Overview
Supporters of Obamacare are alleging that the pending expiration of its enhanced subsidies would be a “catastrophe” and “devastating.” Such claims are contradicted by the core facts of the matter, which the press has largely ignored. Among them:
- Obamacare recipients are paying an average of $74 per month for health insurance, and if the enhanced subsidies expire, they will pay an average of $159.
- The much larger payments showcased by Democrats and the media are outliers who comprise less than 0.1% of the U.S. population, are nearly old enough to receive Medicare, and have incomes that exceed four times the federal poverty level.
- Before the enhanced subsidies were enacted, Obamacare recipients paid an average of 17% of the costs of their insurance premiums, while taxpayers picked up the rest of the tab. These original Obamacare subsidies will remain if the enhanced ones expire.
- If the enhanced subsidies expire, the average Obamacare premium payment of $159 will still be less than the standard $203 premium payment for Medicare Part B.
- The enhanced subsidies are currently providing an average of $14,680 per year in welfare to 60-year-old couples with incomes of $125,000, regardless of how much wealth they have in IRAs, real estate, and other assets.
- If the enhanced subsidies are permanently renewed, Obamacare will cost each U.S. household an average of more than $80,000 over a lifetime to subsidize insurance for about 6% of the nation’s population.
Background
In 2010, Congressional Democrats and President Obama enacted two laws that are collectively known as the “Affordable Care Act,” or “Obamacare,” for short.
Among its many provisions, Obamacare created “exchanges” to sell taxpayer-subsidized private health insurance to people with incomes up to four times the federal poverty guidelines. These vary depending on the size of the household, and four times the federal poverty line for a family of four is currently $128,600.
The Obamacare exchanges began operating in 2014, and the Congressional Budget Office projected that 26 million people would join them by 2018. However, the actual figure turned out to be 10.6 million, or 59% lower than projected.
In 2021, Congressional Democrats and President Biden enacted a law that significantly increased Obamacare subsidies in 2021 and 2022. The law stated this was a “temporary” measure, and the Biden administration said it was meant to “deliver immediate relief to American families bearing the brunt” of the Covid-19 pandemic.
However, the Democrats and Biden extended the enhanced subsidies for another three years in the 2022 Inflation Reduction Act. Instead of making the enhanced subsidies permanent, a time limit was included to control the costs of the bill in order to gain the support of moderate Democrats like Joe Manchin.
Limiting the costs of the Inflation Reduction Act also allowed Democrats to prevent a Republican filibuster. This was done via a budget process called “reconciliation,” which allows the Senate to pass bills with a simple majority vote if they are projected to reduce the federal deficit.
Hence, Democrats boasted that the act would “make a historic down payment on deficit reduction to fight inflation.” However, the act is increasing deficits because its green energy and Medicare prescription drug provisions are costing far more than projected, eclipsing the bill’s original estimated deficit reduction of $300 billion.
Currently, about 21.4 million people are receiving Obamacare subsidies, or 6% of the nation’s population.
Average Premium Payments
Senate Democrats and media outlets have persistently declared that letting the enhanced Obamacare subsidies expire would be disastrous. For just a few examples among many:
- Chuck Schumer alleges this would “raise healthcare rates for American families to OBSCENE levels.”
- Mark Kelly and Dick Durbin claim it would cause healthcare costs to “skyrocket,” as did ABC, CNN, and MSNBC on 10 occasions during six primetime news shows over just two days.
- Cory Booker says it would be “devastating.”
- Amy Klobuchar says it would put an “enormous strain” on family budgets.
- Chris Murphy says it’s an “oncoming catastrophe.”
- Elizabeth Warren says this is a “crisis.”
In reality, Obamacare recipients are paying an average of $74 per month for health insurance, and if the enhanced subsidies expire, they will pay an average of $159. These vital facts are from KFF (the Kaiser Family Foundation), which estimates that yearly premium payments for Obamacare recipients will rise “from an average of $888 in 2025 to $1,904 in 2026.”
The same KFF analysis is the primary source of the common talking point that Obamacare “premiums will double” or “more than double.” This reveals that Democrats and the media are well aware of this source.
Yet, Google News shows a total of two results which mention that the average premium payment will rise from $74 per month to $159. Reports of the annual figures tally to 26, but most of these are small outlets, and some of the major media players present the costs in a deceitful manner by not stating that these are annual payments instead of monthly ones.
Because health insurance premiums are typically quoted, billed, and paid on a monthly basis, most people will assume they are monthly figures. In the words of the Medicare Rights Center:
The monthly premium for health insurance is the point of comparison most familiar to consumers and the one that most influences consumers’ choice of plan.
Yet, a recent CNN article reports that the “premiums enrollees pay will more than double, from $888 to $1,904, on average, next year, KFF found.” This ambiguity is not a fluke but a pattern. CNN’s lead “fact checker,” Tom Foreman, misled viewers in an October broadcast of Inside Politics by reporting three examples of “dramatic” Obamacare premium increases without stating that they were yearly figures instead of monthly ones.
