Now that the bill has passed, and experts have had an opportunity to analyze the law, it is becoming clear that Obamacare will be more expensive than advertised — adding to a deficit already crippling the economy.
So far, the main culprit is the law’s expensive health insurance subsidies, available to some people who lack employer-sponsored health insurance. “The massive federal subsidies are money on the table” Douglas Holtz-Eakin, former Congressional Budget Office director, wrote, “inviting a vast reworking of compensation packages, insurance coverage and labor market relations.”
In other words, when government offers a subsidy, it invites people to change their behavior and take advantage of it — even if this wasn’t the intent.
Beginning in 2014, tens of millions of employees will be eligible for these new subsidies. Many already have access to health insurance through their employers but are likely to find it more advantageous if this insurance is dropped, and they can instead have taxpayer health care subsidies and slightly higher wages.
Holtz-Eakin has calculated that previous projections may have underestimated Obamacare’s 10-year cost by roughly $1 trillion.