Majority of Americans Support Permitting Biden’s COVID Credits to Expire

Today’s newsletter begins with results from a poll Paragon commissioned on the enhanced Affordable Care Act (ACA) subsidies, which have been called Biden’s COVID credits to distinguish them from base ACA subsidies. I then highlight a new Paragon Prognosis on human stories and lives ruined by the combination of Biden’s COVID credits and the Biden administration’s enrollment-at-any-cost strategy.

Paragon continues to counter myths about the One Big Beautiful Bill (OBBB). This week, we released two new fact sheets—on the new Medicaid community-engagement requirements and on how the OBBB helps nursing homes. These fact sheets follow the first three we published on the myths that the OBBB cuts Medicaid, that its Medicaid reforms are unpopular, and that it will cause large coverage losses. We also updated our summary of the key OBBB health policy provisions based on the final estimates of the law from the Congressional Budget Office (CBO).

Speaking of OBBB, Paragon will host a virtual event on the health provisions in the OBBB on Thursday, August 7 at 11 a.m. EDT. Register for that event here.

I conclude by discussing an important program integrity action from the Centers for Medicare and Medicaid Services (CMS) to address the nearly 3 million people who have been enrolled in multiple programs and a new study on how hospital consolidation (hospitals buying up physician practices) drives up prices.

High Quality Survey Shows that Most Americans Support Ending Biden’s COVID Credits

In 2021 and 2022, Democrats used reconciliation to expand ACA subsidies to address the COVID pandemic—making them larger for anyone who qualified for them and lifting the cap that had existed at four times the poverty level. One feature of the COVID credits was to fully subsidize plans for many individuals, which invited massive waste and fraud. Not a single Republican voted for these expansions. The enhanced subsidies boosted exchange enrollment, more than doubled total subsidy spending, and triggered widespread fraud and other problems (which I’ve discussed in many pieces).

In the spring, Paragon commissioned a poll as part of the Medicaid debate. Although most questions addressed reforms, we included one about ACA subsidy expansion.

Here is the question: “To help Americans get through the COVID pandemic, Congress passed legislation to expand assistance to Americans who receive health care coverage through Obamacare. The legislation increased the amount of the subsidies people receive to help them pay their premiums, and it expanded the number of Americans who can receive the subsidies. The legislation made the insurance cost nothing to nearly half of the people in the program, with payments going directly to insurance companies. These enhanced subsidies are scheduled to expire at the end of 2025 unless Congress votes to make them permanent.”

The poll was representative of the American electorate. Respondents then chose between two options.

• 53 percent of respondents said that Congress should allow these enhanced subsidies to expire and return to the subsidy levels that existed before COVID.
• 47 percent of respondents said that Congress should vote to make these enhanced subsidies permanent.

A recent poll claiming support for permanent subsidies was extremely misleading—it asked about total subsidies, not just the enhanced portion, giving respondents the impression that all ACA subsidies would expire. But even if Congress allows the Biden COVID credits to lapse, a family of four earning up to $125,000 a year would still receive subsidies—and nearly 95 percent of enrollees would continue to receive subsidies, most of them quite substantial, to purchase exchange plans.

The misleading poll also fails to mention that letting the Biden COVID credits expire—as Congress should—would result in somewhat higher premium costs to enrollees, but reduced cost for taxpayers. In fact, maintaining the COVID credits costs nearly $40 billion a year, fuels fraud, and discourages small-employer coverage.

Big health insurers are among the strongest supporters of the expanded subsidies since the subsidies flow directly from the U.S. treasury to them. Much of the information that Congress receives on the expanded subsidies over the coming months will come from the industry eager to protect the government financing stream, as it is easier for insurers to collect from the treasury than it is for them to offer consumers a product that they value and are willing to buy.

Victims of Biden’s Enrollment-At-Any-Cost Strategy

Last week, Gabrielle Kalisz Minarik authored a must-read Paragon Prognosis exposing the real-life consequences of President Biden’s enrollment-at-any-cost exchange strategy. Her post highlighted a dozen people harmed by Biden’s policies, people who were enrolled or switched without their consent and who lost coverage, had prescriptions denied, and experienced steep tax penalties. The stories should outrage policymakers who want government to work for the American people.

In The Greater Obamacare Enrollment Fraud, we estimated that at least 6.4 million people are enrolled in fully subsidized plans this year for which they are not eligible. Although the taxpayer cost is large, Elle’s post shows the private human toll as well as the exploitive nature of unscrupulous brokers committing fraud to pocket big commissions—fraud that bad policy enabled.

CMS Cracks Down on Duplicate Enrollment in Government Programs

Kudos to CMS and Dr. Oz for cracking down on a portion of the improper enrollment unleashed by Biden-era mismanagement. Last week, CMS announced it found 1.2 million enrolled in multiple Medicaid programs and 1.6 million in both Medicaid and subsidized exchange coverage. CMS estimates that its corrective actions will save $14 billion annually—a massive victory for taxpayers.

The OBBB empowered CMS to combat duplicate enrollment. For people enrolled in two or more Medicaid programs, CMS will provide states with a list of individuals dually enrolled and ask states to recheck their eligibility. And CMS will work with states to prevent individuals from losing coverage inappropriately.

For people enrolled in Medicaid and a subsidized exchange plan in a state using the federal exchange, CMS will notify the individuals and ask them to disenroll from Medicaid if no longer eligible, end their exchange subsidy, or notify the exchange that the data match is incorrect and submit supporting documentation.

These efforts will end millions of double payments and preserve taxpayers’ dollars for the truly vulnerable. CBO estimates that there were 21 million people who had multiple forms of coverage in 2024 (some combination of Medicaid, exchange plans, and an employer plan) so there remains significant work to do.

Prices Go Up When Hospitals Acquire Physician Practices

As I’ve written before, declining competition in the U.S. health care system is hurting patients and driving up prices. Although hospital consolidation has attracted a lot of attention, another trend is just as troubling: The precipitous decline in independent physician practices.

A new National Bureau of Economic Research study analyzed the effects of hospital acquisitions of physician practices in 2013 and 2014. Using 2011 to 2016 claims data, the study found that significant and sudden price increases accompanied these mergers, likely because of decreased competition. Hospital acquisitions of practices rose 72 percent from 2008 to 2016. Following these acquisitions, hospitals immediately began capitalizing on their market power: prices for labor and delivery admissions grew an average of 3.3 percent for hospitals and 15.1 percent for physicians, with no detectable improvement in quality.

Nearly every analyzed transaction was valued below Federal Trade Commission (FTC) reporting thresholds, meaning that there was little enforcement of competition statutes. Yet vertical hospital-physician mergers have anticompetitive effects similar in magnitude to those of horizontal mergers, which are subject to greater scrutiny.

Large, consolidated hospital systems pose a major policy challenge, but Congress should eliminate incentives for greater consolidation. For example, Paragon research highlights how Medicare’s higher payment rates for services in hospitals incentivize hospitals to buy physician practices and convert them to outpatient departments with higher reimbursement rates. Stronger site-neutral payment policies would disincentivize this vertical consolidation and help lower costs for both patients and taxpayers.