Better Use Of Tax Dollars: Shutting Down the Government or Subsidies for Healthcare Insurance? ~ Barbara J. Cobuzzi and Lynne Smith

The United States government closed down at 12:01AM EST time on October 1st.  This is a simple fact.  It is estimated that every hour the government is “closed” it will cost the American taxpayer 12.5 million dollars. (http://www.nbcnews.com/business/money-nothing-government-shutdown-costs-12-5-million-hour-8C11308802) In one 24 hour day, the cost to taxpayers will be approximately 300 million dollars.  If the government shutdown lasts a month, the cost to all taxpayers increases to 9 billion dollars.  In all fairness, this is only the cost of closing the government; it does not take into consideration the following:

• Washington D.C. will lose about 200 million dollars a day in wages and spending. (http://thinkprogress.org/politics/2013/09/30/2706091/cost-of-shutdown/
• The 800,000 federal employees will no longer be able to pump the 1 billion dollars they earn in wages into the US Economy.  (http://whnt.com/2013/09/30/government-shutdown-possible-economic-impact/
• Reversing the Affordable Care Act would cost the US $109 Billion over 10 years.(http://thehill.com/blogs/floor-action/healthcare/299895-cbo-obamacare-repeal-will-increase-the-deficit ) In other words it would ADD to the deficit.

This suggests the actual losses will be far greater than simply the 12.5 million dollars per hour being used in this explanation by the end of the government shut down.

Through the years the Republicans have always called themselves the party of “fiscal conservatism.” They want “less government” and suggest that this will mean decreasing deficits and less “interference” by the government.  It is a bit confusing then to understand why they would orchestrate a federal government shut down rather than simply allowing the Affordable Care Act to become part of the American fabric.  Confusing you might ask? Certainly it is understandable, that these fiscal conservatives want to save money, you might be thinking.   That is what they say, but the facts don’t support that contention.

The median income for a family in the United States is approximately $50,000.00 per year.  (http://www.today.com/money/we-are-median-living-50-000-year-1B7879451)  This means that about half of the families in America have an income higher than this and half have an income that is lower each year.  Based on the figures projected by the Health and Human Services Department of the federal government, the retail cost of a Silver health insurance family plan through the healthcare exchange could range in cost from $584.00 per month or $7000.00 per year in Tennessee on the low end to $1237.00 per month or $14,484.00 per year in Wyoming on the high end. (http://www.kaiserhealthnews.org/Stories/2013/September/25/Federal-Exchange-Rates-Lower-Than-Expected.aspx)  Obviously, this suggests there is a significant difference in the retail costs of healthcare insurance based on where a person resides.  The Affordable Care Act was designed to insure that regardless of where a family resides, they will be able to get health insurance for the same cost, which in this case would be $284.00 per month for a median income family. The subsidies are based on the Silver policies.  The subsidies are “the great equalizer” in terms of insurance rates.  While the family living in Tennessee would receive about $3600.00 per year in subsidies, the family in Wyoming would get $11,460.00 per year when purchasing the Silver policy.  In other words a family would be responsible for approximately the same premium regardless of where they live.  [NOTE: This is based on average policy pricing.  Since different insurance companies will price their Silver plans differently, the ultimate price after the subsidies will vary a bit, based on age and whether the person is a smoker.]

For simplicity’s sake let’s simply average these two subsidies for the purposes of discussion.  The total of the subsidies paid to the family in Wyoming and Tennessee is equal to approximately $15,000.00, divided by two suggests an average tax incentive of $7500.00 for families who make the median salary of approximately $50,000.00 per year.

Why is this important?  Currently the US government has been shut down, by the Republicans, at the cost of $12,500,000.00 per hour supposedly because the Affordable Care Act is too expensive (even though repealing the ACA will cost $110 Billion) along with several other claims that have proven to be false and will not be reviewed here. However, the cost of the Affordable Care Act to taxpayers is far LESS than shutting down the government.  Consider this:

Using the average tax incentive of $7500.00 per year to a family making $50,000.00 per year, each hour that the government is closed could have paid the tax incentive for 1,667 American families.  40,000 families could receive their subsidies or their health insurance in what it takes for the government to be shut down for a twenty four hour period.  If the government stays closed for one week, that money could have been used to provide 280.000 families as a subsidy. And finally, if the government remains closed down for one month, the money could have been used to provide 1,120,000 families in the US a tax incentive or tax break to help them pay for health insurance.

This analysis does not even take into account the damage caused to the economy from the 800,000 federal employees who will no longer be able to pump their paychecks into the US Economy.  The question is then what is more fiscally conservative in these two scenarios? The answer is simple.   Clearly, it would be a better use of taxpayer dollars to simply allow American families to have these subsidies than shutdown the government which puts a strain on the workers who were furloughed, the economy of the local areas in which the federal employees reside, as well as services to the American public as a whole.  Undoubtedly, there is NO fiscal explanation or data that suggests shutting down the government is a better use of taxpayer dollars than acknowledging the Affordable Care Act as the law of the land that offers tax payers significant tax incentives or tax cuts. The Affordable Care Act was signed into law in 2009, approved by the Supreme Court in 2012, and WILL result in a significant number of American families getting a tax subsidy to pay for their 2014 health insurance and at the same time improve the quality of so many American’s health, lives and financial futures.

About the Authors: By: Barbara J. Cobuzzi, MBA, CPC, CPC-H, CPC-P, CPC-I, CENTC, CPCO and Lynne Smith, MSSW. Barbara is an industrial engineer with an MBA. She worked in the pharmaceutical industry for many years before moving into the healthcare industry where she had a company where she provided top quality coding, compliance and revenue cycle management services for physicians. She has since moved into full time consulting for physicians. Barbara is a nationally known expert known for her education, consulting and expert witness services. Lynne has dedicated her career to helping others. She has experience as a social worker in a rural county, an administrator in a large hospital network and as a College Professor. She uses the skills she developed over the years as an advocate in a variety of areas including her most recent venture serving as a Healthcare Advocate. Together, Lynne and Barbara own the ACA Healthcare Advocates consulting firm and are available to individuals, families and businesses to help them meet the requirements of the Affordable Care Act in order to meet the specific needs of the client while optimizing the fiscal considerations.  Please direct your questions and/or inquiries to askcobuzzi@gmail.com