New study shows ObamaCare subsidies potentially five times higher in first year than predicted

posted at 3:13 pm on October 21, 2010 by Ed Morrissey

In passing ObamaCare, Democrats argued that it would provide a net relief to the budget deficit in its balance of new taxes and fees, drastic cuts to Medicare Advantage, and the subsidies it would provide to Americans making $88,000 a year or less.  A new study commissioned by Families USA, a group that supports ObamaCare, shows that the Democrats and the CBO badly miscalculated the level of subsidies provided.  In the first year (2014), 28 million Americans would have eligibility for more than $110 billion, outstripping the Congressional/CBO estimate by almost 600%:

Families USA commissioned The Lewin Group to use its economic models to estimate how many individuals would benefit from the new premium tax credits in 2014 and the value of the dollars going to help pay for insurance (see the Methodology on page 12 for more details). We found that an estimated 28.6 million Americans will be eligible for the tax credits in 2014, and that the total value of the tax credits that year will be $110.1 billion.

The new tax credits will provide much-needed assistance to insured individuals and families who struggle harder each year to pay rising premiums, as well as to uninsured individuals and families who need help purchasing coverage that otherwise would be completely out of reach financially. Most of the families who will be eligible for the tax credits will be employed, many for small businesses, and will have incomes between two and four times poverty (between $44,100 and $88,200 for a family of four based on 2010 poverty guidelines). However, because the size of the tax credits will be determined on a sliding scale based on income, those with the lowest incomes will receive the largest tax credit, which will ensure that the assistance is targeted to those who need it the most.

That conflicts with the final CBO estimate that Barack Obama and Congressional Democrats used to argue for ObamaCare.  In his presentation to Congress, CBO director Douglas Elmendorf predicted a cost of only $20 billion on health-exchange subsidies and associated costs.  The Lewin Group, which conducted the study for Families USA, shows that four times as many people will become eligible for subsidies in 2014 than the CBO predicted in March and that the cost will be 550% higher as a result (page 4 of the linked study):

  • „„ Nationally, approximately 28.6 million Americans will be eligible for these new premium tax credits in 2014 (see Table 1).„
  • „ People in working families—those with annual incomes at or above 200 percent of the federal poverty level ($44,100 for a family of four in 2010)—will constitute nearly twothirds(65.6 percent) of the people who will be eligible for a premium tax credit (seeTable 1a).

Morgen at Verum Serum discovered the wide discrepancy and notes that the study wasn’t intended to argue against ObamaCare:

The Lewin Group study was commissioned by Families USA, a healthcare reform advocacy group based out of Washington D.C. which is closely allied with the White House and leading Democrats in Congress. Then Senator Obama was a keynote speaker at their annual Health Action conference in 2005 and 2007, and House Speaker Nancy Pelosi opened the 2008 event. Other leading Democrats who have participated at Families USA events in recent years include Hillary Clinton, John Kerry, and Ted Kennedy.

The study appears to be the centerpiece of a major media campaign initiated last month by Families USA to promote the benefits of the health reform legislation. A September 14 press release touts the projected $110 billion in federal subsidies as “one of the largest middle-income tax cuts in history”, but makes no mention of the discrepancy with the CBO’s earlier estimate.

Families USA also published state-by-state estimates by the Lewin Group of the number of people eligible to receive these subsidies and the associated costs. Numerous local media outlets around the country have reported on these figures over the past few weeks.

The CBO’s projection that the healthcare reform bill would reduce the deficit by an estimated $143 billion over 10 years was a critical factor in the enactment of the bill. Democrats lost their super-majority in the Senate in January 2010 when Scott Brown was elected in Massachusetts, and ultimately passed the bill in March only through the use of procedural tactics, and without a single Republican vote in the House or Senate.

The claim that the bill will reduce the deficit continues to be a leading selling point for proponents of reform. Just last month Families USA repeated this claim in a press release criticizing opponents of the legislation. But if the latest Lewin Group estimate is correct the initial 10-year cost of the bill will be significantly higher than what was forecast by the CBO, and would begin adding to the federal deficit as early as 2015.

