There are many things to like about the deal that ended the government shutdown last week. Most importantly, it reopens the government without committing taxpayers to tens of billions of dollars in new spending on COVID-era enhanced premium subsidies for coverage sold through Obamacare’s exchanges.
But the battle over these subsidies is far from over. Republican leaders have promised Democrats a vote in early December on whether to extend those tax credits. The GOP must hold fast, just as it did during the 43-day shutdown. The enhanced subsidies remain a gargantuan waste of money.
For starters, they help cover the cost of coverage for people with healthy six-figure incomes. Roughly one-third of those claiming the subsidies have income above 400% of the poverty level — $129,000 for a family of four.
Under the program’s current rules, a family earning $500,000 a year would be entitled to a subsidy totaling over $8,000.
Many of those claiming the subsidies are early retirees. Paying people to leave the workforce, as the enhanced subsidies effectively do, is bad for the economy. And it’s unfair to younger workers, who will bear the tax burden associated with covering the multibillion-dollar cost of those subsidies.
Then there’s the rampant fraud the subsidies have enabled. In a recent analysis, Brian Blase of the Paragon Health Institute estimated that 12 million exchange plan enrollees filed no health claims last year.
Eighty-four percent of people with private health insurance file a claim each year. Why is the exchange population so different? The most likely explanation is that insurers and brokers have been enrolling massive numbers of patients without their knowing — and collecting federal premium subsidies without paying for a single dollar in medical care.
RETURN TO NORMAL? WHAT HAPPENS NOW THAT LONGEST-EVER GOVERNMENT SHUTDOWN IS OVER
How much money has the government shelled out on behalf of such “phantom enrollees”? According to Blase, around $40 billion in 2024 alone.
Republicans were right to refuse the Democrats’ request to extend the enhanced subsidies as a condition of reopening the government. They must continue to hold fast against extending them or making them permanent if the issue comes to a vote later this year.
Sally C. Pipes is president, CEO, and 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.