Marketplace Subsidies: Poll Tax on the Poor, Giveaways for the Rich

When the Biden Administration “ended” the Covid-19 public health emergency in March 2023 for over 20 million poor children and adults on Medicaid through “Medicaid Unwinding,” it had just extended Exchange health insurance subsidies which provided billions of taxpayer dollars to health insurance corporations, for that same pandemic.

Nowhere is the dictum “socialism for the rich and capitalism for the poor” more apparent than in the decision to end continuous enrollment in Medicaid, which protected millions of poor children and adults during the pandemic from being kicked off Medicaid, and to enhance, and then continue, the Exchange health insurance subsidies through the Inflation Reduction Act.

But KFF.org, a nonprofit health policy research, polling, and news organization, is sounding the alarm: “The results of the 2024 elections will likely play a major role in whether the enhanced subsidies are extended beyond 2025.” Meaning, vote for the Democratic candidate, or these subsidies will be cut off.

If the Democrats want our votes, we must stop being satisfied with crumbs and raise our demands for a national, single payer, publicly financed, publicly owned health care system for all.

Who benefits from the subsidies on the Exchanges, also aptly called “The Marketplace”? Yes, people who earn “too much” to qualify for Medicaid (or who live in states which have not expanded Medicaid) but not enough to pay for private health insurance, benefit to some extent—but only in a warped kind of way. Depending on their level of poverty, these individuals and their families might qualify for zero-premium monthly payments with hefty deductibles.

KFF.org has a nifty calculator where you plug in your state, income, and size of family and figure out how much a “silver plan” will cost you. Keep reading the fine print, because even if you have $0 monthly premiums, your out-of-pocket annual costs could be as high as $6,300. This means that you pay $6,300 per year, or 6.3% of your annual income, before the insurance company starts to pay a penny for your care. Clearly, poor people benefit if they don’t get sick.

How much would a family of four, earning about $40,000 per year, pay for this “silver plan” without subsidies from the Exchanges? Over $1,400 per month! Wait! Is the insurance company giving poor people premiums for free?

No, not really. The government, using tax dollars, pays the insurance company $1,400 for the monthly premium (the calculations are a bit more complicated, but this is the general gist of the scam). The government pays the insurance company $17,796 annually to provide the family with a silver plan, plus the family pays the plan $6,300 out-of-pocket, if they need health care that year. The health insurance plan pockets over $24,000 every year before it spends a penny on care. And that’s if the plan doesn’t deny the family care, or make their doctor go through enough prior authorizations to discourage seeking care they’ve paid for.

In 2022, health insurance companies offering plans through the Exchanges made $20 billion. If the subsidies are extended permanently, as KFF suggests, the price tag, according to the Congressional Budget Office, will be closer to $28 billion per year.

So, this election cycle, who is going to be voting for the Democrats? All the insurance company CEOs! They know who signs their checks.

There is an easier, more equitable, much less expensive way to fix this. Eliminate insurance companies and profits from health care altogether. If the Democrats want our votes, we must stop being satisfied with crumbs and raise our demands for a national, single payer, publicly financed, publicly-owned health care system for all. The health of our nation depends on it.