The name of President Barack Obama’s health care law is, of course, the Affordable Care Act. But a major clash has broken out in Washington regarding what that word “affordable” really means–and billions of dollars in subsidies hang in the balance.
As we’ve noted in the past, Richard Burkhauser of Cornell was the first to spot this problem, an error made during the evaluation process of Obama’s law that artificially diminished the cost of its numerous subsidies.
Essentially the problem arose when the Joint Committee on Taxation informed the Congressional Budget Office that it should “ignore family members when determining whether employees actually pay more than 9.5 percent of their household income on insurance.” From the article:
The instruction was included in a correction of a complex, 150 page March 21 document. The correction read: “ERRATA FOR JCX-18-10 … On page 15, Minimum essential coverage and employer offer of health insurance coverage, in the second sentence of the second paragraph, ‘the type of coverage applicable (e.g., individual or family coverage)’ should be replaced with ‘self-only coverage.’”
So essentially, as Burkhauser’s paper here indicates, the administration faces a difficult choice: either you expand affordability to include the cost of family coverage (thereby exploding the costs of the subsidies by billions of dollars), or you keep it where it is, and far fewer people qualify under the “affordability” designation than Congress had expected.
Now, the Washington Post reports, the Treasury Department has released a draft rule to resolve this issue – and it leans toward the original, more restrictive definition. Here’s the story:
A proposed Treasury Department rule says workers and their families cannot qualify for those subsidies unless their employer’s plan is unaffordable because it exceeds 9.5 percent of their household income. Consumer advocates oppose the rule because it bases affordability on how much employees would pay to cover themselves, not on the cost of covering their entire family. As a result, they say, many workers will be unable to afford family coverage, yet their spouses and children will be ineligible to get help to buy insurance. An estimated 3.9 million dependents would be affected, according to one estimate.
“The proposed rule excludes people Congress intended to cover,” said Bruce Lesley, president of First Focus Campaign for Children, which wrote a letter to Treasury signed by more than100 advocacy groups, including the American Academy of Family Physicians, the Children’s Defense Fund, the March of Dimes and the National Council of La Raza.
The letter calls on the president and congressional leaders to take “administrative action or legislation” to clarify what Congress intended. Treasury officials are reviewing the comment letters as they draft final rules expected to be released in the upcoming weeks.
The timing could hardly be worse for the administration, given the run of bad luck they’ve had of late with the ever-rising pricetag associated with Obama’s law, even if their friends in the media would prefer to keep it off of page one.
While it remains to be seen whether the administration heeds the outrage among these advocacy groups, the cost of keeping its promises may turn out to be just too high. Which should make them wonder whether it was the right promise to make in the first place.
