A new report from the Joint Economic Committee reveals that the enhanced premium tax credits introduced under President Biden during the pandemic have significantly benefited large health insurance companies, while delivering limited savings for American households. Originally intended as a temporary measure through the American Rescue Plan Act of 2021 and later extended by the Inflation Reduction Act of 2022, these subsidies were designed to expand coverage. However, findings suggest they have instead weakened cost-control incentives for insurers. n nChairman David Schweikert emphasized that while the policy was framed as a public health response, it has evolved into a costly federal expenditure with questionable long-term value. He noted that billions in taxpayer funds are being used to support enrollment—even for individuals who do not utilize medical services—while insurers face little pressure to moderate premium increases. With national debt at historic levels, Schweikert argued that Congress should allow the subsidies to expire as planned and instead focus on reforms that promote competition and consumer-driven health care markets. n nFederal spending on these credits has surged since their implementation. Even if they expire at the end of the year, projections show that by 2026, total spending on premium tax credits (PTCs) will still exceed pre-2021 estimates by more than double. The structure of the program contributes to inefficiency: for every two dollars spent, only one dollar effectively benefits consumers, while the rest goes toward insurer gains or is lost to waste. n nAs more enrollees pay nothing for premiums—now accounting for 42 percent of users—competition based on price has diminished. This allows insurers to raise gross premiums without losing customers. Additionally, the number of individuals who enroll but file no medical claims has nearly quadrupled, reaching 35 percent of all enrollees. In these cases, insurers receive full government payments despite providing no care, raising concerns about fiscal accountability. Independent research cited in the report estimates around 6.4 million potentially improper enrollments, including cases where individuals were signed up unknowingly by brokers. n nExtending the program permanently would sustain what the report describes as a subsidy bubble, reinforcing flawed market incentives, reducing competitive dynamics, and channeling public funds toward intermediaries rather than patients. The committee urges policymakers to reassess the program’s future in light of its economic and structural shortcomings. n
— News Original —nTitle: Joint Economic Committee Finds Biden’s COVID Premium Subsidies Led to Financial Boom for Insurers while providing Limited Reduction in Consumer CostsnContent: WASHINGTON, DC – Today, the Joint Economic Committee released an issue brief entitled, Long Overdue: Enhanced Premium Tax Credits Should Expire, which finds that the Biden COVID premium subsidies (enhanced premium tax credits) have not only outlived their intended temporary purpose, but evidence indicates that their design, focused on maximizing coverage regardless of cost, reduces pressure on insurers to contain costs. As a result, the Biden COVID premium subsidies perform poorly as permanent policy: they do more to improve the financial outcomes of large health insurers than to reduce health care costs for Americans. n n“Originally designed as a temporary response to a public health crisis, these subsidies are increasing profits for large insurance companies while doing little to contain costs for American families,” said Chairman David Schweikert. “The government is paying billions to cover people who aren’t receiving care and to subsidize insurers who face little pressure to control costs. This is not a sustainable policy, and Congress should allow these temporary subsidies to expire as scheduled and begin a serious conversation about how to make health care markets more competitive, efficient, and consumer driven. As our nation faces record high debt, we must ensure every federal dollar delivers real value.” n nDemocrats in Congress created these temporary COVID enhanced premium tax credits (PTCs) in the American Rescue Plan Act of 2021 and later extended them in the Inflation Reduction Act of 2022. According to JEC findings, federal spending on these subsidies has skyrocketed since their introduction. Even if the enhanced credits expire at the end of this year as scheduled, total PTC spending in 2026 will remain more than double what was projected before these changes took effect in 2021. n nThe Biden COVID premium subsidies have allowed insurers to push premiums even higher by masking rising prices, with many consumers enrolling in plans for $0 per month. The inherent inefficiency of the PTCs drives their increased costs: only one-dollar benefits consumers for every two that are wasted or benefits insurers and intermediaries. As the share of consumers paying little to nothing in premiums has increased to 42 percent, pressure to compete on price has weakened, allowing insurers to benefit from rising gross premiums. The enhanced subsidies result in a larger share of each subsidy dollar benefiting insurers or being wasted, instead of reducing premiums for consumers. n nThe number of zero-claim enrollees—people whose insurance companies receive a PTC payment on their behalf but who do not use their coverage or file any medical claims in a given year—has risen substantially. Since the government increased PTCs with Biden’s COVID premium subsidies, the number of people not using their coverage has nearly quadrupled, reaching 35 percent of all enrollees. In these cases, insurers still get full payments for each enrollee, costing tax-payers money without providing any real health benefits. This is supported by other research estimating 6.4 million potentially improper enrollees, some of whom are “phantom” enrollees who were signed up without their knowledge by unscrupulous brokers. n nThe brief also finds that a permanent extension will burden American taxpayers by maintaining an unsustainable subsidy bubble, which perpetuates a broken incentive system that deepens market distortions, erodes competition, and directs taxpayer dollars to insurers and intermediaries. n nRead the full brief here.
