Photo by Andy Feliciotti on Unsplash
In the American Rescue Plan (ARP), President Biden and congressional Democrats expanded Obamacare subsidies by increasing benefits for households at every income level and expanding them to households earning more than 400 percent of the federal poverty level. These expanded subsidies were extended through 2025 in the Inflation Reduction Act. As the expiration date approaches, Democrats are attempting to extend them yet again at a cost to taxpayers of nearly $450 billion over 10 years.
The Biden COVID credits were always supposed to be temporary. The massive cost of this expansion not only puts our country further in debt, but these federal dollars are going straight to insurance companies, not patients, who now have little incentive to keep their costs low. The expanded subsidies have encouraged rampant fraud and are putting taxpayers on the hook for high-income earners’ payments. Congress should let them expire.
See below for five reasons lawmakers should let the Biden COVID credits expire.
1. Biden COVID credits were supposed to be temporary.
At the time they were passed, the American people were assured that the expanded premium tax credits were a necessary and temporary response to the global pandemic. Four years later, we have moved on from the pandemic, but taxpayers are still on the hook for rising premiums.
2. In the long run, these subsidies inflate premiums.
When the government subsidizes the cost of anything, sellers inevitably raise their prices. The government will pay for it, after all. As a result, the hundreds of billions of dollars spent on this expansion are going straight to insurers, not to patients.
These expanded subsidies have already led to higher healthcare costs and premiums for American consumers. Because the subsidies limit the amount that households pay for a benchmark exchange plan to a percentage of their income and the rest is paid by the government, insurers lack any incentive to lower premiums or costs. A 2022 CBO report confirmed that premiums for exchange plans are rising more quickly than originally anticipated.
While some Americans may be concerned about premiums going up in the short term, removing the incentive for insurers to continue raising their prices will save patients money in the long run.
3. Extending the Biden COVID credits would be a massive cost to taxpayers.
This would be an extremely costly endeavor. According to the Congressional Budget Office, expanding the subsidies would cost around $35 billion per year, or $350 billion over the next decade. As the Economic Policy Innovation Center detailed, “resulting increases in net interest costs would add another $64 billion, for a total cost of $448 billion over the FY 2026 to 2035 period.”
The cost of premium tax credits was already colossal – costing taxpayers $1 trillion over 10 years. It is unacceptable for “temporary” expansion to raise that cost by roughly 45 percent.
4. Biden COVID credits massively expanded qualification requirements, including to those making over $500,000 per year.
Under the Affordable Care Act (ACA), premium tax credits (PTCs) were only available to individuals with a household income between 100 percent and 400 percent of the federal poverty level. The ARP eliminated the maximum income limit for subsidy eligibility, putting taxpayers on the hook for high-income households’ payments to insurers.
According to the Congressional Budget Office (CBO), new enrollees make up 89 percent of the increased cost of the Biden COVID credits. Roughly half of these new enrollees would not have been eligible under the original ACA framework, as their incomes exceed the 400 percent federal poverty level.
Further, these subsidies provide little benefit to those who need assistance in securing health coverage. A CBO report notes that nearly 75 percent of this drastic new spending was spent on individuals who already had health insurance, with little of the spending going towards reducing the number of uninsured Americans.
5. Biden’s expanded subsidies have fueled widespread fraud.
Lax verification during the Biden expansion enabled millions to qualify improperly. The Paragon Health Institute estimated that 6.4 million Americans are improperly enrolled in Obamacare exchanges, a number that surged by more than one-quarter from 2024 to 2025. This level of improper enrollment, which is likely an underestimation, will cost taxpayers up to $27 billion this year.
As Paragon details in their report, after the PTC expansion, there was a surge in enrollment and high-than-ever insurer profits, with many of these enrollees “ineligible, unaware they were signed up, or never [having] used their plan.” This mirrors Paragon’s research regarding phantom Obamacare enrollees, finding that “a staggering 40 percent of enrollees in 94 percent actuarial value silver plans and bronze plans had no medical claims in 2024.” No doctor visits, services received, or prescriptions filled.
Americans for Tax Reform encourages lawmakers to let the Biden COVID credits expire, thus lowering costs to taxpayers, disincentivizing premium inflation, slashing rampant fraud, and finally returning to pre-COVID policy.
