Democrats are celebrating their midterm victories. And they’re already making plans for their return to power in Congress.
High on their agenda is restoring the enhanced Obamacare subsidies that expired last year. Democrats are pitching the proposal as a way to make health insurance more affordable.
But subsidizing expensive coverage isn’t the same as making coverage less expensive. And pouring hundreds of billions more taxpayer dollars into Obamacare would leave many of the problems driving high premiums untouched.
The enhanced premium tax credits were introduced in 2021 as a temporary pandemic-era measure and extended through the end of 2025. They increased federal assistance for Obamacare enrollees and eliminated the income cap on eligibility. Even households with six-figure incomes could qualify for taxpayer-funded premium subsidies.
But the enhanced subsidies did nothing to reform the regulations that make Obamacare coverage so expensive. The law requires insurers to accept applicants regardless of their health status, sharply limits how premiums may vary based on age, and mandates a broad package of essential health benefits. These requirements drive up premiums for many Americans by forcing them to pay more for coverage than they otherwise would.
Indeed, according to research from the Paragon Health Institute, individual-market premiums have risen 129% since 2014, nearly twice the 68% increase in employer-sponsored insurance premiums over the same period.
Rather than address those costs, the enhanced subsidies shifted more of the burden to taxpayers. And because federal assistance generally rises along with benchmark premiums, insurers face less pressure to keep prices down. The result is a system in which rising premiums can mean bigger taxpayer payments to insurance companies.
The subsidies also created opportunities for widespread enrollment fraud. With many consumers eligible for plans carrying little or no monthly premium, unscrupulous brokers could enroll people without their knowledge and collect commissions. Insurers, meanwhile, could receive taxpayer-funded premium payments for people who never intended to purchase coverage.
A 2026 analysis from Paragon estimated that nearly 6.5 million Obamacare sign-ups in 2025 were improper, potentially costing taxpayers $27 billion in subsidies. Even after the enhanced subsidies expired, Paragon estimated that 6.2 million improper sign-ups persisted in 2026.
Now Democrats want to make the enhanced subsidies permanent. The Congressional Budget Office estimated in 2025 that doing so would have added roughly $350 billion to federal deficits between 2026 and 2035.
That’s an extraordinary price to pay for a policy that leaves Obamacare’s costly mandates intact and risks perpetuating widespread enrollment abuse.
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When the new Congress convenes in January, lawmakers should focus instead on expanding access to less expensive insurance options, easing unnecessary mandates, and strengthening safeguards against fraudulent enrollment.
Americans need health insurance they can afford — not an ever-growing federal subsidy to help pay for coverage that remains too expensive.
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 (Encounter 2025). Follow her on X @sallypipes.