Hidden Spending

Obamacare has raised Americans’ health-insurance premiums, sapped their liberty, caused millions to lose their doctors, and funneled huge amounts of power and money to Washington. It has become a vehicle for executive lawlessness​ - a federal judge recently ruled the Obama administration has been violating Article I of the Constitution by giving insurers monies that Congress never appropriated. But that's not the only chicanery involving funds paid to insurers. Largely unnoticed, the architects of Obamacare have invented a new way to hide federal spending.

In addition to dumping people into Medicaid, Obamacare functions by having the federal government send billions of dollars in direct payments to insurance companies. Taxpayers pay this money to the federal government, and the government then pays it to insurers. By any normal definition of the terms, the money coming in constitutes revenues, and the money going out constitutes outlays.

Under Obamacare, however, the government is obscuring large sums of federal spending by labeling these direct subsidies to insurance companies "tax credits." Not only is the government hiding billions of dollars in spending, it is counting these hidden expenditures as tax cuts.

The strange thing about these so-called tax cuts is that when money is funneled to an insurance company, it doesn't actually lower anyone's taxes. Take a family whose income-tax burden is $5,000. If that family is eligible for a $5,000 Obamacare subsidy and picks an insurance policy with a $5,000 annual premium, the government sends $5,000 directly to the insurer, and the family pays the insurer nothing. That family, however, will still owe $5,000 in income taxes. If they don't have any income taxes deducted from their paychecks throughout the year, they will have to pay $5,000 in taxes on April 15​ - the same amount they would have to pay if Obamacare didn't exist. Yet the government says Obamacare has somehow given this family a $5,000 tax cut. Meanwhile, the $5,000 that the government paid to the insurer isn't counted as government spending​ - it is counted as money that the government, theoretically, never received.

That's how Obamacare is hiding some $104 billion in federal spending over a decade (the portion of Obamacare's direct payments to insurers that the Congressional Budget Office counts as tax cuts).