The open enrollment period for HealthCare.gov came to a close last week. And at the end of this month, open enrollment in many of the states that run their own marketplaces will close.
As of Jan. 11, the most recent date for which the government has data, roughly 15.9 million people have purchased health plans through the federal HealthCare.gov insurance exchange or those run by the states.
The Biden administration is touting this record-high enrollment as a major victory. "Thanks to President Biden’s Inflation Reduction Act," Secretary of Health and Human Services Xavier Becerra said, "four out of five HealthCare.gov enrollees can find coverage for $10 or less."
That's true. But it's only because federal taxpayers are picking up most of the tab.
The IRA directs unprecedented sums of money to insurance companies to cover people's premiums — and does nothing to address the reasons why those premiums are surging.
Covering up Obamacare's faulty structure with ever-greater amounts of taxpayer money is no public policy victory.
This enrollment season's 15.9 million sign-ups exceed the 14.5 million from the year before — and the 11.4 million who enrolled in 2020.
This shouldn't be surprising, given that federal premium subsidies are higher than ever. The IRA extended through the end of 2025 more generous exchange subsidies that were originally put in place as part of the March 2021 American Rescue Plan Act.
These enhanced subsidies reduced what people who made less than 400% of the poverty level had to pay in premiums — and capped what anyone would have to pay for coverage at 8.5% of income.
By one estimate, these giveaways will increase federal deficits by about $25 billion a year over the next decade. A sizable share of that assistance is going to Americans who may not need the help.
According to a 2021 analysis of the initial pandemic-era subsidy scheme published by the Galen Institute, a family of four headed by a 60-year-old earning six times the poverty level — about $159,000 a year — qualified for a premium tax credit totaling $16,845 under the enhanced subsidy scheme.
Subsidies, in other words, are no longer reserved for the poor. In the 2022 plan year, a whopping 89% of exchange enrollees received some form of subsidy.
It's no mystery why. Before subsidies, the average monthly premium in 2022 was $585.
Unsubsidized premiums have marched steadily upward since Obamacare was created. In 2019, average monthly premiums were $558. That's well more than double the $244 average monthly premium in 2013 — the year before Obamacare's exchanges launched.
These rate hikes are a function of Obamacare's regulation of the insurance market. The law requires all health plans to cover a list of ten "essential" health benefits, regardless of whether consumers want or need them.
Obamacare also limits how much insurance providers can charge older patients compared to younger ones and requires insurers to cover all applicants, regardless of health status or history.
Those regulations are generally popular. But they're not free. They increase costs for insurers, who pass those increases along in the form of higher premiums.
Democrats have temporarily hidden those increases from consumers with their enhanced subsidies. Judging by this year's enrollment figures, that strategy has worked.
But it can't work forever. Eventually, Democrats will run out of other people's money to spend propping up Obamacare's exchanges.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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