Ronald Reagan once quipped that “nothing lasts longer than a temporary government program.”
He could have been talking about the effort to extend — for a second time — former President Joe Biden’s Affordable Care Act-enhanced tax credits, a set of extremely generous federal health insurance subsidies intended to help Americans get through the COVID-19 crisis.
That crisis ended two years ago. Biden’s extra help, enacted by a Democratic-majority Congress in 2021 and extended in 2022, is scheduled to expire at the end of this year. Yet Democrats and a coalition of health insurance companies are now demanding it be made permanent.
It’s a bad idea. Like other pandemic measures, it’s time for these temporary handouts to end.
Biden’s expansions greatly increased the generosity and availability of the existing Affordable Care Act tax credit for people who purchase their health insurance through an online government marketplace. The Biden tax credits make health insurance 100 percent free of charge for everyone with an income below 150 percent of the federal poverty line. Remarkably, they also eliminate the program’s income cap, so that now, sliding-scale subsidies are available to everyone above the poverty line as well — even millionaires.
And by the way, all that extra money goes directly to health insurance companies, who obviously don’t need the money.
Perhaps such lavish help was needed during the endless COVID-19 lockdowns, when unemployment was rising. But five years later, the case for another extension is untenable. The pandemic is over and people are back to work.
That’s not stopping Democrats and the health insurance lobby from claiming the world will end without another extension. They are running millions of dollars’ worth of political ads, claiming hard-working families will have to pay significantly more out of pocket for their health insurance next year or could even lose coverage altogether.
It’s a huge exaggeration.
Yes, the federal subsidies will indeed shrink back to their pre-COVID levels. But they will still be very generous. No one will have to pay more than 9.78 percent of their income for health insurance, and most will pay less. The poorest will pay only 2 percent.
And if some people do leave the rolls, there are other generous subsidies available, including Medicaid and workplace coverage, which are tax-exempt.
Biden’s tax credits caused total enrollment in the Affordable Care Act premium tax credit program to more than double, from 11.4 million people in 2020 to 24.3 million in 2025. But it turns out at least half the enrolled population, 12 million people, are “phantom” enrollees who never saw a doctor even once in 2024. Many of them are not even aware they’re on the rolls. Most probably have other health insurance.
How could that happen? Many may have been signed up for Biden’s tax credits without their knowledge by unscrupulous insurance brokers looking to make a quick buck. Fraud across the program is rampant. Indeed, a Florida health insurance broker in April pleaded guilty in a $133 million scheme to submit fraudulent customer applications for fully-subsidized Affordable Care Act plans.
So insurance companies are receiving tens of billions of tax dollars to “cover” millions of supposed enrollees who, as a practical matter, don’t exist.
Another stunning fact: 6.4 million people are on the rolls unlawfully. Research by the Paragon Health Institute finds that in 29 states, there are more people signed up for free health insurance than actually exist and are eligible in the state. In Florida, the most egregious example, it is estimated that five times the eligible population is signed up. In second-place Texas, it is calculated to be twice the eligible population.
Extending the Affordable Care Act enhanced tax credits would perpetuate an unconscionable level of fraud and waste — and cost taxpayers nearly $40 billion a year.
Republicans face a choice. Should they give in to the insurance lobby’s drumbeat for more taxpayer subsidies? Or should they reform America’s health care system to make it better for everyone?
The choice is easy.
A decade of ObamaCare-induced premium inflation has squeezed the middle class. In place of Biden’s inflationary Covid credits, why not make every dollar we spend on our health care tax-free? As President Trump might say, “No tax on health care!”
Republicans took a great first step in that direction in their recently enacted working family tax cuts bill, which expanded access to tax-advantaged Health Savings Accounts to an additional 7 million Americans. But even with that change, only about 20 percent of Americans are eligible for a Health Savings Accounts. Why not go further and make them available to all Americans?
And let’s stop the insurance-company rip-offs like surprise bills and outrageously high claim-denial rates, which have grown under ObamaCare, too often denying access to needed care.
Temporary means temporary. The pandemic is over. It’s time to let the Biden tax credits expire — and make health care affordable again for everyone.
Dean Clancy is senior health policy fellow at Americans for Prosperity.
