Tags: Healthcare Reform | Obamacare | subsidies | premiums | insurance | healthcare

Subsidies Push True Cost of Obamacare Billions Higher

Wednesday, 18 Jun 2014 01:44 PM

By Melanie Batley

Official projections for the cost of Obamacare do not take into account at least $11 billion in tax credits the government is granting consumers to push down the cost of their premiums.

Almost 90 percent of people who bought health insurance through the new federal healthcare exchange receive financial assistance to subsidize the cost of their premiums, lowering their costs by an average of 76 percent, according to a new report from the Department of Health and Human Services, the Los Angeles Times reports.

The additional cost estimate of the subsidies does not take into account the assistance provided to the millions customers who signed up through the state-run exchanges, meaning the figure is likely closer to $16.5 billion this year, given they account for roughly one-third of the 8 million people who are signed up for Obamacare, according to the Times.

"While the generous subsidies helped consumers, they also risk inflating the new health law's price tag in its first year," the Times said.

Consumers who make less than four times the federal poverty level, or around $94,000 for a family of four, are eligible for tax credits to offset the cost of their coverage. As an example, a premium that would ordinarily have cost $346 per month on average would be reduced to $82 with financial assistance, the Times reported.

The subsidies are a centerpiece of the president's signature healthcare law in that they are a key element in reducing the cost of health insurance in line with the aim to achieve affordability.

Officials who worked on the report refused to discuss with the newspaper the possible impacts of the subsidies on the long-term costs of Obamacare.

The Congressional Budget Office estimated in April that next year the annual cost of the subsidies will increase to $23 billion, and will cost an estimated $95 billion in 2024.
The CBO, however, projects that the costs will be offset by other areas of revenue collection, as well as cuts in other federal healthcare spending, the Times reported.

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