Pennsylvanians should support letting Obamacare tax credits expire
The Biden-era tax credits fuel waste. By making insurance “free” for anyone under 150% of the poverty level, the credits do nothing but invite abuse.
Pennsylvania’s 2024 election cycle was a mandate from voters — Democrats, Republicans, and independents — that it was time to reject the waste, fraud, and abuse plaguing our government programs and systems.
At the end of this year, the Biden administration’s COVID-era expansion of the Obamacare tax credits is set to expire. Special interests in Washington want Congress to extend them indefinitely, but doing so would be a mistake.
The pandemic is long over. That’s reason enough to eliminate measures that were put in place for those very specific circumstances. But the Trump administration and many Republicans in Congress have identified the subsidies for what they are — special interest handouts sold as measures to help patients that, in reality, line the pockets of insurance companies through waste, fraud, and abuse.
The Biden-era tax credits fuel waste. By making insurance “free” for anyone under 150% of the poverty level, the credits do nothing but invite abuse. Enrollment data suggest that millions of people are underreporting their income to qualify, and in nearly 30 states, more people are claiming eligibility than live in the state, according to Paragon Health Institute. On top of that, 12 million ACA enrollees never use their coverage — a tripling of “phantom policies” since the credits began.
Many of these people are likely enrolled elsewhere, in Medicaid or employer coverage, which means taxpayers are footing the bill for duplicative, unlawful enrollment. This isn’t healthcare. It’s fraud.
The subsidies also alter the market, which is a driving force in healthcare inflation. When insurance is free, patients have little incentive to shop for value. Insurers know it, and premiums have soared — up more than 50% since 2020.
Predictions of massive hikes if the credits expire are wildly misleading. Most of the projected increases over the next few years stem from other factors, like labor costs and new drugs.
The insurance industry’s claim that some families will face “3,000%” increases is simply a scare tactic, as “3,000%” is mathematically what happens when the share of the premium paid by the enrollee rises from, say, $1 to $30 a month. It’s large in percentage terms, but small in dollar terms.
Meanwhile, deductibles and out-of-pocket costs keep climbing, leaving many families worse off.
What’s more, Pennsylvania voters have already rejected this approach to healthcare policy. The 2024 election was a referendum on Biden-era policies, including the credits tucked into the Inflation Reduction Act — a law passed without a single Republican vote.
Extending them now would be a rejection of the mandate voters sent to change course.
Pennsylvania voters have already rejected this approach to healthcare policy.
Who really benefits from keeping the credits alive? Spoiler alert: It’s not patients. The entire $125 billion annual cost flows directly to insurers. Patients get surprise tax penalties when they’re reenrolled automatically, oftentimes without even realizing it. That’s a bailout for special interests, not a resource for families.
Even worse, the credits dilute resources away from those truly in need. Thanks to Joe Biden’s expansion, even a family of four making almost $130,000 a year can qualify for subsidies. Every dollar spent subsidizing affluent households is a dollar unavailable for households in genuine need.
Meanwhile, enrollment in the tax credit program has doubled in just four years, not because need has spiked, but because millions are abandoning existing coverage for “free” plans. That’s dependency at its worst.
What do patients get in return? Shrinking networks, longer wait times, and coverage they don’t value. According to Paragon Health Institute, many low-income families weren’t willing to pay even $25 a month for these plans before the expansion, a clear sign that the main beneficiaries of the extra subsidies are insurers, not patients.
The Biden credits fail every test of sound policy. They fuel fraud, inflate costs, supplement insurers, and trap people in a state of dependency. Patients deserve a system that works for them, not handouts that mask failure.
Letting these subsidies expire, as the law requires, would clear the way for transformative policies — policies that empower patients with control over their healthcare dollars and unleash competition to lower care costs.
For patients’ sake, our Pennsylvania delegation in Washington would be wise to let these tax credits expire.
Emily Greene is the Pennsylvania state director for Americans for Prosperity.