Morgen also contacted Families USA to get an explanation of the difference, and was told that he made an “apples to oranges” comparison.  Why?  This survey, they explained, showed how many people would be eligible, while the CBO predicted how many people would actually take advantage of their eligibility for tax credits.  This is an odd distinction to make, since the entire idea of the subsidies is to encourage uninsured Americans to buy health insurance through both mandates and generous subsidies.  How likely will it be that people will pass on the notion of getting big tax credits to subsidize must-issue health insurance?  And if the success rate in applying mandates, higher taxes, and more government authority to the 270 million Americans who are already insured is only 20-25% in getting the other 30 million insured, how is that at all successful?

The deficit projection given by Democrats was apparently based on 75% failure rates to get people into the system; their advocates are busy touting the massive amounts of subsidies in the program that will tip ObamaCare into a deficit exploder in Year 2.  Either way this goes, it’s a massive failure.


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math is hard.

moonbatkiller on October 21, 2010 at 3:14 PM

Repeal it. Kill it. Drive a stake through its heart.

Then, let’s address the real issues, and let the marketplace and individual citizens make the decisions.

coldwarrior on October 21, 2010 at 3:16 PM

None of this actually matters to Marxists.

The important things was tricking the American people into getting it passed. Period…

Fuzzlenutter on October 21, 2010 at 3:18 PM

These anti-Obama articles strike me as pointless until the GOP decides, within itself, what it’s going to do.

There won’t be any concensus until then.

AnninCA on October 21, 2010 at 3:18 PM

In other words, in case of Obama and the Democrats………

THEY LIE!!!!!!!!!!!

pilamaye on October 21, 2010 at 3:18 PM

I didn’t understand a thing in that article, most likely because I’m operating under a cloud of fear which has dampened my intellect.

Bishop on October 21, 2010 at 3:18 PM

math is hard.

moonbatkiller on October 21, 2010 at 3:14 PM

Count it… commerce clause… derp. /crr6

tetriskid on October 21, 2010 at 3:18 PM

…the Democrats and the CBO badly miscalculated the level of subsidies provided.

Garbage in, garbage out.

There was no bad miscalculation–it was purposefully manipulated data.

INC on October 21, 2010 at 3:19 PM

So Obamacare will cause people’s premiums to skyrocket and will create massive deficits in order to subsidize the uninsured. Good job, Barry.

Doughboy on October 21, 2010 at 3:19 PM

These anti-Obama articles strike me as pointless until the GOP decides, within itself, what it’s going to do.

There won’t be any concensus until then.

AnninCA on October 21, 2010 at 3:18 PM

We will let you know November 3..:)

Dire Straits on October 21, 2010 at 3:20 PM

Cue up Captain Renault to express my shock at this.

teke184 on October 21, 2010 at 3:22 PM

thniking is hard…

PatriotRider on October 21, 2010 at 3:23 PM

/s

PatriotRider on October 21, 2010 at 3:24 PM

REPEAL IT!

jawkneemusic on October 21, 2010 at 3:25 PM

WTF-WTH…………………….

he lied again!!!!!!!!!!!!!!!!

canopfor on October 21, 2010 at 3:25 PM

I think they knew this going in. It’s just another avenue to take, to single payer.

capejasmine on October 21, 2010 at 3:26 PM

math is hard.

moonbatkiller on October 21, 2010 at 3:14 PM

thniking is hard…

PatriotRider on October 21, 2010 at 3:23 PM

BS is far easier than either math or thinking, and the liberal world is composed entirely of BS.

ZenDraken on October 21, 2010 at 3:26 PM

Obamacare subsidies 5X higher than predicted…

predicted by whom?

Critics of Obamacare reasoned against it on that very premise. It is financially insupportable. Even WITH 5X higher subsidies, it will require another 5X and 10X higher subsidies. The nature of the federal bureaucracy beast.

maverick muse on October 21, 2010 at 3:26 PM

A September 14 press release touts the projected $110 billion in federal subsidies as “one of the largest middle-income tax cuts in history”

It is so annoying how people (especially Leftists, it seems) interchange the terms “tax cut” and “tax credit.” They are not the same and it’s imperative that every American understand the differences.

