Based on the Congressional Budget Office’s (CBO) most recent projections, federal spending on Obamacare subsidies from 2026 to 2033 is now expected to be $490 billion—or 90.9%—higher than what CBO projected when President Biden took office. Importantly, this period excludes Biden’s COVID credits—enhanced Obamacare subsidies that also exploded fraud and waste in the program—since those expire after 2025. Even after the One Big Beautiful Bill (OBBB) becomes law, spending on Obamacare subsidies will be six percent higher than the CBO’s 2021 forecast.
The main driver of this massive spending increase is a set of Biden administration policies that prioritized enrollment at any cost. These policies weakened program integrity measures, stopped income verification for many enrollees, and essentially opened a year-round enrollment period. Some, like the decision to fix the so-called family glitch, were implemented without clear legal authority. (The “family glitch” arises from the Affordable Care Act’s defining “affordable” employer-based health benefits according to self-only coverage, even if an employee puts her family on the plan. The Biden Administration issued a rule redefining “affordable.” Paragon led a comment letter opposing the Biden administration rule in 2022.)
The biggest winners from these policies were health insurers, who reaped massive profits from the flood of subsidies and improper enrollment, which Paragon estimated was 5 million people in 2024. Based on CBO’s assessment, it will take a few years for the fraud to work its way out of the system.
The OBBB contains a host of commonsense measures to ensure that only eligible individuals who actually want coverage are enrolled, while reducing incentives for income manipulation to maximize subsidies. The OBBB also includes an appropriation for the ACA’s cost-sharing reduction (CSR) program, which will lower premiums and federal deficits.
In total, the commonsense reforms in the OBBB will reduce projected Obamacare subsidies by $334 billion over the 2026–2033 period relative to the inflated Biden-era baseline. However, even with these reforms, Obamacare subsidy spending would still be $156 billion higher than CBO’s February 2021 baseline for ACA subsidies over the same period. In essence, the OBBB would pare back a large share of the wasteful spending from the Biden administration’s policies.
