Alexander Ciccone: Congress should not turn a temporary handout into a permanent burden

Pennsylvania families already face some of the steepest health care costs in the nation, with premiums and deductibles eating up bigger chunks of household budgets every year. The Pennsylvania Insurance Department has warned that premiums are expected to rise by nearly one-fifth in the year ahead, putting even greater pressure on working families.

Instead of confronting the underlying reasons why health care is so expensive, lawmakers often prefer the political expediency of masking rising costs with more handouts. Sadly, Pennsylvania’s own Rep. Brian Fitzpatrick is opting for this very strategy. Rather than promote the tough reforms that would lower healthcare costs for Pennsylvanians, he now wants taxpayers to shovel even more money to the insurance industry.

In Washington, nothing is more permanent than a temporary government program. Case in point: President Biden’s short-term covid-era enhanced subsidies for Obamacare that Congress now wants to extend permanently. For the sake of taxpayers, fiscal responsibility, and sound health care policy, Congress should let these expensive and wasteful covid-era tax credits expire at the end of this year.

First enacted in the American Rescue Plan Act and then extended by the Inflation Reduction Act, these enhanced premium tax credits funnel taxpayer dollars directly to health insurance companies. While Obamacare’s original subsidies were tightly targeted to help lower-income families afford coverage, President Biden’s enhanced premium tax credits flipped that logic on its head and extended government largesse to upper-income households who need it least.

Biden’s covid subsidies effectively scrapped the income cap, so now even high-earning families making six figures — or more than half a million dollars in some cases — can get taxpayer help with their health insurance. Even individuals pulling in over $250,000 qualify. Obamacare was meant to help the poor afford coverage, not hand out benefits to the wealthy.

Instead of allowing these credits to expire as intended, Democrats made their extension a red-line demand in government funding negotiations. Now, Washington has lurched into a government shutdown because Democrats prioritized preserving costly covid-era subsidies over keeping the government open. The public health emergency is long over, and these pandemic credits should have ended with it.

Continuing these credits comes at a huge cost to taxpayers. Extending them permanently would cost nearly $40 billion per year, more than the Department of Justice’s total budget, according to the Congressional Budget Office. With deficits near $2 trillion and interest payments rising fast, the government cannot continue to spend as if the debt doesn’t matter.

Beyond the cost, these expanded subsidies are rife with fraud and abuse. By sending billions to households with little financial need, the program encourages misreporting income and gaming the system. The IRS Inspector General reports a 26% improper payment rate — the highest of any federal health program.

To make matters worse, government data show millions of exchange enrollees never filed a single claim in 2024. Among fully subsidized enrollees, 40% had zero claims. In addition to wasting taxpayer funds, this gargantuan amount of fraud and improper enrollment erodes public trust in government.

Eager to keep their government handouts, insurance lobbyists have resorted to a dishonest campaign of fearmongering in an attempt to strong-arm Congress into extending these enhanced subsidies. The end of Biden’s covid sweeteners won’t leave people stranded since Obamacare’s original subsidies still pick up most of the tab for lower-income families.

To be clear, the entire Obamacare subsidy is not on the chopping block — only what was expanded in 2021. For almost all enrollees under 250% of the federal poverty line, taxpayers will continue to cover the vast majority of premiums after the enhanced subsidies expire.

Notwithstanding the spin, nearly three-quarters of all current Obamacare enrollees fall under this category. If lawmakers truly cared about patients, they’d fight the underlying causes of runaway health care costs instead of clinging to taxpayer handouts.

These bigger subsidies don’t control costs — they just mask them. By shielding people from the true price of insurance, the government lets insurers keep raising premiums. After falling from 2019 to 2022, benchmark premiums jumped 3.4% in 2023, showing that subsidies don’t stop costs from rising. Rather than sticking taxpayers with the bill, Washington should pursue real fixes: more competition, less red tape and accountability for insurers and providers.

President Biden’s enhanced covid subsidies were sold as temporary relief but have morphed into regressive, fraud-ridden handouts for the well-off. Letting them expire isn’t radical — it’s common sense. Congress should end this costly experiment and return Obamacare to its original purpose: helping the poor afford coverage, not padding the profits of insurance companies or subsidizing the upper-middle class.

Alexander Ciccone is the policy and government affairs manager at National Taxpayers Union.