Just read that press release. The organization uses the terms interchangeably. Are they being deceptive, or what?

visions on October 21, 2010 at 3:26 PM

Fool me once…….

O.T.P. ( One Term President ) by WOLVERINES!

http://www.youtube.com/watch?v=MddREczVeL4

canopfor on October 21, 2010 at 3:27 PM

AnninCA on October 21, 2010 at 3:18 PM

Don’t blame Republicans for this “anti Obama” article. The Democrats did this, from beginning to end, and now , inadvertently, they’re being called to the mat for their lies!!!

What Republicans plan to do, all depends on the outcome of the elections, and has no relevance to this specific issue.

capejasmine on October 21, 2010 at 3:28 PM

Why should they care? It’s not like it’s their money being wasted. Or are they too stupid/liberal to know or care?

AubieJon on October 21, 2010 at 3:28 PM

math is hard.
moonbatkiller on October 21, 2010 at 3:14 PM

Count it… commerce clause… derp. /crr6
tetriskid on October 21, 2010 at 3:18 PM

Unexpected?

Chip on October 21, 2010 at 3:29 PM

Ya don’t say…

Really, why is this suprising? How could the CBO have made any predictions anyway? As Nancy Pelosi said: “We have to sign the health care reform bill to find out what’s in it!”

Skywise on October 21, 2010 at 3:29 PM

So the subsidies will be $110 billion in 2014, and we can assume they will increase from then until 2020, but even if they remained constant, that’s $770 billion by 2014, instead of $20 billion per year ($140 billion total) projected by the CBO.

The difference is $630 billion in “unexpected” costs, which must be added to the deficit, so instead of a deficit reduction of -$143 billion, we end up with a deficit INCREASE of $487 billion, IN ADDITION to reduction in Medicare funding.

Pelosi: Vote for the bill to find out what’s in it.

Surprise! Isn’t this wonderful?

Steve Z on October 21, 2010 at 3:31 PM

What a big boondoggle failure pushed by failed people who have utterly no concept of what the hell they are doing. Outside of not being economists, they are neither doctors, nor administrators, nor accurate prognosticators, nor skilled in the arts of planning medical services for individuals, nor populations of people–despite these failings, they’re a group of excellent leaders, let me tell you that right now…/

ted c on October 21, 2010 at 3:31 PM

Defund and repeal. Period.

kingsjester on October 21, 2010 at 3:31 PM

Look what else will cost more…..

Medical Device Makers: Health Care Law Will Cost Jobs

http://www.manufacturing.net/article.aspx?id=260480
==========================================================

COME ON ICEBERG………..

canopfor on October 21, 2010 at 3:33 PM

How can anyone be surprised that it was going to cost more than said

ConservativePartyNow on October 21, 2010 at 3:34 PM

Makes NO diff…people know he is a LIAR…it is a fraud. NOT going to change that…

winston on October 21, 2010 at 3:34 PM

A September 14 press release touts the projected $110 billion in federal subsidies as “one of the largest middle-income tax cuts in history”

It is so annoying how people (especially Leftists, it seems) interchange the terms “tax cut” and “tax credit.” They are not the same and it’s imperative that every American understand the differences.
Just read that press release. The organization uses the terms interchangeably. Are they being deceptive, or what?
visions on October 21, 2010 at 3:26 PM

Don’t ask trick questions :-)

Of course they were being deceptive and lying – it’s what Leftists do.
It’s the only way they can sell their Marxist agenda.

If people knew that Obamacare and the rest of it would run this country over a cliff, no one would go for it – except maybe the left for some inexplicable reason.

