CBO Confirms the Folly and Waste of Expanded Obamacare Subsidies
by Brian Blase |
Forbes, October 20, 2021 |
A new report from the Congressional Budget Office (CBO) shows that expanding Affordable Care Act (ACA) subsidies is poor public policy.
CBO projects that expanding the ACA, which includes increased premium subsidies for exchange insurance as well as a new federal Medicaid program, would cost $553.2 billion over the next decade.
The main economic effect is crowd out: Most of this new government spending would replace private spending that would otherwise have occurred to purchase health insurance.
Only 4.1 million people would newly gain health coverage by 2031. CBO expects the government cost would be $77.364 billion that year, an amount equal to $18,869 in new spending per newly insured.
The expansion of these subsidies is problematic for at least seven reasons:Most of the benefit would go to people who already have coverage.Wealthier households would benefit much more than poorer ones.Men would receive unfair benefit relative to women.The subsidies would go directly to health insurance companies.Poor subsidy design would lead to increased premiums, prices, and wasteful spending Employers, particularly small employers, would drop coverage.The budgetary cost would be substantial. The ACA subsidy structure is poorly designed and leads to rampant inefficiencies and waste. Congress should not throw good money after bad by permanently enlarging the pipeline that goes directly from the Treasury to insurance companies that sell through the exchanges.
Instead, Congress should pursue more fruitful paths, such as empowering consumers and families to have greater control over their own health spending to demand more choices of more affordable coverage and care.