Obamacare must be reformed, not just extended, as the House recently voted to do.
Intended as a program to help people gain insurance coverage, it has instead been plagued by rising premiums, rampant fraud and minimal oversight.
The Affordable Care Act (ACA) has proven to be anything but affordable. Exchange premiums more than doubled in the early years after it went into effect, and as fast or faster than employer-sponsored insurance since 2022. Premiums are now so high that even higher-income people qualify for subsidies. It’s not as if deductibles have become more affordable, either. Average deductibles have risen more than 50 percent across all exchange plans, and average nearly $7,500 in the lowest-premium plans in the exchanges.
Regulations are a big driver of healthcare inflation. While some government requirements are popular and central to the ACA promise, many are unnecessary, distortionary and counterproductive.
The ACA imposes complicated actuarial requirements concerning “medical loss ratios” and rate-setting based on “age banding” that increase costs and impair the market with little benefit. There are also more straightforward requirements, such as requiring everyone, regardless of circumstances, to purchase plans that cover contraception. These regulations need to be reviewed closely, balanced against access and cost, and removed in many cases.
Removing government barriers to affordable care and, ultimately, bringing down prices should be Congress’s primary goal in healthcare reform. It’s the high costs that drive most of the problems people experience in obtaining and affording healthcare. Lower premiums would mean higher insurance rates, less need for regulation and better access for Americans.
The other big reason reform is necessary is fraud. At this point, the evidence of endemic fraud in the exchanges is overwhelming. Paragon Health Institute has been at the forefront of exposing this problem, including research showing that in some areas of the country, more people are enrolled in Obamacare plans than are eligible, by a wide margin. Journalists have further exposed disreputable insurance brokers who sign people up without their knowledge to collect extra fees.
Paragon did a second analysis that showed a disproportionate number of “phantom enrollees” who don’t ever file a claim, as would be the case if people were signed up without their knowledge — a problem corroborated by the Centers for Medicare & Medicaid Services and also by an analysis that found official population surveys show a huge discrepancy in enrollment numbers.
In December, the Government Accountability Office released a report demonstrating how easy it is to enroll in Obamacare and collect a subsidy without documenting your eligibility. GAO submitted 24 fake applications, and CMS approved 23 of them.
Clearly, fraud has become an enormous problem in the ACA, particularly since the implementation of fully subsidized plans for some enrollees. Paragon and Competitive Enterprise Institute’s estimates suggest that improper enrollment may account for 25 percent of the 22 million people that the CMS claims are enrolled and receiving subsidies. ACA subsidies cost $138 billion in 2025, up from $53 billion prior to the subsidy expansion.
Democrats want to extend pandemic-era subsidies yet again with no other changes, judging by the proposals they’ve submitted. Their proposals differ in the duration of the extension, but they offer no underlying changes or proposals to fund it. On the other hand, Republicans have steadfastly opposed extension but have been unable to coalesce around a reform.
Congress needs to take this issue seriously and fix the problems their predecessors caused, so as not to let the insurance market continue to unravel. Regardless of what Congress does with subsidies now, it’s essential to rework Obamacare’s regulations and structure.
With programs that distort healthcare choices and the preference to pay for that bad policy with a growing pile of debt, Congress is covertly writing the biggest surprise bill of all, and the next generation is going to have to pay it.