A helpful reminder: “…the dirty secret is that insurers stand to lose the most from King v. Burwell… The giant players — United Healthcare, Cigna, Aetna, Anthem and Humana — have seen stock prices double, triple, even quadruple since the law was passed in 2010. The coming ruling threatens to put an end to their gravy train.” As Betsy [McCaughey] noted elsewhere in that article, the insurance companies were more than happy to sign onto a program where they had a guaranteed – dare we say, mandated? – customer pool; and one where sweet, sweet tax revenue could be used to stitch together any gaps in this Frankenstein’s Monster* of a health care market.
Between 4.5 million and 7.5 million taxpayers received subsidies for insurance premiums when they signed up for coverage on Obamacare exchanges, federal officials said. These folks had to forecast their 2014 income when they applied. Those who underestimated their earnings either will receive smaller tax refunds or will owe the IRS money.
Some enrollees, however, had a change in circumstances — such as a raise, new job, marriage or baby — during the year that could affect their subsidy level. Obamacare enrollees were supposed to contact their exchange so it could revise their premium. Some people, however, did not know they had to notify the exchange or simply didn’t bother.
The problem for Democrats is not exactlythis: “As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm… H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.” Although it’s definitely going to be a problem: ‘several million people suddenly discovering that they now owe back taxes to the government over Obamacare’ is not exactly a good scenario, especially if you belong to the political party that set that scenario up in the first place. But it’s still not the worst thing for Democrats.
No, the problem for Democrats here is that this is going to happen every year. The system is more or less designed to assume that people would twiddle with their coverage on a regular basis: as plans changed, improved, or degraded the consumer would be obligated to follow suit, in order to keep the subsidy. This sounds perfectly reasonable… if you’re not the one doing it. But out in the real world? Well, I’ve written about this before: Continue reading Millions of Obamacare subsidy recipients may need to pay back-taxes.
Jonathan Gruber, a Massachusetts Institute of Technology economist who helped design the Massachusetts health law that was the model for Obamacare, was a key influence on the creation of the law. He was widely quoted in the media. During the crafting of the law, the Obama administration brought him on for his expertise. He was paid almost $400,000 to consult with the administration on the law. And he has claimed to have written part of the legislation, the section dealing with small business tax credits.
After the law passed, in 2011 and throughout 2012, multiple states sought his expertise to help them understand their options regarding the choice to set up their own exchanges. During that period of time, in January of 2012, Gruber told an audience at Noblis, a technical management support organization, that tax credits—the subsidies available for health insurance—were only available in states that set up their own exchanges.
This passage from the Washington Post on yet another problem with Obamacare is not the one that will give the administration fits:
The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.
The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.
Actually, before I get started on that… please watch this related ad on Terry McAuliffe, and his uncritical – not to say, slavish – devotion to one of the greatest American civic disasters since Prohibition. I refer, of course, to Obamacare:
Megan’s showing some dislike for free trade* in this Bloomberg piece; but it was this that stood out for me.
A disability check is a poor substitute for a job, from both the recipient and the taxpayer’s perspective. The sort of person who prefers a disability check to a decent job is the only person we don’t want to help.
Megan needs to define that ‘we.’ The federal government is apparently ready, willing, and able to subsidize people who prefer disability checks to decent jobs; and she also knows as well as I do that if you want more of something, you subsidize it. More to the point, so does the federal government – or, more accurately, the political party running the government’s executive branch. Some day I’d like to hear why LBJ hated poor people this much…
*What do I think about free trade? To mangle Ghandi: I think that it’s a great idea; we should try it some time. From where I’m sitting we’ve got far too many regulations, carve-outs, and extraneous checks on manufacturing** as it is; and this administration is apparently driven to throw as many anvils on the back of business as it can possibly manage.
**Careful use of the adjective, there. I like clean water, air, and soil as well as the next person – particularly when I’m living on the same planet as my society’s manufacturing base.
Details here and here: the short version is that the Senate back in June kicked off opposition to continued ethanol subsidies via a bipartisan amendment: it didn’t pass, but Congress has just let both the ethanol subsidy and a restrictive foreign tariff (on Brazilian sugar-cane ethanol) lapse. Given that the Iowa caucuses will be finished by the time Congress reconvenes – and given that the House of Representatives is currently chock-heavy with people who spit at the very phrase ‘ethanol subsidy’ – getting back either is going to be a problem for the domestic ethanol industry. Mind you, there are still mandates for using ethanol in place, but note again the ending of the tariff; I’m not a businessman, but effectively lowering the price of Brazilian ethanol by 54 cents/gallon while simultaneously effectively raising the price of domestic ethanol by 45 cents/gallon sounds to me like it would at least raise some intriguing alternatives. Continue reading Oh, by the way, ethanol subsidies are dead.