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February 19, 2021
More Subsidies for the Rich –– Newsletter Issue #118

Washington’s first answer to most any problem is to throw more money at it—more of your money.

That’s just what is happening now with the massive $1.9 trillion so-called Covid relief bill that is racing through Congress.  And the more we look at the details, the more egregious it is.
 
The bill is designed to provide economic assistance to people suffering from the effects of often-misguided government decisions in response to the pandemic.
 
Among other big government “solutions,” the proposed legislation expands Affordable Care Act subsidies, spending $34 billion over two years.
 
Blase tweets this “will increase the number of insured by about 1 million on average – about 800,000 in 2021 and 1.3 million in 2022. So, the CBO estimate is this proposal spends $34,000 to insure 1 person for two straight years.
 
“If the overriding goal is to reduce the number of uninsured, this is a really, really inefficient way to do so,” he writes.
 
Much of the money would go to boost subsidies for those who already have coverage and allow those with the highest incomes to qualify for government assistance.
 
Blase observes:  “The proposal also makes much wealthier people who likely already have insurance eligible for the premium subsidy. For example, a family of four headed by a 60-year-old earning $240,000 per year will now qualify for a subsidy of nearly $9,000.”
 
Most of the funding would go to those who already have coverage.  It also would pay for continued COBRA coverage and pour even more money into state Medicaid coffers.
 
Why is there so much spending with little decrease in the numbers of uninsured?
 
“Crowd-out,” Blase tweets. “A 60-year-old led family-of-four earning $263,000 a year—that almost certainly has coverage already—would qualify for a subsidy of $6,744 under the proposal. If they earn $210,000, the subsidy is $11,400.”
 
Astute Axios reporter Sam Baker writes, “This does not seem like a particularly efficient, or even effective, bridge for the millions of people who lost their health insurance when they or their family members lost their jobs amid the pandemic.”  Baker’s piece is entitled:  “Democrats' very pricey, very small health care coverage expansion.”  We couldn’t agree more.
 
Despite projections that millions of people would lose their employer-based health coverage due to COVID-19, a Heritage Foundation analysis found that “health insurance enrollment has remained fairly stable this year.”
 
Health policy analyst Michael Cannon of Cato writes “Democrats Promise Throwing $36 Billion at Health Insurance Companies Will Work This Time
 
“The proposal would offer its largest subsidies to high‐​income earners. It would offer more subsidies on behalf of men than women,” Cannon writes. “It would cover few previously uninsured individuals, and at a very high cost. Perhaps worst of all, in the name of ‘affordability,’ it would push health care prices and health insurance premiums even higher.”
 
A dozen House committees have been busy drafting their part of the massive spending bill that congressional leaders hope to quickly pass.  There is a better way!
 
 
Doug Badger and Brian Blase did a stellar job on Tuesday of “Assessing President Biden's Obamacare Expansion Proposals” in a webinar hosted by Galen and the Institute for Policy Innovation.  They provide an informed and insightful overview of many more of the health policy changes the Biden administration and congressional leaders are planning. If you missed it, you can watch the recording here.
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