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Last week, I filed a blog post about the looming Supreme Court decision on the case King v. Burwell. The case will determine the legality of billions of dollars worth of subsidies handed out to customers on the federal health insurance exchange under the Affordable Care Act (ACA). In short, I argued that we shouldn’t weep if the subsidies are struck down. By their very nature, subsidies put upward pressure on prices because they essentially guarantee a level of revenue for the subsidized industry. The higher education system was the example I offered, where we’ve seen tuition prices rise faster than any other sector of the economy, even outpacing healthcare inflation. Ridding the insurance market of subsidies would therefore actually be a step forward towards “affordable” care in the long term, despite some undeniable short-term disruptions that would result.
Meanwhile, liberal supporters of the ACA, better known as ObamaCare, continue to predict doom and gloom if the subsidies suddenly evaporate. Some have even gone so far as to claim that conservative opponents of President Obama’s signature law should be hoping that the Supreme Court upholds the subsidies. They make these claims because of the threat from the short-term disruptions. People may not be able to afford the health insurance they had previously purchased and, as a result, all sorts of bad things will happen. “Thousands of people may die,” some have exclaimed.
Well then, clearly these subsidies are very, very important. So important, in fact, that the government completely failed to track whether or not nearly $3 billion worth of them actually made it to the right people…
That’s right. The government apparently has no idea who got what amount of the nearly $3 billion handed out through these subsidies.
According to an internal government investigation conducted by the Office of the Inspector General at the Department of Health and Human Services (HHS), the Centers for Medicare and Medicaid Services (CMS) within HHS was unable to ensure that issued subsidies went to the correct people in the correct amounts.
The report stated, “CMS’s internal controls did not effectively ensure the accuracy of nearly $2.8 billion in aggregate financial assistance payments made to insurance companies under the Affordable Care Act during the first four months that these payments were made.” Further, the government lacked any way to “ensure that financial assistance payments were made on behalf of confirmed enrollees and in the correct amounts.”
In short, it is very possible that many people did not receive their subsidies at all while some people who were ineligible for subsidies received them. At this point, anything is possible given the notorious general track record of government accounting. For example, a recent Government Accountability Office report found that the federal government made an absolutely mind-boggling $125 billion (with a b) in improper payments across dozens of programs in 2014 alone.
Aside from the clear economic case against subsidizing expensive insurance coverage, we’re being lead to believe that the subsidies at risk in the King v. Burwell case are literally a matter of life and death. Yet given the fast and loose accounting of these ObamaCare subsidies by the Administration, if the Justices decide to strike down these illegal subsidies they should do so with clear conscience and without regard to the usual liberal fear-mongering.