Insurance Subsidies

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How the Affordable Care Act Is Supposed to Pay for Subsidies

 

(Getty Images)

(Getty Images)

By John Ydstie, NPR

The new health care law will provide around $1 trillion in subsidies to low- and middle-income Americans over the next decade to help them pay for health insurance.

Johanna Humbert of Galien, Mich., was pleasantly surprised to discover that she qualifies for an insurance subsidy, since her current plan is being canceled. Humbert makes about $30,000 a year, so she’ll get a subsidy of about $300 a month. The new plan is similar to her current one, but it will cost $250 — about half of what she pays now.

But where will the money come from to pay for subsidies like these?

On his show last Friday, liberal comedian Bill Maher called the Affordable Care Act a “Robin Hood” plan. “It does take from the rich to make better the poor,” he said.

You can certainly make a case for that, says economist Joseph Antos of the American Enterprise Institute. “In a general sense, the rich, of course, subsidize the poor. The rich pay more income taxes,” he says. “So, yes, absolutely, that’s how subsidies are supposed to work.” Continue reading