Acton Institute Powerblog

Don’t Fret About the Premium Increases, You Can Just Pay More in Taxes to Subsidize Yourself

Share this article:
Join the Discussion:

paying-taxesYesterday I was reading an article about Obamacare in the Washington Post. . .

Whether they know about that financial help is a different question, as many have had trouble using to figure out how much insurance would cost under the Affordable Care Act. And the study does not include information on whether those subsides would lead to lower premiums for shoppers buying in the health law’s new exchanges.

“There’s no question that when people get better coverage it is likely to mean that they are going to pay somewhat higher premiums,” Families USA executive director Ron Pollack said. “You don’t get anything for nothing. But if you’re eligible for subsides that are going to significantly reduce your premiums, that could more than make up for an increase in premium costs.”

. . . and then I repeatedly banged my head against the wall until I lost consciousness. Before I came to, I had this weird dream:

Uncle Sam: “Give me a hundred dollars.”

I.M. Citizen: “Why”

Uncle Sam: “I’m going to spend it on some things you need—and some stuff you don’t.”

I.M. Citizen: “I don’t really have a choice do I?”

Uncle Sam: “Not really, no.”

I.M. Citizen (reaches for wallet): “Well, okay, here is a hundred dollars . . . ”

Uncle Sam: “Wait, did you have to pay higher insurance premiums because of Obamacare?”

I.M. Citizen: “Yeah, after my insurance plan was canceled I had to sign up for a more expensive plan and . . . ”

Uncle Sam: “Yeah, yeah, I know the drill. Here, keep five bucks for yourself.”

I.M. Citizen (puts the five back into his wallet)

Uncle Sam: “And what do you say?”

I.M. Citizen: “What do I say about what?

Uncle Sam: “How about ‘Thank you.’ Didn’t your parents teach you any manners?”

I.M. Citizen: “Thank you for what, I just gave you my money.”

Uncle Sam: “I just gave you a subsidy of five dollars.”

I.M. Citizen: “A subsidy? What are you . . . hold on. (Pulls out his iPhone and checks The definition of subsidy is “a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like.”

Uncle Sam: “Exactly. I just gave you direct pecuniary aid.”

I.M. Citizen: “But all you did was let me keep my own money.”

Uncle Sam: “Yes, but I was planning to spend that five dollars.”

I.M. Citizen: “Why don’t you just plan to spend five dollars less than you had planned?”

Uncle Sam: “I don’t understand the question.”

I.M. Citizen: No, I guess you wouldn’t.

Uncle Sam: “Okay, fine we won’t call it a subsidy. How about we call it a “spending increase?”

I.M. Citizen: “So you let me keep five bucks because my spending increased and you say that letting me keep that money increases your spending? Does that mean that the other $100 I have in my wallet has increased government spending by $100 dollars?”

Uncle Sam: “Well, I don’t know much about economics, but since . . . wait a minute, you still have some money left? I don’t remember giving you another subsidy?”

Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).


  • Bill Hickman

    O’care genuinely shifts the cost of health insurance toward richer and healthier people. It doesn’t uniformly tax and then subsidize everyone in a circular fashion as you suggest.

    When conservatives talk about premium increases without mentioning the subsidies, they wrongly imply that O’care will make health insurance feel more expensive for everyone. For many, the net effect of O’care will actually be lower premiums. Conservatives might disagree with the subsidies in principle, but that doesn’t mean they won’t bring real relief to people’s pocketbooks.

  • According to the CBO, Obamacare will cost the American people $1.3 trillion with a “T” over the next decade. I suspect that’s a low ball estimate given the complete incompetence and deception that has characterized the “launch.” So much for “pocketbook” relief, unless you think that subsidies are financed out of thin air.

    It’s already devolving into “Medicaid for the Middle Class”:

    Doctors, who have long experience with Medicaid, are already heading for the exits:

    The “richer” people will, as they do in Canada and the EU, simply pay for private doctors and private hospitals. People aren’t all fools and they have options.

    Obamacare will turn out to be one of the biggest “pocketbook” issues for American voters in decades. Will it make them happy?

    • David

      Private doctors and hospitals are NOT being eliminated.

  • Sticker shock hits health exchange shoppers
    Sweeping differences in health care exchange pricing among states and counties is leading to sticker shock for some ***middle-class*** consumers and others who aren’t eligible for subsidies under the Affordable Care Act. The average prices for the most popular plans are twice as high in the most expensive states as those with the lowest average prices, according to a USA TODAY analysis of data for 34 states using the federal health insurance exchange.

    Older Hill aides shocked by Obamacare prices
    Veteran House Democratic aides are sick over the insurance prices they’ll pay under Obamacare, and they’re scrambling to find a cure. “In a shock to the system, the older staff in my office (folks over 59) have now found out their personal health insurance costs (even with the government contribution) have gone up 3-4 times what they were paying before,” Minh Ta, chief of staff to Rep. Gwen Moore (D-Wis.), wrote to fellow Democratic chiefs of staff in an email message obtained by POLITICO. “Simply unacceptable.”

    [ … ]

    … age is one of the few factors insurers can use to adjust prices under Obamacare — and older people will often pay much more than younger people.

    • Bill Hickman

      John –

      1) The USA Today article seems to support my point – policies will be more comprehensive and more expensive. This will cause premium increases for some, but for some it won’t because of subsidies. That’s why the “sticker shock” narrative is too simple.

      2) The Politico article is talking about a unique case, not the individual market. Some Congressional staff were forced out of the “heavily subsidized Federal Employees Health Benefits program” where they got large subsidies.