A disastrous year in federal health spending


For current and future taxpayers, 2021 has been a brutal year, at least when it comes to health spending. Congress and the Biden administration have approved tens of billions in new spending. Much of this money has been, or will be, wasted on ineffective programs and grants that do little to improve the quality of care Americans receive. But the bill will still arrive.

The president started his first term with a massive $ 1.9 trillion stimulus package, the US bailout. About $ 34 billion has been spent on extending grants until 2022 for plans sold through the Obamacare exchanges. An additional $ 7.8 billion has been earmarked for a temporary 100% premium subsidy for COBRA, the government program that allows workers to continue to benefit from their employer-sponsored health plan after being made redundant. , provided they pay the cost themselves.

The ACA grants were particularly heinous. Despite their huge costs, the Congressional Budget Office estimated they would only extend coverage to 1.3 million uninsured Americans. Economist and principal researcher at the Galen Institute Brian Blase estimated that about 75% of people who received the expanded grants already had insurance.

Many of these people were barely in financial difficulty. By capping the price that all trade-in buyers pay at 8.5% of income, the US bailout has allowed every American to receive a subsidy well in excess of the previous limit, 400% of the federal poverty line. .

Consider the numbers. A family of four earning $ 344,500 could receive a grant. Under this new plan, a 45-year-old man whose family earns about $ 200,000 gets an additional $ 5,000 discount on his premiums. But the same 45-year-old man who earns $ 50,000 would get an increased grant of only about $ 2,500.

While they only lasted until September, the COBRA grants were not much better. They urged those who lost their jobs to stay on expensive employer-sponsored plans instead of finding cheaper coverage or a new job with health benefits. The average employer contribution costs workers and employers a combined total of $ 7,739 for individuals and $ 22,221 for families. An individual referral plan, which anyone can purchase after losing a job, would have cost an individual only $ 5,424 on an annualized basis. Many other plans could be purchased for even less.

In short, the COBRA grants went to working-class taxpayers helping middle-class and even upper-middle-class Americans keep their gold-plated insurance plans.

And in the second half of the year, taxpayers were faced with the specter of even greater spending. The House passed the Build Back Better Act just before Thanksgiving – and it briefly looked like the Senate would vote on the bill as well this year, until Sen. Joe Manchin’s (D-WV) reservations forced the chiefs to his party to postpone a vote until 2022.

The sweeping legislation would spend an additional $ 73.9 billion to extend ACA grants until 2025. Build Back Better would also increase hearing benefits for Medicare registrants to $ 36.7 billion over ten years .

A new study by my colleague at the Pacific Research Institute, Wayne Winegarden, has highlighted the huge amount of unnecessary federal spending since the start of the pandemic. Winegarden rightly returns to the issue of federal debt. He points out that since the start of the pandemic in March 2020, the federal government has authorized $ 5.9 trillion in new spending, increasing public debt by $ 4.8 trillion through March 2021.

If Build Back Better passes the Senate and is enacted by President Biden, we’ll get more spending in exchange for minimal improvements to the insured rate. Taxpayers can only hope lawmakers come to their senses and guarantee a good year by not doubling down on their mistakes.


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