House Ways and Means Chairman Dave Camp is asking about health insurance tax subsidy cost figures in the Obama administration’s fiscal year 2013 budget proposal.
The proposal seems to indicate that the cost of the subsidies will be about $111 billion, or 30%, higher than originally expected, Camp, R-Mich., writes in a letter addressed to U.S. Treasury Secretary Timothy Geithner.
The Premium Assistance Tax Credit line near the bottom of page 315 of a 2013 budget table shows, for example, that the government would spend $21.5 billion on the tax credit in 2014 and $478 billion from fiscal year 2014 through fiscal year 2021.
Near the top of page 322 in the comparable 2012 budget table, the administration said the government would spend $15.6 billion on the tax credit in fiscal year 2014 and $367 billion from fiscal year 2014 through fiscal year 2021.
“This staggering increase in health insurance exchange subsidy spending cannot be explained by legislative changes or new economic assumptions, and therefore must reflect substantial changes in underlying assumptions regarding the program’s utilization and costs,” Camp says.
Fiscal year 2013 will start Oct. 1.
Camp says U.S. Health and Human Services Secretary Kathleen Sebelius indicated Tuesday that she was unfamiliar with the subsidy figures when she testified at a Ways and Means hearing on the U.S. Department of Health and Human Services (HHS) fiscal year 2013 budget request.
The Internal Revenue Service (IRS), an arm of the Treasury Department, would administer the subsidy, Camp says.
Camp asks Geithner to provide an accounting for the subsidy spending change and an analysis of the assumptions behind the increase.
The tax subsidy provision is part of the Patient Protection and Affordable Care Act of 2010 (PPACA).
If PPACA takes effect as written and works as drafters expect, a new health insurance exchange distribution system, or Web-based health insurance supermarket, will start selling standardized, pre-screened health insurance packages for small groups starting Jan. 1, 2014.
The IRS is supposed to help individuals with incomes under 400% of the federal poverty level pay for individual coverage by making subsidies available in the form of refundable tax credits.