TL/DR –
Several Republican Congress members are considering extending COVID-era enhanced ACA subsidies, an element of Obamacare expansion. Critics argue that this extension will not only increase the national debt by almost $450 billion over a decade, but it will also encourage insurance companies to raise premiums and perpetuate fraud. They point out that Obamacare failed to fulfill its promises of reducing family premiums, enabling competition in the insurance market, reducing deficit, and boosting growth and jobs, and warn that the proposed extensions will not address the root of healthcare unaffordability and will likely lead to further healthcare cost increases.
Republicans’ Potential Cave on Obamacare Expansion Amid COVID-era Enhanced ACA Subsidies
After an extended period of media-induced fear, several members of the Republican party in Congress are reportedly considering the expansion of Obamacare by prolonging the COVID-era enhanced Affordable Care Act (ACA) subsidies. Representatives such as Jen Kiggans (R-Va.) and Senators Bernie Moreno (R-Ohio), Susan Collins (R-Maine), and Roger Marshall (R-Kan.), are among those who have proposed plans for extensions.
Nevertheless, all members of Congress are urged to decline these proposals. The fear is that if these subsidies are extended once more, they will become permanent fixtures.
As part of the American Rescue Plan (ARP), Obamacare subsidies saw an expansion as President Biden and congressional Democrats increased benefits for households across all income levels. Furthermore, households earning more than 400 percent of the federal poverty level (FPL) were also included in these expanded subsidies, which were subsequently extended until 2025 by the Inflation Reduction Act. Notably, the expanded version of the premium tax credit (PTC), known as the enhanced premium tax credit, will conclude at the end of the year. However, this does not include the PTC established by the ACA.
Concerns Over Extension Plans
Extending the expanded Obamacare subsidies has been seen as highly flawed policy. Extending these subsidies could rack up nearly $450 billion worth of debt over the next decade. The extensions would invariably benefit insurance companies, either directly or indirectly through a government-run account under a recipient’s name. Additionally, these extensions would likely incite insurance companies to continue escalating their premium costs, further fueling the issue. Last week, reports surfaced of rampant fraud, including the improper use of Social Security Numbers to obtain Obamacare subsidies, subsidies being granted to 58,000 deceased individuals, and each fabricated identity created by GAO receiving subsidized ACA coverage.
Many argue that the only reason these debates are happening is due to a lack of delivery on Obamacare’s promises. President Obama and congressional Democrats made several commitments regarding the ACA, including reducing the typical family’s premium by up to $2,500 a year, increasing competitiveness in the insurance market, reducing the deficit, promoting growth and jobs, and famously stating that if you liked your plan, you could keep it. However, critics argue that Obamacare has delivered the exact antithesis of these promises to the American public.
Proposed Extension Plans
Despite these concerns, some Republican members are attempting to find common ground with Democrats. Representative Jen Kiggans (R-Va.) has allied with Democratic Representative Josh Gottheimer (N.J.), proposing a two-year extension plan, without any Hyde protections. This plan allows for households with an income of up to 1000% of the FPL to still receive subsidies. For example, a family of four could earn up to $321,500 a year and still be eligible for taxpayer funds.
Sens. Bernie Moreno (R-Ohio) and Susan Collins (R-Maine) are also advocating for a two-year extension of the enhanced Obamacare subsidy, sans Hyde protections. Their plan would allow recipients earning up to $200,000 to still receive taxpayer funds, with a minimal contribution of $25 every month.
Impact on Healthcare Costs
A report from the Congressional Budget Office (CBO) confirmed that premiums for exchange plans, under the enhanced credits, are rising more quickly than initially anticipated. It is suggested that when the government subsidizes anything, sellers tend to increase their prices, citing government payment coverage. While these hikes in premiums may cause concern in the short term, removing incentives for insurers to continue raising their prices will potentially save patients money in the long haul.
Effect on Republican Base
Many argue that the expansion of Obamacare is not a political victory for Republicans, but rather a betrayal to their moderate and conservative base. They assert that Democrats will never credit Republicans who concede, instead framing it as a victory for the Left. Republican voters, however, may lose faith in a member who contradicts foundational principles such as avoiding steps towards a socialist healthcare system.
Proposed Alternatives
According to Grover Norquist, President of Americans for Tax Reform, “Voters didn’t give Republicans full control of Congress and the White House to expand Obamacare.” He suggests that conservatives should, instead, concentrate their efforts on reforms which make healthcare more affordable, such as expanding health savings accounts, tax parity for health sharing ministries, price transparency, codifying Individual Coverage Health Reimbursement Arrangements (ICHRAs), a surplus pension healthcare fix, supporting Association Health Plans, among others. [source]