How Much of Federal Transfer Payments Are Obamacare Subsidies? More than You Think!

January’s Personal Income and Outlays report from the Commerce Department’s Bureau of Economic Analysis shows how significant Obamacare’s subsidies to households have become. Last month, they accounted for 21 percent of the increase in total government transfer payments to households:

Personal current transfer receipts increased $24.8 billion in January, compared with an increase of $13.8 billion in December. The January estimates of current transfer receipts reflected several special factors…. Other government social benefits to persons was boosted $5.3 billion, primarily reflecting health insurance premium subsidies paid in the form of tax credits to enrollees of the Affordable Care Act exchanges.

The actual figure reported in the data is $5.9 billion (Table 3, Line 28), which I suppose means that $0.6 billion of the January transfer payments to persons were uncategorized.

The $5.3 billion payout in January was a new high-water mark. Obamacare subsidies started in 2014. The previous high was October 2014, when the figure reported in the data was $2.1 billion. Also, the category of “personal current transfer receipts” includes Medicaid and unemployment insurance, of which states pay a significant share.

Considering the Obamacare subsidies solely as a share of federal transfers, my back-of-the-envelope estimate based on this report is that they account for more than one-quarter of the total change in transfer payments in January. For example, the change in Obamacare subsidies in January was almost three times as large as the increase in Medicare payments, which was only $2.0 billion.

These data highlight that the King vs. Burwell lawsuit is a very big deal. The Supreme Court hears oral arguments tomorrow. If the suit succeeds, the administration will be forced to obey the law by stopping subsidies to insurers operating in the majority of states using the federal Obamacare exchange.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

John R. Graham is a former Senior Fellow at the Independent Institute.
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