The cost of Obamacare’s tax credits are estimated to hit over $32 billion in 2016, according to a top health policy firm.
The Kaiser Family Foundation projects that through the end of 2016, Obamacare exchange customers will receive $32.8 billion in tax breaks in order to cut the cost of their premiums, based on the number of customers who purchased health insurance as of March 31, 2016.
The overwhelming majority of Americans who buy health coverage on the health law’s exchanges receive a subsidy, which comes in the form of a tax credit. The federal government pays insurers in advance based on customers’ estimate of what they’ll earn. As a result, Obamacare participants have reported in past years that they ended up owing more than expected at tax time because their income projections weren’t exact.
With such a substantial amount of money in question, the subsidies promise to be a sensitive aspect of Republicans’ plan to repeal the health care law. Both the Senate and the House have focused on Obamacare repeal as the first order of business under the incoming Trump administration. Wyoming Sen. John Barrasso devoted the GOP’s weekly address to the health care law Saturday, pledging to revoke several aspects of the law, including more than 20 new taxes and the mandate that all Americans must buy health coverage. (RELATED: Here’s How Trump Will Dismantle Obamacare)
Barrasso cited several policies a Republican plan will establish, including making Health Savings Accounts more widely available and enabling Americans to purchase health coverage across state lines. The senator did not touch on how Congress will handle the sizable payout Obamacare customers currently receive but pledged to handle the transition as “smoothly as possible.”
Speaker of the House Paul Ryan introduced a plan to reform health care earlier this year, which would include some financial assistance for health coverage. Unlike Obamacare, Ryan’s plan bases assistance for insurance premiums on age, not income.
Ryan spoke to CBS’ Scott Pelley about the subsidy issue on 60 Minutes Sunday night, charging that the House’s first legislation come January will concern Obamacare. While neither the House nor the incoming Trump administration have indicated when a repeal of the health care law would kick in, Senate Majority Whip John Cornyn said that a gradual transition away from Obamacare could take as long as three years. Ryan did not comment on the exact length, but said Congress will attempt to move quickly.
“What we know is we have to make good on this promise. We have to bring relief as fast as possible to people who are struggling under Obamacare,” Ryan said. “So we believe that we should have support based on age. The sicker and the older you get, the more support you ought to get. If you’re a person that has low income, you probably should have more assistance than a person with high income, for example,” Ryan told Pelley.
While Ryan suggested Sunday that income may be a factor in determining future financial support for health care, in contrast to his proposal, an aide told The Hill Monday that age will be the only consideration in Ryan’s new health care plan.
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