It’s increasingly clear that President Joe Biden’s so-called coronavirus recovery plan is best understood not as a coronavirus relief bill, designed to solve the specific health and economic problems that have emerged as a result of the pandemic, but as a catchall boondoggle for longstanding Democratic policy priorities that have little if anything to do with COVID-19.
Case in point: The bill funds the most dramatic expansion of Obamacare since the health law’s inception, an expansion that would benefit the well off. And it sets the stage for another expansion down the road.
Biden’s plan would funnel an additional $34 billion into the law over the next two years, boosting spending on subsidies for private insurance by about 29 percent. The boosted spending would move about 1.7 million people onto subsidized coverage sold through the health law’s regulated marketplaces; about 1.3 million of them would be previously uninsured, according to a Congressional Budget Office (CBO) estimate. A substantial chunk of the effect, in other words, will be to move about four hundred thousand people who are already insured into subsidized coverage. That alone is a reason for skepticism.
Worse, much of the spending would go to relatively well-off, and even quite high-earning, households. The subsidy boost is intended to address the fact that Obamacare’s array of coverage requirements have helped make insurance plans sold through the law often run well into the four-figure-per-month range. In some parts of the country, Obamacare plans cost tens of thousands of dollars per year.
In many cases, coverage provided through the law is only affordable for those who receive subsidies.
The law already provides subsidies for households up to 400 percent of the poverty line, or about $106,000 a year for a family of four. But as the law currently stands, a household that makes just a little bit more than that threshold qualifies for no subsidies at all.
Obamacare, in other words, made insurance so expensive as to be unaffordable for many people, and then tried to solve that problem by subsidizing very expensive insurance. But some people still made a little bit too much to get subsidies. So now Biden’s recovery plan is trying to solve that problem too—which in practice means increasing subsidies for households earning six figures a year.
And Biden’s plan wouldn’t just expand subsidies to people who make a little bit more than the current cutoff.
In some cases, as Cato Institute health policy scholar Michael F. Cannon and former Trump administration economic policy official Brian Blase have both pointed out, the law would make subsidies available to households earning more than $350,000 a year.
Democrats: people who make $350k should get $20k from taxpayers so they can afford a $51k #ObamaCare plan. https://t.co/TN3qdzcxXX
— Michael F. Cannon (@mfcannon) March 4, 2021
All of this, of course, falls under the guise of pandemic relief. It’s no such thing. As Blase has written, the main effect would be to expand subsidies for the well-off.
Expanding Obamacare was a Democratic policy priority before there was a pandemic. And it will of course remain a priority after the pandemic is gone—specifically when next year’s midterm election comes around. Indeed, Biden’s plan is designed to tee up the next round of expansion.
The COVID-19 bill expands subsidies for two years to start with. But there’s little doubt that Democrats, who (not unreasonably) believe that running on Obamacare helped them win races during the 2018 midterm, will use the expiration of the subsidy expansion as an election-year talking point come 2022.
As NBC News reports, “The changes, which would be temporary, closely mirror Joe Biden’s health care agenda from the presidential campaign, and Democrats are expected to try to make them permanent down the line.”
And how will Republicans respond? One possibility is that many simply won’t.
Although Senate Minority Leader Mitch McConnell (R–Ky.) has dismissed the subsidy boost as “a wildly expensive proposal largely unrelated to the problem,” NBC News notes that when House Minority Leader Kevin McCarthy (R–Calif.) delivered a floor speech opposing Biden’s stimulus package, he never mentioned the Obamacare subsidies at all.
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