Seymour Flops
Diamond Member
There seems to be a lot of confusion on this board about it.
Government subsidies for insurnce premiums do not reduce the cost of insurance and do nothing at all about how expensive medical treatment is. The subsidies merely shift who pays for the insurance.
Here are six reasons Congress should not extend the inflated pandemic insurance subsidies:
Costs almost half a trillion dollars. The Congressional Budget Office recently estimated that permanently extending the COVID-19 subsidies would increase the deficit by $350 billion over ten years, plus another roughly $60 billion in additional interest costs to finance the spending. Total spending, a better measure of the size of government, would increase by more than $488 billion.
Sarah Wagoner at the Economic Policy Innovation Center notes that this extra cost is more than Congress spends on many federal agencies, such as the National Aeronautics and Space Administration (NASA) or the Environmental Protection Agency (EPA).
So, a person who insists he or she needs a subsidy is not demanding lower insurance premiums; he or she is demanding that other people pay for their premiums.
Now mind you: Subsidies can and do affect the amount an insurance company is able to charge for premiums. They cannot charge more than people can afford and still keep its customer base. But it can raise its prices in response to subsidies that will make the new higher prices "affordable."
If an average family of five could barely afford $6,000 per year ($500 per month) for health insurance, then if the insurance company decided to tripple its prices, it would be cutting its own throat, because they would lose most of their customers. Only the wealthiest and the sickest would remain. Unless it did so after a subsidy was enacted.
That is why you did not notice a drop in your premium payments when the COVID temporary subsidies were enacted. The insurance companies simply raised their rates to match the subsidy. Therefore the moneys for the subsidies ended up in the pockets of health insurance providers, who are also major campaign fund providers for the lawmakers who enacted the subsidy.
What if the process is reversed, i.e. subsidies taken away, as the Democrats provided for by making the COVID subsidies temporary? Will the insurance companies keep their premiums trippled up, knowing that their customers will not be able to afford it with only the previously existing "Affordable" Care Act subsidies?
I suppose they might, hoping people will find the money somehow. But if they do, competitors are sure to arise, who will offer policies that the people can afford. How fast depends on how fast any regulatory red tape can be navigated.
Yes, this process will put many people on a financial roller coaster before it settles into market-controlled equilibrium. But that is what you accept once you seek funding for your healthcare through a political process rather than a voluntary exchange process.
Government subsidies for insurnce premiums do not reduce the cost of insurance and do nothing at all about how expensive medical treatment is. The subsidies merely shift who pays for the insurance.
Here are six reasons Congress should not extend the inflated pandemic insurance subsidies:
Costs almost half a trillion dollars. The Congressional Budget Office recently estimated that permanently extending the COVID-19 subsidies would increase the deficit by $350 billion over ten years, plus another roughly $60 billion in additional interest costs to finance the spending. Total spending, a better measure of the size of government, would increase by more than $488 billion.
Sarah Wagoner at the Economic Policy Innovation Center notes that this extra cost is more than Congress spends on many federal agencies, such as the National Aeronautics and Space Administration (NASA) or the Environmental Protection Agency (EPA).
So, a person who insists he or she needs a subsidy is not demanding lower insurance premiums; he or she is demanding that other people pay for their premiums.
Now mind you: Subsidies can and do affect the amount an insurance company is able to charge for premiums. They cannot charge more than people can afford and still keep its customer base. But it can raise its prices in response to subsidies that will make the new higher prices "affordable."
If an average family of five could barely afford $6,000 per year ($500 per month) for health insurance, then if the insurance company decided to tripple its prices, it would be cutting its own throat, because they would lose most of their customers. Only the wealthiest and the sickest would remain. Unless it did so after a subsidy was enacted.
That is why you did not notice a drop in your premium payments when the COVID temporary subsidies were enacted. The insurance companies simply raised their rates to match the subsidy. Therefore the moneys for the subsidies ended up in the pockets of health insurance providers, who are also major campaign fund providers for the lawmakers who enacted the subsidy.
What if the process is reversed, i.e. subsidies taken away, as the Democrats provided for by making the COVID subsidies temporary? Will the insurance companies keep their premiums trippled up, knowing that their customers will not be able to afford it with only the previously existing "Affordable" Care Act subsidies?
I suppose they might, hoping people will find the money somehow. But if they do, competitors are sure to arise, who will offer policies that the people can afford. How fast depends on how fast any regulatory red tape can be navigated.
Yes, this process will put many people on a financial roller coaster before it settles into market-controlled equilibrium. But that is what you accept once you seek funding for your healthcare through a political process rather than a voluntary exchange process.
