“America’s health system sorely needs the kind of market-oriented reforms that promote choice and competition,” writes health expert Sally Pipes. “Obamacare—and now, Biden’s enhanced subsidies—stand in the way of that goal.”
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A group of Republican lawmakers is trying to preserve one of the worst mistakes of former President Biden’s tenure—the enhanced subsidies for health insurance sold through Obamacare’s exchanges.
The subsidies—which were first enacted on an explicitly temporary basis during the pandemic before being renewed in 2022—are set to expire at the end of this year. Democrats have fiercely resisted this eventuality for years. But now 11 House Republicans have joined them by signing onto legislation that would extend the enhanced subsidies for another 12 months.
It’s unclear whether those 11 will prevail. During a meeting last week, Republicans on the House Ways and Means Committee had a “tense” conversation about whether to extend those subsidies.
These generous subsidies were always a wildly expensive and irresponsible fix for the exorbitant premiums that Obamacare itself brought about. Renewing them yet again would give insurers a multibillion-dollar taxpayer-funded gift—while doing nothing to make insurance more affordable in the long run.
The enhanced subsidies date back to the 2021 American Rescue Plan Act. The measure made Obamacare’s tax credits even more generous and ensured that no American, regardless of what they earned, would have to spend more than 8.5% of their income on an exchange plan. Those earning between 100% and 150% of the federal poverty level became eligible for no-premium coverage.
The subsidies were renewed under the 2022 Inflation Reduction Act. And since then, many Democrats have called for making them permanent—at an estimated cost to taxpayers of $335 billion over 10 years.
All that cash just obscures the dysfunction Obamacare has let loose in our health insurance market.
It was Obamacare’s insurance market regulations, after all, that led average individual premiums to more than double from $244 in 2013 to $558 in 2019. This year, average premiums for an individual plan have reached $590 a month, according to a recent Forbes.com analysis.
This kind of inflation is a direct result of Obamacare’s requirement that insurers sell to all comers regardless of health status or history and that they cap premiums for the old at three times what they charge the young. The law also outlawed more affordable bare-bones coverage with its mandated coverage of ten “essential” health benefits.
Together, these basic features of Obamacare have made it nearly impossible for insurers to offer affordable coverage to most people. The enhanced subsidies simply hide this glaring problem—at outrageous cost to taxpayers.
The massive federal subsidies available to insurers have also opened the door to widespread fraud by those eager to get a cut—regardless of whether they are entitled to it. The Paragon Health Institute projects that nearly 6.4 million people are improperly receiving taxpayer-subsidized coverage through the exchanges. The bill for all that impropriety will exceed $27 billion this year.
Some brokers are facilitating this fraud by signing people up for coverage without their knowledge—and collecting a commission for their effort.
Nearly 12 million enrollees last year had no medical claims. That’s great news for their insurers, who held onto every cent the government gave them to help cover those folks’ premiums. It’s possible—perhaps even likely—that many of those people did not know they had coverage.
America’s health system sorely needs the kind of market-oriented reforms that promote choice and competition, reward innovation, and place downward pressure on prices. That’s the vision that Republicans have rightly championed for decades.
Obamacare—and now, Biden’s enhanced subsidies—stand in the way of that goal.
Allowing this massive government giveaway to expire may prove unpopular with the voters who benefit. But if these subsidies remain in force, insurers will continue to get rich at the expense of ordinary taxpayers—and Obamacare’s dysfunction will continue to reign in the health insurance market.
Democrats might welcome that outcome. Republicans should know better.
Source: https://www.forbes.com/sites/sallypipes/2025/09/15/republicans-must-stand-their-ground-on-enhanced-obamacare-subsidies/
