Concealed in the $1.9 trillion packages is an extension of Obamacare insurance subsidies, which could give thousands of dollars to wealthy families who have been barely affected by the pandemic, according to critics.
Democrats endeavor to make the Affordable Care Act’s (ACA) premium subsidies available to more people through the end of 2022. It also extends the amount of those subsidies for currently eligible people.
The altered structure makes the subsidies much larger for older people and the wealthier, according to Brian Blase, a senior fellow at the Galen Institute and former special assistant to former President Donald Trump at the National Economic Council.
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The offered reform in the plan, “recklessly boosts federal subsidies for health insurance in a way that exacerbates tax inequities, substantially replaces private spending with government spending, reduces incentives for work and productivity, and significantly adds to already unsustainable family and government health care expenditures,” Blase wrote in a report.
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He considered that a family of four with a 60-year-old head of household and income of $159,000 a year, would qualify for an annual payment of $15,868 under the Democratic proposal.
Biden’s stimulus package makes Obamacare subsidies open to more people by raising the income cap on subsidy eligibility. Currently, subsidies are obtainable only to people with income below 400 percent of the federal poverty level—$51,520 for an individual and $106,000 for a family of four. The program also decreases a person’s maximum spending on gifts for benchmark coverage to 8.5 percent of income from 10 percent.
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Lifting the “subsidy cliff” would help people living in states with high premiums, according to a report by the Kaiser Family Foundation.
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The report shows that a 60-year-old with $55,000 income living in Wyoming, West Virginia, South Dakota, Nebraska, Connecticut, or Alabama would see a premium saving of more than 70 percent on a benchmark plan.
“Because Obamacare premiums rise with age, most of the benefit from this change will accrue to households in their 50s and 60s, often in their peak earning years and with considerable accumulated savings,” according to Chris Jacobs, a health policy expert and CEO of Juniper Research Group.
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In an article in the Federalist, Jacobs claimed that the change in subsidy would diminish the motivation to work because “some households can lose thousands of dollars in insurance subsidies by going one dollar over the cliff.”
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Senate Minority Leader Mitch McConnell (R-Ky.) on March 2 on the Senate floor repeated the criticisms raised by conservative health policy experts, and said the enhanced subsidy structure would “disproportionately benefit wealthier people.”
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