The Patient Protection and Affordable Care Act (ACA), also known as ObamaCare, contains the largest new entitlement since the Great Society in the form of health insurance subsidies. As anyone with even a modicum of historical knowledge would expect, that entitlement’s cost is already growing much faster than originally projected. In fact, even though the subsidies have not yet gone into effect, they are expected to cost almost 25 percent more than initial estimates from just two years ago. Furthermore, the subsidies’ price tag is likely to continue to rise as a result of increasing healthcare costs, a sluggish economy, and a reduction in the number of individuals receiving health insurance through their employers.
Those are the conclusions of a new paper from the American Action Forum. The think tank’s president, former Congressional Budget Office (CBO) director Douglas Holtz-Eakin, examined the CBO’s projections for the subsidy entitlement and found real cause for concern that the program could end up costing vast sums of money at a time when Uncle Sam is already borrowing over $1 trillion a year.
The ACA provides subsidies for people with incomes from 100 percent to 400 percent of the federal poverty level to purchase health insurance on state exchanges if they cannot obtain “affordable” (as defined by the ACA) employer-sponsored insurance and are ineligible for other federal healthcare programs.
At the time the ACA became law, the CBO estimated that it would enable 32 million more Americans to obtain insurance coverage, with 24 million of those individuals doing so via subsidies. “Put differently,” writes Holtz-Eakin, “the insurance subsides are the central component of the ACA’s primary accomplishment: greater health insurance coverage.” This should hardly have come as a shock to informed readers: 83 percent of the people who newly obtained health insurance under the Massachusetts law on which ObamaCare was based did so at taxpayer expense.
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