Lawmakers have learned that ObamaCare could end up overpaying insurance subsidies by as much as $152 billion. That’s more than the deficit cut Washington once promised ObamaCare would produce.
Inquiring minds want to know if the Government can get their money back when subsidies are reconciled on their tax returns. Of course, this would only work for subsidies that were in error due to participant’s mistakes is estimating income. For other situations, such as being ineligible for coverage due to “affordable” coverage being available at work, the returnee is likely to continue to “misstate” or remain ignorant.
After all, subsidy payments depend on individuals’ claims about future incomes, family size, immigration status and the availability of “affordable” coverage at work. Obama promised that all this would be instantly verified during the application process, but the administration now admits that at least 25% of sign-ups could be either ineligible for any subsidies or are getting the wrong amount.
And, since the law restricts the IRS’ ability to “claw back” any overpayments — and caps how much must be repaid — many of those who get too-big subsidies are likely to simply ignore the government’s request to have that money back.
Holtz-Eakin calculates that if the same 21% error rate applies to ObamaCare subsidies, it will mean $152 billion in overpayments in a decade. In other words, these overpayments could easily swamp the $120 billion budget savings the CBO said ObamaCare would produce.
The CBO has given up estimating the budget consequence of the law since it changes on nearly a daily basis.
But the administration has already made vast changes to the law. It delayed the employer mandate, neutered much of the individual mandate, put off cuts to Medicare Advantage, promised bigger insurance industry bailouts and so on. All of these had the effect of raising the net cost of ObamaCare.
President Obama has made so many ad hoc changes, in fact, that the CBO finally gave up even pretending it can predict how ObamaCare will affect the deficit.
Amateur hour. There’s something about Keep It Simple Stupid that politicians just don’t understand. Also, the alluring vision of “big data” and the power of computing allows people to create these grandiose and very complex ideas that are doomed to fail.