A COVID-19 relief law that dramatically expanded subsidized Obamacare coverage swelled enrollment and shielded consumers from rising costs, but critics argue it also drove premiums higher, entrenched government dependence, and enabled widespread fraud.
By yourNEWS Media Newsroom
Congress’s response to the COVID-19 pandemic fundamentally reshaped the Affordable Care Act marketplace, expanding subsidized coverage to millions of Americans while shifting rising costs onto taxpayers and, critics argue, destabilizing the health insurance system in lasting ways.
The changes stem largely from the American Rescue Plan Act, a $1.9 trillion spending package enacted in early 2021 to provide economic relief during the pandemic. Among its provisions, the law expanded access to government-subsidized health insurance through the Obamacare marketplace, temporarily removing income caps on subsidies and reducing the share of income enrollees were required to pay toward premiums.
The result was a surge in enrollment and a significant increase in federal spending on health insurance subsidies. But according to a detailed report by The Epoch Times, the expansion also had unintended consequences, including greater dependence on government aid, rising premiums masked by subsidies, and vulnerabilities to large-scale fraud.
Obamacare was originally designed to serve people who earned too much to qualify for Medicaid but lacked access to employer-sponsored insurance. It provides income-based premium tax credits—paid directly to insurers—for individuals earning between 100 percent and 400 percent of the federal poverty level. Those below that threshold, or up to 138 percent of it in states that expanded Medicaid, generally qualify for Medicaid instead.
Under current standards, that subsidy range covers individuals earning up to $62,600 per year, or $106,600 for a family of three, based on the federal poverty level.
During the pandemic, Congress eliminated the income cap on subsidies altogether and lowered the so-called affordability cap, the maximum share of income an enrollee must pay toward premiums. Beginning in 2021, no enrollee paid more than 8.5 percent of income for premiums, while many paid 6 percent, 4 percent, 2 percent, or nothing at all.
Enrollment climbed rapidly, rising from 11.4 million to 14.5 million in two years. By 2025, marketplace enrollment had more than doubled from its pre-pandemic level, topping 24 million, according to data from health policy research organization KFF.
Although the enhanced subsidies were originally scheduled to expire in 2022 as the economy recovered, Congress extended them even after pandemic restrictions ended. Critics argue that decision insulated consumers from the true cost of coverage while allowing premiums to rise.
Health insurance premiums had already climbed sharply during Obamacare’s early years. Data reported by KFF show that during the program’s first five years, the average individual premium for a 40-year-old rose at least 75 percent. In the broader commercial market, individual premiums increased about 120 percent between 2013 and 2019, according to figures cited by The Heritage Foundation, where prices soared.
Premiums stabilized before the pandemic and fell about 5 percent between 2020 and 2022, a period that included the first two years of enhanced subsidies, according to KFF data. But inflation surged in 2022—the year subsidies were initially set to expire—peaking at more than 9 percent by midyear, according to the Bureau of Labor Statistics.
Economists have widely attributed that inflation spike to pandemic-era fiscal and monetary policy. Former Federal Reserve Chairman Ben Bernanke wrote in a co-authored Brookings assessment that rising prices were driven by “easy fiscal and monetary policies, excess savings accumulated during the pandemic, and the reopening of locked-down economies,” as outlined in the paper.
Congress responded by spending more. The Inflation Reduction Act, passed in August 2022, was estimated by the Cato Institute to inject another $1.2 trillion into the economy over a decade, according to its analysis. That legislation included a three-year extension of the enhanced Obamacare subsidies.
Premiums then resumed their upward climb. KFF data show marketplace premiums rising more than 13 percent over three years. Cynthia Cox, a policy researcher at KFF, pointed to factors including higher hospital costs, the growing use of expensive drugs such as Ozempic, and tariffs.
Other analysts argue the subsidy structure itself is inflationary. “The [Affordable Care Act] subsidy structure is itself inflationary—driving up health care prices and total premiums,” Mark Howell and Brian Blase of the Paragon Health Institute said. They added that as Congress debates the future of the pandemic-era credits, “it must confront the reality that the [Affordable Care Act] made coverage far less affordable.”
For many enrollees, rising premiums were largely hidden. Out-of-pocket costs were capped based on income, while price increases above that cap were paid by taxpayers, making the subsidies increasingly critical for households with modest earnings.
At the same time, wages failed to keep pace with broader inflation. Rep. Jim McGovern, D-Mass., highlighted the value of the subsidies in a district statement, saying that without the Inflation Reduction Act, average premiums would have risen 76 percent in 2023, to $1,430 per year for affected constituents.
By 2025, when the enhanced subsidies were again scheduled to expire, marketplace premiums reached record highs. Insurers recognized that without subsidies, healthier customers would likely exit the market, leaving a smaller, sicker pool to insure, according to the Peterson-KFF Health System Tracker, which reported that insurers realized this risk.
Insurers responded by proposing premium increases ranging from 10 percent to 59 percent, with a median increase of 18 percent.
As premiums rose, lawmakers turned their attention to another issue critics say was exacerbated by the subsidy expansion: fraud. The average Obamacare premium in 2025 was $619 per month, with subsidies covering more than $500 of that amount. About 46 percent of subsidized enrollees paid $10 or less per month, and roughly 8 million paid nothing, according to Brookings.
That structure, critics argue, created incentives for abuse. Brian Blase testified that many individuals were enrolled without their knowledge by unscrupulous brokers seeking commissions. “In 2024, nearly 12 million enrollees did not use their plan a single time—up from fewer than 4 million in 2021,” Blase told the House Judiciary Committee on Dec. 10.
He said 35 percent of all exchange enrollees had no claims, and 40 percent of fully subsidized enrollees had none—double the rate seen in commercial markets and pre-pandemic Obamacare.
America’s Health Insurance Providers disputed that interpretation, saying a no-claims year can simply reflect good health or partial-year coverage.
Investigations nevertheless uncovered significant irregularities. In 2024, investigators enrolled 20 nonexistent identities using unissued Social Security numbers; 18 of those accounts remained active in September 2025, costing taxpayers more than $10,000 per month. Another probe identified 26,000 accounts that received subsidies in 2023 using Social Security numbers linked to the Social Security Administration’s death file, costing taxpayers more than $94 million in a single year.
Paragon Health Institute estimates fraudulent marketplace enrollment costs taxpayers up to $20 billion annually, according to its analysis.
The enhanced subsidies expired on Dec. 31, 2025, but the debate over their future continues. The Senate in December 2025 rejected a proposal to make them permanent. House Minority Leader Hakeem Jeffries, D-N.Y., said in January that Democrats remain committed to extending them, warning that without subsidies some consumers could face cost increases of $2,000 per month or more.
Republicans have largely favored market-based reforms. Senate Majority Leader John Thune, R-S.D., said in December that progress would require shifting power and resources “into the hands of the American people, and less of that in the pockets of the insurance companies.”
The House passed a three-year subsidy extension on Jan. 8, but an effort by Senate Minority Leader Chuck Schumer to advance it failed days later. President Donald Trump has said he would veto any extension of Obamacare subsidies that reaches his desk, setting the stage for another major health policy showdown.
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