Obamacare's Subsidies to Cost Taxpayers an Extra $10 Billion in 2017

As premiums rise sharply, the public covers much of the cost.



Earlier this year, the Obama administration published a report saying that a typical health insurance plan bought through Obamacare's exchanges would rise in price by about 22 percent this coming year. Administration officials responded by downplaying concerns about rising premiums, noting that most consumers would be largely insulated from those increases by the law's subsidies, which increase with the price of insurance.

The increased cost of insurance under the law, in other words, would be born by consumers rather than taxpayers. We now have a price tag showing exactly how much those higher premiums will cost the public. The government will spend nearly $10 billion more this year, rising from about $32.8 billion in 2016 to about $42.6 billion in 2017, a 28 percent hike. The average monthly subsidy will rise from $291 per month to $367.

Those numbers come from a new report by the nonpartisan Center for Health and Economy, which used government data in combination with the organization's own subsidy estimates in order to produce the findings.

Thanks to far lower than expected enrollment, the total cost of Obamacare has come in lower than expected. But that cuts both ways, because the lower than expected enrollment is part of what's driving premium hikes. And what we see with this year's premium hikes is that the price tag of subsidizing those people who are signed up is rising rapidly—at significant public cost. Those people are only insulated from premium hikes because taxpayers are footing the bill.

And not everyone, of course, is insulated. A little more than 20 percent of enrollees in Obamacare's exchanges don't get any sort of subsidy at all, meaning they bear the full cost of any premium increases.

The report comes as Republicans have vowed to make repealing Obamacare a top priority after Donald Trump takes the White House in January. And it hints at some of the potential difficulties of repeal: Republicans in Congress have made it clear they favor a "repeal and delay" strategy in which Obamacare repeal legislation is signed quickly, but leaves the law's major components on the books for a number of years. That could accelerate the unwinding of the health insurance marketplaces, and perhaps lead to even higher premiums in the short term for those who maintain coverage under the law.

In the meantime, though, it also shows the sorts of struggles the law is having with rising costs to both taxpayers and consumers, and adds to the evidence that Obamacare in its current form cannot maintain a stable equilibrium.

NEXT: Police Keep Pulling People Over In 'Cute' Christmas-Themed Publicity Stunts

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I don’t expect much from the Repubs but can they at least delete the first “A” from the ACA?

    1. I’ve been assured by supporters of the ACA that it did not make my health insurance premiums go up, because the act explicitly makes health care “affordable.” No shit. People have said that to me.

      1. In that case I withdraw my request. I just needed a reason to believe.

      2. I have a family of 4. I’d like my $2,500 x 7 = $17,500 in savings. I should bill DSHS for the increased premiums as well, since I was supposed to have no increases and savings. I’d settle for the $17,500.

        1. They would be happy to do that as long as you consented to paying an addition $25,000 in taxes.

      3. Not only did the premiums go up, in some cases nearly 200% in four years. Healthcare itself has a new shiny premium price.

    2. It’s meant in the same sense that single payer is “free” healthcare.

      It doesn’t refer to the costs incurred by the host.

  2. So where is the money going? Physicians claim they aren’t getting paid better. Insurance companies claim they are losing money. The patients claim they are paying more and getting less. Are they literally burning tax dollars?

      1. “If you love America, you throw money in its hole!”

        That was awesome. Thank you!

    1. Nah, just inflating the supply of 1’s & 0’s.

    2. gruber & jug ears forgot to mention the vig was going to be extremely steep… those exchanges and HHS are hoovering the shit out of the healthcare industrial complex.

    3. We know where it’s going. It’s subsidizing insurance for the poor which was the goal all along. It’s a wealth redistribution ponzi scheme that fucks the middle class the most. So, we see the poor going to the doctor more and everyone else less.

    4. Hospital margins have increased significantly under the ACA as they are seeing more paying patients.

      1. Let’s check that one out:

        Investor confidence in Community Health Systems plummeted Thursday as losses in the third quarter previewed by the company after the close of markets Wednesday caused its stock to fall nearly 50%.


        A Modern Healthcare analysis of earnings reports for about 200 hospitals and health systems, both not-for-profit and investor-owned, found that hospital margins narrowed significantly last year despite an improving economy.

        Despite a buoyant stock market streak by some publicly traded chains, healthcare providers as a group continue to operate with slim and shrinking margins. Overall, a smaller percentage of healthcare providers saw positive operating margins last year compared with the previous two years.


