Amid the ongoing government shutdown fight, the Democratic Party’s message has largely focused on blaming Republicans for stripping “millions” of their health insurance because they won’t approve expanded Obamacare subsidies.
Democrats temporarily expanded Obamacare subsidies during COVID, adding what they called enhanced tax credits.
But these tax credits, pushed through Congress by Democrats with no Republican support during the COVID-19 pandemic, aren’t universally accepted as a cost-cutting measure. Rather, according to some experts, they are a temporary fix to a long-term problem and fail to address the root causes of high healthcare costs in the country.
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Critics also lament that the extra tax credits make Obamacare more susceptible to waste, fraud and abuse.
“We believe healthcare is a right for every American. But starting today, millions will get notice that they are being priced out of their insurance due to Republican policies,” Rep. Alexandria Ocasio-Cortez said in a video alongside Sen. Bernie Sanders, I-Vt., posted to social media Wednesday. “GOP may shut down the government, but we stand up for you.”
Meanwhile, Senate Democrat leader Chuck Schumer, has accused Republicans of refusing to protect Americans’ healthcare.
“We Democrats are going to be there every day, every hour, the Senate, the House, groups that care about healthcare, hospital groups, healthcare groups, research groups, letting them know this didn’t have to happen,” Schumer said from the Senate floor on Wednesday. “It happened because our Republican colleagues wanted to give tax breaks to billionaires and cut their healthcare.”
According to Sen. Elizabeth Warren, D-Mass., Republicans’ failure to expand the Obamacare tax credits will lead to “over 50,000 more people” dying each year.
But the idea of using subsidies to lower costs even more for Americans using Obamacare has sparked concern about the longevity of the program, and its susceptibility to fraud, waste and abuse.
“Democrats are fighting to extend expiring COVID-era Obamacare subsidies they passed under Joe Biden with zero Republican support,” Sen. Mike Lee, R-Utah, posted on X. “These subsidies are responsible for tens of billions in improper and fraudulent payments.”
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Estimates cited by Democrats suggest as much as a 75% increase in Obamacare premiums if the enhanced tax credits aren’t re-approved. But Heritage Foundation senior research fellow Edmund Haislmaier argued in 2022 that extending them will have “next to no effect on the premiums charged by insurers.”
“Obamacare’s subsidy system was deliberately designed to keep what the enrollee pays constant, regardless of how much premiums increase. The COVID-19 spending bill simply changed how much enrollees are expected to contribute to the cost of their coverage by temporarily changing the formula,” Haislmaier wrote at the time. “In sum, extending the temporary bump-up in Obamacare subsidies by three more years will pointlessly throw another $64 billion onto the inflation bonfire in exchange for virtually no societal benefit.”
James Capretta, an analyst at the American Enterprise Institute, a right-of-center think tank in Washington, D.C., pointed out that subsidies, in turn, increase federal spending. An indefinite extension of the Obamacare enhanced tax credits would cost $350 billion over the next decade, according to the Congressional Budget Office (CBO).
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“The longer the enhanced credits remain in place, the harder it will be to revert to the pre-2021 schedule,” Capretta wrote this week ahead of the looming government shutdown. “A more straightforward and fiscally sustainable solution to low take-up of insurance would be to lower overall healthcare costs, thereby bringing down health insurance premiums. But, as a political matter, it is much easier to increase government support for insurance enrollment than to impose more cost discipline on hospitals, doctors, and other providers of services.”
Brian Blase, the president of the Paragon Health Institute and a former advisor on the White House’s National Economic Council, explained why claims that Republicans are intentionally skyrocketing their premiums could be misleading in a post on X.
“The premium increase will hit regardless of what Congress does. That is an unfortunate feature of how Obamacare is working. The question is the share that should be paid by taxpayers,” Blase said. “Pouring more subsidies on insurers entrenches the status quo & means higher premiums & prices.”
Meanwhile, conservatives have also pointed out that the enhanced tax credits in question don’t expire until the end of the year, noting that negotiations for extending them could take place once the government is reopened.
“You can’t reward this exercise in hostage taking, which is what we would be doing if we allow the government opening to be conditional on the Democrats’ policy disagreement,” Vice President JD Vance said during an appearance on “Fox and Friends” on Wednesday.
“That premium support program doesn’t even expire until next year. So why are you shutting down the government on October 1 because of a program that doesn’t even expire for another few months,” he continued. “Let’s talk about it, let’s negotiate, let’s do what you do in Washington, D.C.”
