Democrats Want To Fight Inflation With Obamacare Subsidies That Would Make Inflation WorseThe political class still hasn't come to grips with the idea that subsidies don't fight inflation.
PETER SUDERMAN
7.6.2022
Obamacare's headline promise was contained in the title of the legislation that spawned the program: It was the Affordable Care Act, and it promised to make health care, or at least health insurance, more affordable.
What went mostly unacknowledged by the law's authors and backers was that Obamacare had little if any real mechanisms to bring down the price of health coverage. Instead, it had a system of federally funded subsidies, running about $60 billion annually, which would mask the true price of health insurance by offloading a share of premium costs to taxpayers.
As it turned out, even this system of subsidies was deemed deficient by supporters of the law, including its namesake, President Barack Obama. This April, Obama commemorated the law's anniversary by warning that, in the absence of a subsidy funding boost provided by the American Rescue Plan (ARP), "health-care subsidies aren't where we want them to be, which means that some working families are still having trouble paying for their coverage." The implicit conclusion was hard to miss: The Affordable Care Act, on its own, had not made coverage more affordable.
Instead, the subsidies had been topped up by the ARP, the roughly $2 trillion grab bag of Democratic policy priorities passed by President Biden and congressional Democrats in early 2021. For two years, the ARP raised income caps for the subsidies and increased their value, setting up a situation in which some households earning well into six figures were eligible for health insurance subsidies worth tens of thousands of dollars per year.
In theory, the two-year subsidy boost was a temporary measure intended to address the emergency of the pandemic. In practice, it was obvious from the outset that Democrats hoped to use the temporary subsidy boost as a stepping stone to permanently expanding Obamacare's subsidies. Extending the subsidies, at a cost of $25-35 billion a year, was among the proposals that consistently featured in last year's Build Back Better spending bundles. But negotiations over Biden's spending bill stalled last year, leaving the expanded Obamacare subsidies set to run out.
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Source:
https://reason.com/2022/07/06/democrats-want-to-fight-inflation-with-obamacare-subsidies-that-would-make-inflation-worse/