Chip on October 21, 2010 at 3:35 PM

I predict lots of people all of a sudden making $88K a year that were once making $120K a year. Funny how those W2s and 1099s get lost in the mail huh?

angryed on October 21, 2010 at 3:36 PM

Defund and repeal. Period.

kingsjester on October 21, 2010 at 3:31 PM

kingsjester: And imprisonment!!:)

canopfor on October 21, 2010 at 3:36 PM

Wait a minute,can’t this be off set,by taxing,
and denying heathcare in the other 7 States,
the 57 States thingy!!(snark).

canopfor on October 21, 2010 at 3:38 PM

Steve Z on October 21, 2010 at 3:31 PM

I abhor abuse of the elderly, but Andy Griffith needs a good smack upside the head for his ads. He’s literally duping the elderly….and I can’t believe he doesn’t know it.

capejasmine on October 21, 2010 at 3:39 PM

Defund and repeal. Period.

kingsjester on October 21, 2010 at 3:31 PM

kingsjester: Heres a linky,I found while surfing!:)
=====================================================

The Subversion Process Study
Tuesday, October 19, 2010

http://therepublicanmother.blogspot.com/

canopfor on October 21, 2010 at 3:42 PM

Impossible!!!!

ncborn on October 21, 2010 at 3:42 PM

Just another bait and switch – Progressive style – Promise them a free Cadillac then force them to buy a Chevy Volt.

Done That on October 21, 2010 at 3:45 PM

How likely will it be that people will pass on the notion of getting big tax credits to subsidize must-issue health insurance?

Not only that, Ed, but every department would ask for/justify their budgets on eligibility and not participation. Because, well, one number is 5 times bigger than the other.

Weight of Glory on October 21, 2010 at 3:46 PM

Socialism isn’t free?

The Expert Knows
http://theexpertsblog.blogspot.com/

HotAirExpert on October 21, 2010 at 3:49 PM

But.but.but.but some idiot fifth tier law school kids mocked COD for making a valid constitutional point.

Isn’t that what us concerned conservatives should be worried about? And the electorate too, shouldn’t they be keeping their eyes on the real issues?

joeindc44 on October 21, 2010 at 3:49 PM

Well,me thinks,at this rate,in five years,its going
to be 25X,

jus sayin!!!!!!!!!!!

canopfor on October 21, 2010 at 3:49 PM

ObamaCare was DESIGNED to fail. It’s not a bug, it’s a feature.

GarandFan on October 21, 2010 at 3:49 PM

…all according to plan…

ornery_independent on October 21, 2010 at 3:52 PM

a major media campaign initiated last month by Families USA to promote the benefits of the health reform legislation

I’ve seen those Andy Griffith commercials, but I don’t recall him saying that one of the “benefits” of the legislation was that it will bankrupt the nation much more quickly than anticipated. But maybe he’s saving that tidbit for version 2.0 of his commercial.

Everyone involved with shoving this travesty down Americans’ throats should hang their heads in shame — and that includes you, Sheriff Andy.

AZCoyote on October 21, 2010 at 3:52 PM

Oh, if only Narutoboy were here to sort all of this out for us…!

Akzed on October 21, 2010 at 3:55 PM

But this is not consistent with the super duper non-partisan gold+platinum+diamond-jubilee-standard CBO estimates. How can that be?

I guess they didn’t consider one of the cardinal rules of economics: When something of value is made available at little or no cost, there will be a great demand for it.

SlaveDog on October 21, 2010 at 4:01 PM

That isn’t underestimating. That is lying!

sammypants on October 21, 2010 at 4:02 PM

A September 14 press release touts the projected $110 billion in federal subsidies as “one of the largest middle-income tax cuts in history”

Speaking of apples and oranges…

If 75% of eligible people don’t take the credit, it’s not a tax cut because it never affects their taxes. How can it be a “middle-income tax cut” if it doesn’t cut taxes?

So, are we really talking apples and oranges?

Or is it more like “have your cake and eat it too.”

Bottom line, they’re full of baloney (or something more graphic).

IndieDogg on October 21, 2010 at 4:03 PM

Wouldn’t it have been much easier for the bill to say

1. All employers have to offer health coverage.
2. If you don’t have a job, the govt will give you $X per month to buy insurance
3. If you’re self-employed, you get a $X tax credit per family member that can be applied towards buying insurance.

