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President Biden’s spending spree costs taxpayers $47,000 to insure a single person

Nov 22, 2021 by Dean Clancy

President Joe Biden’s Build Back Better bill, a multi-trillion spending spree being considered in Congress, forces taxpayers to shell out $47,000 per year for each new Medicaid and Obamacare enrollee.

That’s two to four times what a private health insurance policy costs, at roughly $12,000 to $25,000 a year on average.

Most of the money in Biden’s plan goes directly to insurance companies.

In a real sense, the bill is more of a subsidy for Big Insurance than an actual form of health care access for real people.

The bill includes several provisions designed to increase health insurance coverage that are wasteful in nature:

  • Expands federal premium subsidies for Obamacare plans to well-off households earning up to $500,000 a year.
  • Allows people to enroll in federally subsidized Obamacare plans, even if they already have access to affordable employer-sponsored insurance.
  • Makes about 4 million able-bodied, childless adults eligible for Obamacare subsidies in a dozen states that have opted not to expand Medicaid. (Most of these adults already have access to employer-sponsored insurance or other government-subsidized coverage.)
  • Allows anyone with unemployment to get taxpayer health subsidies.

How much would all this new health care spending cost taxpayers?

According to the Congressional Budget Office, the bill’s health care provisions would cost taxpayers $553.2 billion.

How many more Americans would obtain health insurance coverage overall because of this spending?

About 3.9 million people, according to CBO.

About 7.6 million would gain coverage, but another 3.7 million would lose coverage for a net increase in insurance coverage of 3.9 million.

The losses would be concentrated among privately purchased and workplace plans. The gains would be concentrated in Medicaid and Obamacare plans.

How much is all that spending per person, per year? About $47,000.

Here’s the math:

  1. Divide $553.2 billion by 3.9 million newly insured persons, to get $141,795 per newly insured person.
  2. Divide that $141,795 by three, because the subsidy expansions last for only three years. Result: $47,265 per newly insured person.

Why does the spending only last for three years?

To hide the full cost of the bill.

By law, CBO must assume the bill will be implemented exactly as written, and as written it only provides the money for three years.

Why are the subsidies two to four times as costly as a private health insurance policy?

At least three reasons:

First, government programs are inefficient, compared to the private sector, at the best of times.

Second, the bill wastefully steers billions of taxpayer money to wealthy households and able-bodied working adults who don’t need the help.

Third, the subsidies are structured to be highly inflationary.

Specifically, they would drive up the overall cost of health insurance by giving insurers a strong incentive to drive up the price of their offerings in the Obamacare exchanges.

This would happen because taxpayers would have to automatically cover a fixed percentage of the price, with no upper limit.

There would only be two cost controls: enrollees would have a choice of plans (competition), and, in most cases, enrollees would also have to cover at least part of the cost. But because the subsidies are very generous, these cost controls would be weak in practice.

There’s no way around it. The health care provisions of Build Back Better are bloated and misguided. They can’t be fixed.

They should be scrapped and, instead of a wasteful “government option” approach, lawmakers should give all Americans a health care personal option.

A personal option for health care: greater access to better care at a price you can afford.

Get questions to your answers about the personal option today.