Conservatives United Against Extending Biden COVID Credits

In today’s newsletter, I discuss how conservatives are united in their view that Biden’s COVID credits have serious problems, fueled fraud, and need to expire. I then highlight a new Paragon paper released today on how states should use the Rural Health Transformation Program.

Conservative Unity

Conservatives—both in and out of government—are united that the Biden COVID credits should expire after 2025. I joined three dozen leaders in the conservative movement in a letter to President Trump that criticizes Democrats’ unserious demands that led them to shut down the government and makes the case that the COVID credits need to end. The letter, led by Americans for Tax Reform (ATR), made several key points:

• The Biden COVID credits were intended to be temporary. At the time they were passed, the American people were assured that the expanded subsidies were a necessary and temporary response to the global pandemic. The pandemic ended several years ago.
• Over the long term, the Biden COVID credits raise premiums. A Congressional Budget Office report confirmed that premiums for exchange plans are rising more quickly than anticipated. When the government subsidizes the cost of anything, sellers raise their prices. Although some Americans may be concerned about premiums rising in the short term, removing the incentive for insurers to keep increasing prices will save patients money in the long run.
• The Biden COVID credits are further bankrupting our country. The cost of the original subsidies will total $1 trillion over the next decade. Extending Biden’s COVID credits would increase that cost by 45 percent.

The letter cites Paragon’s research on widespread Obamacare fraud, which has double the number of zero-claim enrollees as you would expect in a normal health insurance market. Last week, we released Obamacare Fraud by the Numbers, which details the significant problems caused by the Biden COVID credits.

ATR has a webpage featuring quotes from prominent conservatives—including Ben Shapiro, Sean Hannity, Erick Erickson, Dana Loesch, and many members of Congress—who oppose extending Biden’s COVID credits.

Not a single Republican voted for the COVID credits. It was the Democrats who unilaterally scheduled the add-on subsidies to expire after 2025. In a Wall Street Journal letter to the editor, Texas Representative Chip Roy represented the perspective of conservatives in Congress, making the case that “this is no time to go wobbly” on Obamacare:

Democrats are choosing to shut down the government…because they want to give $450 billion to big health insurance companies and the K Street lobby. Though Republicans are rightly resisting demands to provide “free” healthcare to illegal aliens, the fight is over a more fundamental question: Should Congress extend enhanced subsidies for ObamaCare that were established temporarily during Covid?

It doesn’t take a seasoned pol or savvy operative to know the answer is no. The jig is up, the pandemic is over and my colleagues shouldn’t blink in any other direction. Republicans must prove that we are for healthcare freedom and against socialized medicine. If we cave on these expensive and outdated subsidies, achieving our goals will be nearly impossible.

Making such concessions would make us look weak, saying we’re for one thing and doing another. How will voters take us seriously in our aspirations to deregulate the market to enable competition or expand health-savings accounts to meet their full potential, among other things, if we give up this fight? Rolling over will become our modus operandi.

The COVID credits go directly to health insurers, and they are fiercely lobbying for them to continue, including taking to the pages of The Journal. My colleague Niklas Kleinworth and I rebutted insurers’ argument and made the case that Obamacare is not a healthy market in our own letter in The Journal:

The sweetened “credit” is the problem, not the solution, driving the high cost of healthcare. The zero-dollar premiums created by the Biden administration policy exacerbated structural problems in the Affordable Care Act.

For everyday Americans, the result is worse coverage and tens of billions in higher taxes annually. Many also have been enrolled in plans without their knowledge, leaving them surprised at tax time or without coverage that meets their needs. …

Meanwhile, insurers happily collected large checks from the government that covered the entire premium. Nearly half of 2025 enrollees took no action during open enrollment, as they were automatically renewed into their subsidized plan.

Unfortunately, Trump administration efforts to address the large-scale fraud have been held up by one Democratic-appointed judge. This makes it more important that the Covid credits expire, and with them, the fuel for the fraud.

ObamaCare’s underlying subsidies would persist without the sweetened deal. The government would still pick up more than 80% of the cost of the premium for the typical enrollee next year after Covid credits expire.

The real beneficiaries of extending the credits are insurers, who would rather receive payments from Washington than offer plans people must at least partially pay for. Hard-working families who get coverage through the workplace shouldn’t have to bail them out to prop up this already oversubsidized market.

The ATR letter follows a letter from the National Taxpayers Union that also expressed strong opposition to extending the COVID credits.

How States Should Use Federal Funds to Transform Rural Health

Paragon’s latest paper, Rural Health Transformation Fund Offers States a Way to Improve Rural Health Care Access: Here’s What States Should Do, by veteran rural health policy expert Bill Finerfrock, examines how states can best utilize funding from the Rural Health Transformation Program (RHTP)—a $50 billion initiative enacted as part of the One Big Beautiful Bill (OBBB).

As Finerfrock emphasizes, the key to success is ensuring that funds reach rural providers and patients—not large urban systems that have repeatedly captured dollars from safety-net programs intended to help vulnerable providers, such as 340B and Disproportionate Share Hospital (DSH).

Rural America Needs a New Health Care Model

Rural hospitals and clinics have faced mounting financial pressures for decades. Nearly 200 rural hospitals have closed since 2005, and many more remain vulnerable despite record federal spending. These facilities are often required to keep emergency and obstetric services open around the clock, but reimbursement systems fail to cover the “stand-by” costs of maintaining that capacity in low-volume areas.

Connecting RHTP to Broader Medicaid Reforms in OBBB

The RHTP was part of a much larger reform agenda in the OBBB, which reformed both Medicaid and the ACA. The OBBB closes loopholes that allowed states to inflate federal payments through money-laundering schemes, strengthens verification of eligibility and citizenship, and introduces Medicaid work or community engagement requirements to promote upward mobility and restore program integrity.

Medicaid money laundering schemes result in excessive payments to large health systems with extensive lobbying power. The connection between the reforms to limit Medicaid money laundering and RHTP is direct: by tightening the flow of federal Medicaid dollars, Congress created room to invest in high-value, time-limited initiatives to improve rural health care. States that adopt reforms such as scope-of-practice expansion, certificate-of-need (CON) repeal, and workforce flexibility will receive more RHTP funds under CMS’s scoring system.

CMS’s Guidance Encourages Competition and Reform

CMS guidance for RHTP implementation rewards states that remove regulatory barriers, expand the health care workforce, and adopt sustainable payment and delivery models. One-quarter of the program’s competitive funds are directly tied to state policies—meaning that states with more health care choice and competition will receive more federal resources.

Finerfrock discusses several reforms:

• Address stand-by costs through transparent, temporary subsidies tied to essential services.
• Empower all licensed professionals—physician associates, nurse practitioners, and mental-health providers—to practice at the top of their license.
• Eliminate anti-competitive CON laws that research shows limit facility expansion and drive up costs.
• Leverage telehealth and technology to connect patients to specialty care without duplicating broadband spending.
• Invest in rural clinical training to expand the long-term workforce pipeline.

Ensuring Targeted, Temporary, and Transformative Use of Funds

The RHTP must not becom .another entitlement program. As Finerfrock writes, the “H” in RHTP stands for health, not hospital. Funds should flow to rural communities, not urban conglomerates claiming rural status. They should support sustainable reforms that outlast federal funding, not become ongoing subsidies that vanish once the five-year window ends.