The last several months have been rather uncertain for Americans. Inflation and shaky consumer confidence conflict with reports of low unemployment. To put it simply, we don’t really know how well the US economy will fare in the short-term.
The extensions of the ARP subsidies by the Inflation Reduction Act may be necessary to deliver financial aid to Americans who depend on the subsidies to afford health insurance.
However, if the bill becomes law and the subsidies are extended through 2025, what will happen then?
The use of these subsidies indicates that a great deal of Americans need help affording health insurance. It’s not like small businesses can be expected to give coverage to employees like their larger counterparts. Many of these organizations would buckle from the weight of paying for employers’ health plans if the employer mandate were expanded to all businesses.
There may not be the same inflationary pressures on the average American household, but the cost of healthcare is probably going to keep on increasing. A Penn Wharton budget estimate
considered a scenario that the subsidy expansions would be permanent.
Even with such subsidy expansions made permanent, the predicted 10-year reduction in the federal budget goes from $248 to $89 billion dollars. The net savings are still significant, and it may be necessary to extend the subsidies beyond 2025. However, that is dozens of billions of dollars that could otherwise go to investment in technology, infrastructure, education, and other areas.
Aid is necessary right now to ensure Americans have an opportunity to get health coverage. However at the same time, we must aggressively take in the industry to identify where and why costs continue to balloon. Only after addressing the root cause of rising coverage costs can we unleash the true power of the billions poured into mediocre health coverage.