The Trump administration earlier this month finalized a rule that aims to stop waste, fraud, and abuse in the federally subsidized Obamacare exchanges.
It’s about time. Millions of people who don’t qualify for free health coverage are receiving it on the public’s dime. The new rule will restore some measure of integrity to the exchanges — and save taxpayers billions of dollars.
Currently, a record 24 million people have health coverage through Obamacare’s exchanges.
That’s largely because the Biden administration made it easier to sign up for fully subsidized plans. People can simply assert that their incomes are between 100% and 150% of the federal poverty line, between $32,150 and $48,225 for a family of four, and receive taxpayer-funded coverage for $0 a month.
The previous administration made little effort to validate whether enrollees were telling the truth. Even if they did, the law limits how much excess subsidy the federal government can claw back. The next year, the system automatically re-enrolls them without conducting an income audit.
No wonder fraud has been rampant on the exchanges. Roughly 6.4 million people are improperly enrolled in “free” Obamacare plans, according to the Paragon Health Institute. The cost of their coverage will set taxpayers back an estimated $27 billion this year alone.
The Trump administration’s new rule will require “income verifications to ensure people qualify for the premium subsidies they receive.” Rather than re-enrolling people in free coverage from one year to the next, the government will charge enrollees a temporary $5 monthly premium until they verify their income.
In addition, the rule allows insurers to require that people pay past-due premiums before enrolling them in new coverage.
The administration is also targeting fraud by shortening the annual open enrollment and eliminating a monthly special enrollment window for low-income people. Long enrollment periods make it easier for brokers to enroll people improperly without their knowledge and earn a commission.
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Finally, the rule bans Deferred Action for Childhood Arrivals recipients from enrolling in the exchanges. The Biden administration made an estimated 100,000 illegal immigrants eligible for exchange coverage, including fully subsidized plans. Obamacare’s own text bars noncitizens from receiving subsidies through the exchanges. It’s common sense for the Trump administration to return to following the law.
Combined, the changes will save taxpayers up to $12 billion in 2026. Even in Washington, that’s hardly chump change.
Sally C. Pipes is president, CEO, and a Thomas W. Smith fellow in healthcare 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 (Encounter 2025). Follow her on X @sallypipes.