% of the poverty line would pay only $3.24 per week, with taxpayers covering 98% of premium.
• At 250% of poverty, enrollees would pay roughly $52 per week, with most of the cost covered by taxpayers.
• About 40% of fully subsidized enrollees filed zero claims in 2024, and the CBO estimates the expanded subsidies could reduce employer-based coverage by four million people.
• Extending the subsidies would cost roughbly $400 billion over the next decade.

Democrats are tying subsidy extensions to reopening the government, but Republicans are standing firm in their promise to restrain spending.