A 3 page bill that would actually do what the proponents claim O-care will do…..insure everyone at a reasonable cost.

angryed on October 21, 2010 at 4:04 PM

re: tax cut vs. tax credit

Americans by and larget don’t understand anything to do with taxation or govt spending. 80% can’t tell you the difference between the deficit and the debt. Even the MSM often interchanges the two.

Lots of people think that if they get a tax refund in April, it means they pay no taxes. Which is why Obama could get away with saying a change in the deductions every paycheck meant a tax cut. People see an extra $20 per paycheck and think they are paying less taxes. Never mind that it’s the final tax liability at the end of the year that matters, now how it’s broken up over pay periods.

Americans just aren’t very smart. And so they don’t understand, which allows charlatans like Obama to lie endlessly.

angryed on October 21, 2010 at 4:09 PM

Red ink: it’s what’s in it.

perfect :)

cmsinaz on October 21, 2010 at 4:28 PM

EPIC boondoggle

own it dear leader….own it

cmsinaz on October 21, 2010 at 4:29 PM

Here’s a piece on Ron Pollack and Families USA. I was there at this propaganda meeting at Kirkwood BAPTIST Church in Kirkwood, MO. I wrote the pastor a note telling him I was shocked he would allow such a left leaning group in his church. No reply. Guess the Baptists have joined the social justice movement.

http://www.24thstate.com/2010/07/families-usa-privately-funded-healthcare-propaganda-benefiting-seiu.html

Follow the money in this group. This group is as credible as the climate change pro-Gore people.

manateespirit on October 21, 2010 at 4:36 PM

None of this actually matters to Marxists.

The important things was tricking the American people into getting it passed. Period…

Fuzzlenutter on October 21, 2010 at 3:18 PM

=========================================================

Did they trick you?Most of the public saw thru the “trick”and nearly all on this site surely did.

docflash on October 21, 2010 at 4:42 PM

Aha! I knew there was some good reason why they’re talking on the Hill about increasing Tricare Prime premiums for military retirees by up to 600%.

J.E. Dyer on October 21, 2010 at 4:45 PM

What a mess. The dems have really done it this time. I predicted there would not be another liberal president for 30 years after Jimmy Carter and I was right.

Barring any cheating like amnesty, I predict it will be another 30 years after Obama too.

The liberals just don’t understand America. They think and think and think, but as a circle of light increases, so does the area of darkness around it. That is why dems are in the dark when it comes to human nature and reality.

saiga on October 21, 2010 at 5:14 PM

Hasn’t the goal always been to create a coward pliers strategy to force the U.S. into government health care? And it’s working too.

As Lenin said more or less: if the government controls health care it controls absolutely.

Dhuka on October 21, 2010 at 5:29 PM

EPIC boondoggle

own it dear leader….own it

cmsinaz on October 21, 2010 at 4:29 PM

cmsinaz:Yes,the fall out continues,and I noticed the
red,hehe,going all out!!:)

canopfor on October 21, 2010 at 5:39 PM

What a mess. The dems have really done it this time. I predicted there would not be another liberal president for 30 years after Jimmy Carter and I was right. Barring any cheating like amnesty, I predict it will be another 30 years after Obama too.

The liberals just don’t understand America. They think and think and think, but as a circle of light increases, so does the area of darkness around it. That is why dems are in the dark when it comes to human nature and reality.

saiga on October 21, 2010 at 5:14 PM

Yep, seems every generation has to learn the painful lesson of progressivism/socialism. Re Iran, we are still dealing with the mess Carter left us, how long will it take us to recover from the Jackass?

slickwillie2001 on October 21, 2010 at 6:18 PM

An estimated 6 out of 10 kids in SCHIP had private insurance coverage but dropped it to get into the heavily subsidized government program which, in some states, costs a whopping 35 dollars a year even if family incomes are in the $40,000 range.

Next up, the whole population drops private insurance, and then wants it back when it learns, the hard way, that coverage is not the same as care.

secant on October 21, 2010 at 6:52 PM

A few months ago I calculated the compound annual growth rate for the first 10 years of the program’s exchange subsidy: 166%.

DrSteve on October 21, 2010 at 9:41 PM