Likewise, CBS reported that the “cost of premiums for people who buy their insurance through the ACA marketplaces could more than double, rising from an average of $888 in 2025 to $1,904 in 2026, according to a Sept. 30 analysis by KFF.” Reinforcing the idea that those are monthly figures, the article states two paragraphs later that “premiums — the monthly fee paid for insurance coverage — are poised to surge next year.”
And WCVB, an ABC television station that bills itself as “Boston’s News Leader,” reported that “KFF estimated the average premium payment would increase 114% from $888 to $1,904 without expanded subsidies.” Here again, there was no mention that these are annual payments, not monthly ones. Twenty-two paragraphs later, the article presented figures that careful readers could use to deduce that the earlier figures were annual ones.
Such journalism, combined with the rhetoric of Democrats, hides and distorts the fact that Obamacare recipients will pay an average of only $159 per month for health insurance if the enhanced subsidies expire. This is less than the standard $203 monthly premium payment for Medicare Part B.
The reason why the average payment will be so low is because the original Obamacare subsidies will remain. Under these, taxpayers bore 83% of the premium costs, while Obamacare recipients paid just 17%.
Outliers
Beyond ignoring and misreporting the average premium payments, Democrats are also highlighting and twisting specific cases that are far outside the norm.
For a prime example, Chuck Schumer claims that “because of the Republicans,” “the average 60-year-old couple making $85,000 a year” could see their health insurance “premiums increase” by $25,700 to $27,000 per year.
In reality, those figures don’t apply to the “average 60-year-old couple” but to less than 1% of them who receive Obamacare, have no dependents, make more than four times the federal poverty line, and choose to stick with Obamacare after taxpayers stop paying for the bulk of it.
Citing a CNBC article, Amy Klobuchar claims that “early retirees” like Bill & Shelly Gall “can’t afford” an “extra $15K a year” for health insurance if the enhanced subsidies expire.
What Klobuchar fails to reveal is that the Galls collect government pensions of $127,000 per year, have an IRA, and retired at the ages of 58 and 50. If the enhanced subsidies are renewed, they will also receive $15,000 of Obamacare handouts per year.
Such outliers constitute 1% of the people who receive Obamacare and well under 0.1% of the U.S. population.
Welfare For the Wealthy
Obamacare subsidies take the form of refundable tax credits, which are a type of welfare. Under the expanded subsidies, people with incomes of up to about $300,000 can receive these handouts.
There are also no asset limits on Obamacare subsidies, which means that people with millions of dollars in stocks, bonds, and real estate can also receive this welfare. Thus, financial planners counsel such individuals on how to maximize Obamacare subsidies by avoiding IRA conversions and not selling assets.
On average, the enhanced subsidies currently provide $14,680 per year in welfare to 60-year-old couples with incomes of $125,000, regardless of how much wealth they have amassed.
At lower income levels, the Congressional Budget Office has documented that Obamacare created dynamics which:
- allow “some people to maintain the same standard of living while working less.”
- make work “less attractive” by providing benefits that decline with rising income.
- increase taxes and thus “induce some workers to supply less labor.”
Taxpayer Costs
The Congressional Budget Office estimates that permanently renewing the enhanced Obamacare subsidies will cost taxpayers about $350 billion over the next 10 years. Over the average U.S. life expectancy of 78.4 years, this amounts to $2.7 trillion.
All told, the original and enhanced Obamacare subsidies cost about $136 billion in 2025. If this spending continues, it will cost taxpayers $10.7 trillion over a lifetime. This is an average of more than $80,000 per U.S. household to subsidize insurance for about 6% of the nation’s population.
Most working taxpayers who foot the bill for Obamacare and have health insurance via their employers also pay the costs of their own insurance. This is because these expenses are ultimately taken out of their other compensation, a major cause of wage stagnation.
Employees who receive employer-provided health insurance also receive a subsidy because this benefit isn’t taxed like other forms of compensation. However, the exemption typically saves employees about one-third of the costs of their premiums, as opposed to 87% for Obamacare recipients.
Summary
Obamacare was enacted with claims that it would make healthcare “affordable,” reduce budget deficits, “save families an average of $2,500 per year on insurance premiums,” not cause anyone to lose their doctors or insurance plans, and improve life expectancy. None of these promises have panned out.
During the Covid-19 pandemic, Democrats significantly increased taxpayer funding for Obamacare recipients while claiming that this would only be “temporary.” Now, they are trying to make it permanent while ignoring and distorting the primary facts of the matter. Instead of exposing this deceit, major media outlets are helping to propagate it.
By James D. Agresti
James D. Agresti is the president of Just Facts, a research and educational institute dedicated to publishing facts about public policies and teaching research skills.
