Something strange is afoot on the Obamacare exchanges.
According to a new study by the Paragon Health Institute, an astounding number of patients with premium-free exchange plans filed no claims whatsoever last year.
It's possible that none of these individuals required medical care in 2024.
But the much more likely explanation is that many of them were enrolled in plans without their knowledge.
It's hard not to interpret this situation as anything but evidence of widespread fraud enabled by the enhanced premium subsidies green-lit by Democrats in 2022.
First, some background. As part of the pandemic-era American Rescue Plan Act, the Biden administration made exchange premium subsidies even more generous than the Affordable Care Act envisioned. The 2022 Inflation Reduction Act extended those enhanced subsidies through the end of this year.
One consequence of this policy is that anyone earning between 100% and 150% of the federal poverty level now has access to effectively zero-cost insurance.
That creates a strong incentive for insurers and brokers to enroll as many of these people in exchange plans as possible. They can claim the federal premium subsidies — and the enrollee can ostensibly get free coverage.
Judging from Paragon's analysis, insurers and brokers have reacted to this incentive not just by marketing to low-income customers but by signing them up for coverage without telling them.
How else can we explain the dramatic increase in the number of zero-premium Obamacare patients who never saw fit to use their free health insurance?
According to the study, there were a whopping 12 million individuals who fell into this category last year. That's a more than three-fold increase from just three years prior, before Biden's enhanced subsidies went into effect.
How much is this scheme costing taxpayers?
The Paragon study estimates that in 2024 alone, $40 billion in federal subsidies were paid to health insurance companies on behalf of patients who received no medical care.
That's worth keeping in mind as Congress considers whether to renew the Democrats' enhanced subsidies or let them expire as scheduled at the end of this year.
Democrats have portrayed these subsidies as essential to the well-being of middle-class and low-income patients. And they continue to lambaste Republicans for not wanting to extend them.
Doing so would cost taxpayers an estimated $335 billion over 10 years, according to the Congressional Budget Office.
Any program that effectively encourages insurers and brokers to defraud taxpayers on such a large scale deserves to end.
There are better ways to make insurance more affordable for low-income Americans than to simply have the government cover whatever the insurance industry would like to charge.
Indeed, Obamacare's regulations are in large part why insurance coverage has grown expensive enough that the enhanced subsidies seem necessary.
Consider guaranteed issue and community rating, which require insurers to sell to all comers regardless of health status or history and prevent them from charging older enrollees any more than three times what they charge younger ones.
These reforms are popular but force the price of insurance up.
Obamacare also outlawed bare-bones, low-cost plans by requiring that every policy cover a long list of services and procedures, regardless of whether an enrollee wants or needs them.
Trimming back these regulations is one of the most straightforward ways for Congress to get insurance prices down.
Absent that, the Trump administration should return to its first-term deregulatory agenda — and relax Biden-era rules that restrict access to short-term health plans.
These insurance policies do not need to comply with Obamacare's many regulations — and can thus cost a fraction of exchange coverage.
Trump 1.0 issued rules allowing insurers to offer short-term plans that lasted up to a year and could be renewed for up to three years — in contrast to the three-month maximum term and the one-month renewal allowed under Biden.
The exchange status quo has rewarded insurers for taking the government's money while providing little to nothing in return for patients. Given that reality, it's more than reasonable to let the enhanced subsidies expire on schedule.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy - and How to Keep It."
https://www.newsmax.com/sallypipes/exchanges-obamacare-subsidies/2025/09/04/id/1225135/
