The massive Democratic spending package now working its way through Congress is not, strictly speaking, a health care bill. But it’s not not a health care bill, either. Many of its biggest, most expensive provisions are expansions of government-run or federally subsidized health care programs. Those provisions represent the largest expansion of federal health care spending since Obamacare.
And now we have a much better sense of just how big and costly some of those expansions would be. Just two provisions alone would cost about $533 billion, according to a new analysis by the nonpartisan Congressional Budget Office (CBO).
The first provision is a further expansion of Obamacare’s subsidies for private insurance, at a cost of $209.5 billion. A temporary, two-year version of this expansion, which boosts subsidies for people earning less than 400 percent of the poverty line and opens up subsidies to people making more than that, already appeared in the $2 trillion American Rescue Plan that Democrats passed earlier this year; the reconciliation bill would extend the larger subsidies.
Not only would this be expensive, as health policy consultant and former Trump administration economic adviser Brian Blase points out, CBO’s analysis suggests that the majority of the beneficiaries would be people who already have health coverage: About 2 million of the 3.4 million people projected to move onto coverage through Obamacare’s health exchanges already have some sort of insurance. Moreover, about two-thirds of the new enrollees would be relatively well off, with household incomes above 400 percent of the poverty line, which currently equates to about $106,000 for a family of four.
The second major provision is a $323.1 billion expansion of Medicaid to cover people in the so-called Medicaid gap, which refers to people who make too much to qualify for traditional Medicaid (and too little to qualify for Obamacare subsidies) in the dozen states that have not expanded Medicaid. This is effectively a policy patch on top of an earlier program, Obamacare’s Medicaid expansion, that was itself already a kind of health program patch.
The CBO analysis also looks at two smaller, more technical provisions dealing with employer-sponsored coverage and unemployment, respectively, each of which would cost a little more than $10 billion.
The CBO analysis doesn’t even cover the spending package’s proposed Medicare expansion. A previous estimate of a similar proposal in 2019 came in at around $358 billion over a decade.
It is possible, of course, that some of these programs will be cut, trimmed, or otherwise altered by the time Democrats vote on final legislation. As it has become clear that Democrats don’t have enough votes to pass a $3.5 trillion spending bill, there’s been a lot of discussion about what, if anything to cut or pare back—possibly by employing timing gimmicks that merely fund a smaller number of years worth of program expenses. (The Medicaid expansion has been singled out as a candidate for the timing-gimmick treatment.)
Nevertheless, the CBO analysis confirms that these programs as initially conceived are both expensive and not particularly well targeted or cost-effective.
Founded in 1968, Reason is the magazine of free minds and free markets. We produce hard-hitting independent journalism on civil liberties, politics, technology, culture, policy, and commerce. Reason exists outside of the left/right echo chamber. Our goal is to deliver fresh, unbiased information and insights to our readers, viewers, and listeners every day. Visit https://reason.com