        The second one is a couple of years old, but reality for hospitals hasn’t changed much. The first one is this year, and refers to the largest hospital company in the country, which is in the process of selling off its hospitals.

        Yeah, hospitals are fat and happy under OCare.

      2. Any increase in paying patients, by the way, is attributable entirely to Medicaid, which pays shit and which hospitals lose money on.

  3. Bending that cost curve . . . .

    1. They just didn’t specify which way it would bend.

  4. I laughed and laughed when I got a renew ObamaCare notice. I went back to my catastrophic health insurance plan two months ago and HSA plan and will continue in 2017 to not pay any penalty. Luckily, 2017 there wont be a penalty because ObummerCare will be repealed.

  5. What’s incredible is the net pickup in actually insured (not Medicaid) people since OCare passed is around 2mm and change. Which is less than the growth in the workforce.

    So just what the fuck are we paying for here?

    1. Chocolate Nixon’s legacy. What did you think this was about?

    2. So just what the fuck are we paying for here?

      The schadenfreudier part is that the GOP (or at least the cuck parts anyway) are supposedly powerless to do anything.

      It’s patently obvious that the absolute shittiest of coverage, not care, has been extorted from the top 90% of the electorate and handed to the least fortunate 1-10% at 5-10X the cost. And Republicans are going to have to answer for it if they just repeal it outright.

      God I hope Trump does push the button.

    3. Medicaid for everyone. There’s a reason most states had strict limits on eligibility.

      They took an idea that failed in the laboratory and made it mandatory anyway.

  6. Obamacare is about to be repealed and “replaced.” Gosh, wouldn’t it be nice if there were some sort of libertarian publication which could sketch out a nice, free-market-oriented replacement that would pass muster with Trump, the GOP Congress, and address at least some of the fears of the Democrats?

    1. No, fuck ‘replaced’, ram outright repeal from a libertarian perspective as hard and fast as possible. Anything else is an Overton window shifting of libertarianism.

      If we have to soften the message;

      Dear Poor People,

      Neither libertarians nor the GOP are going to to take $750 from rich people to give you $500 worth of *coverage* on $200 worth of care. The GOP might take $500 from the rich or insurance providers and hand you $400 in vouchers or possibly even cash for whatever amount of care that may get you. We’d prefer you earn whatever you like and negotiate your price as you see fit.


  7. Why ANYONE is buying this load of carp I cannot imagine. WHERE is the spine of the PEOPLE to nullify bad law by simply not participating? REFUSE this rotten business entirely. Fix your payroll deductions so you don’t get a refund.

    The quotes for one year I got run several times my entire medical care costs for forty years…. I’ve paid it all out of pocket. And that does not account for the HUGE deductible then the co-pays once the “insurance” does kick in. The deductible is several times what I’ve spent in that whole 40 years… so why should I buy “insurance”? ANd, of course, I do not qualify for a subsidy.

    They’re moving toward government run/owned medical care…. fascism, in reality. Government control of private means of production.

    Just say NO THANKS. And if our “republican” party leaders vote in anything but full repeal, come next election we’ll make sure we “repeal” everyone who voted for that. Right?

  8. Looking into my exchange based insurance this year, I’m looking at a projected $35k in healthcare costs for a healthy family of 5. And all of our doctors and healthcare facilities, save one, have dropped every plan except the most expensive.

    So, thanks for that Nancy and Barak. I’m really happy that you decided that single-payer was so important that it was OK to design a system that would implode all over those of us who work in the “don’t get your insurance at work” sector of the economy.

    Or I could go with a private plan, not on the exchange. Deductibles seem to be up around $50k this time around. Per person. With a few grand for a premium every month. So, yay for that, I guess. All those mandates on what has to be covered to avoid tax penalties are so very awesome!

    Holy crap, people. The average family income is less than $50k. With rates this high it would certainly make sense to self-insure for everything except catastrophic emergencies and buy insurance just for that. But you can’t do that, because government says so. So thanks again, nanny Pelosi. I really appreciate you guys siphoning off 40% of my income and then making sure that I spend enough on healthcare to feed 1,000 African families.

  9. I wonder if reason has ever mentioned that the fossil fuel industry, that is one of the most profitable industries in the world, gets 10 billion in taxpayer funded subsidies annually. I would be willing to bet they never have mentioned that one considering the Koch Brotehrs are one of Reasons biggest funders.

Please to post comments

Comments are closed.