Cato Institute’s Michael Tanner explains the pitfalls of government dependency and why—when the welfare state becomes ever more unaffordable—it is bad for taxpayers and economic growth. As Margaret Thatcher reportedly said, “Eventually you run out of other people’s money.”
Counting government employees, contractors and recipients of government programs, more than half of Americans receive at least half of their income from the government. And now more Americans are being lassoed into a system that makes it harder for them not to become dependent on government largesse. Read here from Michael Tanner why Obamacare will make this worse.
When critics point out that the policies available on the exchanges are often more expensive than many policies sold before Obamacare, ACA advocates point to subsidies that reduce what many enrollees actually pay. In fact, according to the Center for Medicare and Medicaid Services and outside organizations such as the Kaiser Family Foundation, somewhere in the range of 80 percent, and as many as 83 percent, of those enrolling received a subsidy to help pay for their insurance. That could amount to some 5 to 5.5 million people, depending on how many of those who selected plans actually pay premiums.
And it’s not as though those subsidies are going only to the poor, who otherwise could not afford insurance. Although more generous to those earning 250 percent of the poverty line ($58,875 for a family of four), some level of subsidy is available up to 400 percent of poverty ($94,200 for a family of four). In fact, taking into account various income disregards, some families with even higher incomes could receive a subsidy. The Congressional Budget Office estimates that as many as 700,000 people with incomes more than three times the poverty level will receive a subsidy next year.
Subsidies, of course, do not actually reduce the cost of those insurance plans, but simply shift part of that cost from the purchaser to taxpayers. Moreover, since the Rand Corporation estimates that it’s possible as few as 858,000 enrollees were previously uninsured, millions of Americans who were paying for their own insurance have now moved onto the government dole. While it would generally be unfair to blame people for taking advantage of what is being offered to them, especially when Obamacare may have forced them out of their previous policies involuntarily, it doesn’t change the reality on the ground. The number of Americans dependent on government transfers will increase.