Like many things tried by the federal government, the Affordable Care Act has been a failure.
The good news for advocates of government-run health care is that in Washington, failing upwards is a tradition. In this case, the failure has only emboldened them to try to spend even more money and do more damage to the health care system.
The ACA — which, to be clear, was health insurance restructuring, not health care reform — was supposed to have about 25 million people enrolled in its exchanges by now. Enrollment has been stuck at about 10 million people since 2015.
This is in large part because the ACA specifically outlawed more modest plans and, consequently, priced many people out of the market. Premiums and deductibles in the individual insurance market are high, and the plans typically include far fewer providers than employer-sponsored insurance plans. In 2017, the Department of Health and Human Services reported that individual market premiums more than doubled between 2013 and 2017. Moreover, enrollment in ACA plans is concentrated among lower-income people who receive large subsidies from taxpayers that cover most or all of the premium.
In short, the program has failed in its goal of insuring more people, and taxpayers are paying for those who buy ACA plans.
For the Democrats, however, it is not enough. They want to use the COVID-19 “stimulus” package to have taxpayers pay for health insurance for even more people. The twist? This time, the plan is to have taxpayers pay for rich people, too.
The centerpiece of the scheme is a substantial increase in the tax credits for people who don’t receive coverage through their employer or a government program.
The proposal increases the number of people eligible for the tax credit. Currently, the tax credits are available only to people who make four times the federal poverty limit (that’s $51,520 for a single person and $106,000 for a family of four). The proposal would remove that cap.
As a practical matter, that means the more expensive the health insurance plan, the more money the insured would get from their fellow taxpayers. Because older Americans tend to use more health insurance, the proposal also means that richer and older Americans will get more taxpayer money than younger and poorer Americans.
For example — according to excellent Galen Institute research by Brian Blase, a former special assistant to President Trump at the National Economic Council and now head of Blase Policy Strategies — a 60-year-old couple with two children making $212,000 would receive a tax credit of $11,209. In contrast, a family of four making $39,750, regardless of the age of the couple, would get just $1,646.
Some households with more than $500,000 would qualify for the tax credits. For example, a 64-year-old couple in Kay County, Oklahoma, earning $500,000 per year, whose premium is $49,897 a year, would get a tax credit of $5,946.
As crazy as it sounds, the more you spend on health insurance (which is also partly a consequence of the Affordable Care Act), the more money the federal government gives you.
Who loses here?
Working people lose. Because it sends more taxpayer money to the rich, this scheme is extremely regressive and exacerbates income inequality. Keep that in mind the next time Democrats talk about combatting income inequality.
If you care about small government, you lose. The proposal shifts the cost of private insurance to taxpayers, which means more federal spending now and in the future.
Those who own or work in American businesses, particularly small businesses and those with lower-income and older workforces lose, mostly because those companies will have incentives to stop offering group insurance.
The uninsured also lose. The Congressional Budget Office estimates that the tax credit will cost about $34 billion over two years and that about 75% of that will be spent on people who already have health insurance. If you’re trying to solve the problem of the uninsured, you need to look elsewhere.
So, working people, taxpayers, the middle class, those who work in or own small businesses, and the uninsured all lose under the proposal.
Who could be in favor of this mess?
You’ll be amazed to learn that the insurance companies are in favor of getting their hands on a steady stream of cash from the federal government.
Additionally, those who want to impose government-run health care are also no doubt quietly cheering. The unstated but obvious and ominous purpose of the proposal is to create a sotto voce government-run health insurance program and, ultimately, government-run health care system.
The credit is set to expire in two years, which may limit its effect. But free money from the federal government is almost impossible to stop once it starts, and the long-term impact of the subsidy could cause a large decline in employers offering health insurance.
Millions of workers probably will lose their employer-based insurance and be compelled to join the exchange plans substantially subsidized by taxpayers’ dollars.
That would lead us all one step closer to government-rationed health care, which is, of course, the point of the entire exercise.
• Michael McKenna, a columnist for The Washington Times, is the president of MWR Strategies. He was most recently a deputy assistant to President Trump and deputy director of the Office of Legislative Affairs at the White House.
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