Why Does the Government Need More Money for ObamaCare?
I’ve asked Secretary of the Treasury Jack Lew and Secretary of Health and Human Services Kathleen Sebelius to explain the massive jump in costs for premium subsidies. The projected figure for subsidy expenditures has gone from nearly $16 billion in the president’s 2012 budget up to nearly $22 billion in his 2014 budget. Why is the administration expecting these costs to soar? Is it because they are seeing employers dropping coverage, leaving more employees to get ObamaCare insurance through an exchange subsidized with these tax credits? Is it because they expect insurance premiums to soar, driving up the percentage-figure the government must cover with subsidies? Maybe both.
“Is it because they are seeing employers dropping coverage, leaving more employees to get ObamaCare insurance through an exchange subsidized with these tax credits?”
This seems to be a pretty good assumption to me
I am not even sure that it is an assumption, it’s an empirically proven fact.
“Is it because they expect insurance premiums to soar, driving up the percentage-figure the government must cover with subsidies”
But why are they predicting insurance premiums to soar?
The government will always find a “need” for more money, and a “way” to get it.
I am not sure that what your saying is true. Claiming anything is “always” _____. is logically invalid.
Both questions are one in the same concept, and the answer to both is yes.
There is plenty of evidence to prove that insurance premiums are going to soar, it is an inevitable truth. It’s just how businesses and citizens are going to react to it that is the question.
I don’t understand how the current administration can miss a basic premise in economics: Incentives are everything. Business are laying off workers and cutting back on workers hours because they can’t afford insurance for all of them, because they have a fiscal incentive to do so.
Exactly, people are going to be substantially harmed by either cut backs in work, or they are going to be laid off.
Yes, that’s an important question… Why is it costing billions to set up Exchagnes in all 50 states when eHealthInsurance.com and H&R Block already have the capacity? It has to do with bureaucracy.
One area where costs have been higher than “expected” is implementation costs for state exchanges. California for example. These costs are funded by HHS.
Also likely that costs were underestimated from the start. One possible reason: inadequate analysis. Another possible reason: deliberate understatement. Many people suspected from the start that ACA was underpriced. Common response from many other people: “shut up”.
I wonder if even $22 billion is way too low.
The subsidies are so complex that prediction is difficult, but let me try some rough numbers.
One has to assume that nearly everyone with individual coverage and an income below 400% of poverty will turn to the exchanges. Plus some of the currently uninsured.
I think that number has to be 10 million adults.
Assume that 60% buy individual policies, 6 milloin persons, and get an average subsidy of $3000.
That is $18 billion right there.
Assume that 40% buy family policies, 4 million families, and get average subsidies of $8,000 each.
That is another $32 billion.
If anyone knows what assumptions the HHC has been using, I would love to know them. I could be all wrong, and do not mind if someone proves me so.
And I could be all wrong and too low.