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Supporters of Obamacare promised that the legislation would cut family premiums by $2,500. Instead, its mix of mandates and pricing restrictions sharply increased individual market premiums. From 2013 to 2014—the first year that Obamacare’s key provisions took effect—individual market premiums increased nearly 50 percent. Obamacare plans carried high deductibles and narrow networks, often excluding top hospitals and doctors. As the late Robert Pear of The New York Times wrote in 2015, these high costs rendered many of the plans “all but useless.” Generally, only those heavily subsidized or expecting major medical bills enrolled, leaving enrollment 60 percent below expectations.
Despite this poor performance, Democrats in Congress hiked subsidies to insurers for offering Obamacare plans as a pandemic measure. These COVID credits cut enrollees’ premium share and eliminated premium obligations entirely for roughly half of them. As Paragon has documented, these COVID credits fueled widespread waste and fraud: more than half of fully subsidized enrollees were ineligible, and 40 percent never used their plan. Democrats used reconciliation to enact these credits without any Republican support and scheduled them to expire after 2025.
In an October 5 editorial, The Washington Post admitted that “the real problem is that the Affordable Care Act was never actually affordable.” According to the Post, “[t]he architects of the program assumed that risk pools would be bigger than they turned out to be. As a result, policies cost more than expected.” The Post noted:
President Joe Biden and congressional Democrats used covid-19 to justify chasing the mirage of a European-style welfare state without raising the necessary taxes to pay for it. Now, prodded by the left, party leaders have shut down the government in a bid to permanently extend what was sold in 2021 as emergency subsidies to help people struggling during the pandemic afford health insurance. … Democrats have demanded that Republicans agree to extend the covid-era insurance subsidies without proposing any way to pay for it.
In an October 10 Wall Street Journal op-ed, Senator Rick Scott (R-FL) made a powerful case against extending the COVID credits.
To keep ObamaCare afloat, the federal government has propped it up with hundreds of billions of dollars in handouts directly to the insurance industry while failing to lower costs. These handouts lacked any accountability or eligibility requirements, opening them up to fraud, waste and mass confusion that lined the pockets of insurance companies and brokers, and failing Americans who need help.… This is an unsustainable system that feeds billions of taxpayer dollars to insurance companies. The federal government spent $111.2 billion on ObamaCare subsidies last year, sending checks to insurance companies for 19 million recipients. Reports indicate five million of those recipients were ineligible. That means the average American paid $327 of tax dollars last year on these subsidies, of which some $82 covered fraudulent enrollment.… It is time to end this madness by lowering the cost of healthcare, encouraging innovation at the state level, stopping fraud and waste in the system, increasing competition in the health insurance and provider markets, and giving the American people the ability to spend healthcare dollars in the way that best meets their individual needs.
An October 8 Wall Street Journal editorial argued that Republicans shouldn’t fear this fight. The Journal made the case that Democrats are risking a shutdown to extend subsidies for a pandemic emergency that ended two years ago—an income transfer to insurers costing about $450 billion over 10 years.
Although media polls suggest public support, most Americans have heard little about the issue and don’t realize only the temporary COVID boost is expiring. The editorial cited a Paragon poll that found 53 percent of voters support letting the COVID credits expire, and a Center for Excellence in Polling survey with similar results. As The Journal observed, voters grasp that pandemic policies were temporary. Responsible policymaking can win this debate by standing firm against another bailout and offering a better alternative.
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