What to Cut? Start with the Subsidies to Health-Insurance Companies

By Brian Blase
National Review Online, Oct. 12, 2021

The news is full of stories about the “tough” choices that congressional Democrats must make to trim their massive $3.5 trillion reconciliation package. Here’s an easy one — eliminate the $600 billion in subsidies to health-insurance companies in the proposed legislation, Galen Senior Fellow Brian Blase writes in National Review Online.

The proposed spending does not represent health-care reform and does nothing to expand choices, lower costs, or make programs work better for patients. Rather, it throws more money at wasteful, micromanaged, government-run programs, he writes.

The $600 billion is the estimated ten-year spending from the following three parts of the reconciliation package:
  • premium subsidies especially benefitting higher-income Americans
  • a new federal Medicaid program 
  • a massive new reinsurance program 
Blase writes the proposed legislation is full of bad programs and policies but says the increased subsidies to health insurers are among the worst and should be among the first to go when choosing what to cut.

These subsidies will disproportionately benefit upper-income households, replace private spending with government subsidies, and will result in many people losing their employer coverage.  The subsidies are inflationary, will lead to higher health-care prices, health-insurance premiums, and health-care spending and will discourage work and economic productivity.

For an in-depth analysis of problems with the expanded ACA subsidies, see Blase’s study published by the Galen Institute: “Expanded ACA Subsidies: Exacerbating Health Inflation and Income Inequality
Read the full article in National Review
Copyright © 2021 Galen Institute, All rights reserved.

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