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US Will Blow $700 Billion On Obamacare Subsidies In 2018
By Tyler Durden
May 24, 2018 - 1:15:27 AM

While Democrats have continuously griped about how Republican measures to slowly dismantle the Affordable Care Act (otherwise known as Obamacare) will sink their chances of cementing control of Congress in this year's midterm elections, the US government is now estimating that it will spend $700 billion on subsidies this year to help provide Americans under the age of 65 with health insurance through their jobs or in government-sponsored health programs, according to a report from the nonpartisan Congressional Budget Office.

The subsidies come from four main categories:

Roughly $300 billion is federal spending on programs like Medicaid and the Children's Health Insurance Program, which typically help insure low-income people.

Almost as big are the tax write-offs that employers take for providing coverage to their workers.

Medicare-eligible people, such as the disabled, account for $82 billion.

Subsidies for Obamacare and for other individual coverage are the smallest segment, at $55 billion.

Or, as the chart below shows, a plurality of spending goes to Medicaid + CHIP:


While Obamacare initially added tens of millions of Americans to the rolls of the insured, 29 million people will likely go without health coverage for an average of at least one month this year, according to the Congressional Budget Office.

According to Bloombergthe subsidies in the Affordable Care Act are designed to insulate people from the deleterious impact of premium hikes. The CBO forecast that premiums for mid-range plans will hike by 15% by 2019, and by about 7% annually through 2028.

Several rule changes enacted by the Trump administration have impacted the program more broadly. The non-payment of those subsidies, less enforcement of a rule requiring people to have insurance and limited competition caused insurers to raise their premiums by about 34 percent in 2018, compared to 2017.

That increased the cost of the subsidies to the federal government, according to the CBO.

Thirty-five million Americans could lack coverage by 2028 as rising premiums and the elimination of the individual mandate drive more people to drop coverage.

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