by James C. Sherlock
We know it every time we see it. It is the time-honored Congressional ritual of “temporary” federal subsidies.
Such subsidies for nearly anything that are positioned originally as “temporary” tend to be extended and then often made permanent entitlements. As with everything else, the people who get subsidies care far more about preserving them than those who are not subsidized care about eliminating them.
For example, see the nation’s system for regulating peanut farming. The federal government subsidizes peanut farmers and their incomes by restricting supply.
The laws require a Federal license in order to grow peanuts. Very few licenses have been issued since the early 1940’s. The result: Americans pay 50% more for home-grown peanuts than they would if the market was not restricted.
I can find no record that President Carter raised the issue.
In this case, concerning federal Affordable Care Act (ACA) subsidies, NBC news has alerted us to a pending issue.
During the open enrollment period for 2022 coverage, 307,946 Virginia residents enrolled in private qualified health plans (QHPs) through the Virginia exchange/marketplace.
It involves temporary federal subsidies to ACA Marketplace customers to keep demand high, supporting the prices that are paid to insurers and by insurers to hospitals and healthcare providers. These subsidies are set to expire.
The Kaiser Family Foundation published a study that shouts:
On average, premiums are set to rise by more than 50% for people getting health coverage through a (ACA) marketplace plan.
The source of the price increase:
The American Rescue Plan Act, which was signed into law in March 2021, removed — for two years — the income cap for eligibility (400%) of the federal poverty level.
Of the 14.5 million people enrolled in marketplace plans, 13 million receive subsidies of varying amounts to reduce what they pay in premiums.
The inevitable conclusion:
Unless Congress takes action, enhanced premium subsidies — technically, tax credits — that have been in place for 2021 and 2022 will disappear after this year. The change would affect 13 million of the 14.5 million people who get their health insurance through the federal exchange or their state’s marketplace.
“The default is that the expanded subsidies will expire at the end of this year,” said Cynthia Cox, a vice president at the Kaiser Family Foundation and director of its Affordable Care Act program. “On average, premiums would go up more than 50%, but for some it will be more.”
“Unless Congress takes action”.
Assuming Congress does not extend the expanded tax credits, only people with household income from 100% to 400% of the federal poverty level will once again qualify for subsidies.
“Assuming Congress does not extend.”
Anyone want to predict the odds?
Can you say “entitlement” to rescue a program that was fatally flawed from the start?