There’s a reason so many people need help paying for their health insurance.
www.thebulwark.com
A BIG REASON REPUBLICANS object to extending the subsidies is the cost, which works out to about $35 billion a year. But it’s not just the amount of money involved that they find objectionable. It’s also the principle: The bigger the subsidies, the more money is taken from hard-working taxpayers. (And, some on the right would additionally complain, the more money is transferred to less productive members of society, creating potential dependency.)
It’s true that, with the extra subsidies, the federal government can end up covering the entire premium for some people at low incomes, since they qualify for the most assistance. But that’s what happens in a social insurance system: Healthy people pay more to cover the costs of the sick, rich people pay more to pay the costs of the poor. And when health care is as expensive as it is in the United States, there’s simply no way to make health care affordable to everyone without a lot of those transfers.
A little math can help illustrate why. Annual health care costs in the United States are about $13,400 per person, based on the most recent figures available, according to the Peterson-KFF Health System Tracker. That’s way more than somebody at even twice the poverty line—which works out to about $30,000 in annual income—can possibly afford. They’re going to need a ton of help.
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This brings us to another principled argument critics make: that massive government expenditures warp the market pressures in the health care sector and contribute to runaway costs. That’s because, according to these critics, the subsidies inject more money into health care, which, in turn, induces providers of care to raise prices while reducing the incentives to resist.
To be clear, this is an argument conservatives have made about the Affordable Care Act from the very beginning. The twist now is that they say the problem got even worse with the extra subsidies Democrats added in 2021—the ones that are a central issue in the shutdown fight.
But the numbers tell a different story.
One of the best ways to measure health care spending is by looking at a country’s overall spending on medical care and comparing it to the country’s overall economic output—or, as the wonks put it, health care spending as a percentage of gross domestic product.
In the fifteen years before the Affordable Care Act became law, health care spending went from 13.4 percent to 17.2 percent. In the fifteen years since the law’s enactment, that figure has barely budged, moving from 17.2 to just 17.6 percent.
“If your thesis is that the Affordable Care Act has caused health care costs in the U.S. to explode, it’s pretty hard to square that claim with the facts,” Matthew Fiedler, a Brookings Institution economist who served in the Obama administration, told me.