Charging Low-Income Americans Just $1 Monthly Obamacare Premiums Could Save Taxpayers $7 Billion A YearBy: Christopher Jacobs
November 20, 2025
If roughly 1 million people won’t even pay $1 per month to enroll in an Exchange plan, what does that say about how Americans view the utility and value of Obamacare?
An axiom attributed to libertarian commentator P.J. O’Rourke argues, “If you think health care is expensive now, wait until you see what it costs when it’s free!” Two recent studies illustrate the veracity behind this statement and provide additional reasons for Congress not to pass another Obamacare bailout costing $350 billion plus interest.
Giveaway to Insurers An analysis by the Joint Economic Committee’s Republican staff found that “a substantial portion of the increase in government spending” since the enhanced subsidies went into effect in 2021 “is likely accruing to producers and intermediaries.” It cites a previous study on the original Obamacare subsidies to provide the economic reasoning behind its claims.
The JEC paper, using data from the earlier study, concludes that consumers received only 34 cents of every dollar in federal subsidy spending via lower net premiums. Insurers received more economic value than consumers — 38 cents on the dollar — because the subsidies, by making coverage more “affordable,” give them leverage to raise rates and capture more federal subsidy dollars, particularly in uncompetitive insurance markets. The other 28 cents constitute a deadweight loss because higher premiums discourage enrollment.
The JEC analysis finds that, even as subsidy spending has exploded since the introduction of the enhanced subsidies, the overwhelming majority of the benefits go to insurers (the purple bar in the below graph) or are destroyed by deadweight losses (the red bar), rather than helping consumers themselves (the navy-blue bar):
* * *
Zero-Dollar PremiumsA separate study, by Matthew Fiedler of the Brookings Institution, examined the effects of zero-dollar premiums on enrollment. This issue has become controversial because the enhanced subsidy formula allows low-income households to qualify for zero-dollar “benchmark” plans. (Before the enhanced subsidies, a smaller percentage of individuals did enroll in zero-dollar plans, but they did so by selecting bronze plans, which typically have higher deductibles and cost-sharing.)
While nearly half (at least 45 percent) of Exchange enrollees in 2025 report income that qualifies them for zero-dollar coverage, Fiedler estimates that just over one-third (34 percent) of participants, or about 8 million, are actually enrolled in zero-dollar plans this year. Using estimates from prior studies of enrollee behavior in state Exchanges and elsewhere, Fiedler estimates that charging a de minimis premium of, say, $1 per month would cause approximately 12 percent of that 8 million to disappear from the rolls. All told, 960,000 people would lose Exchange coverage, and “federal [subsidy] costs would decline by around $7.1 billion” per year.
Fiedler describes a nominal premium on all Exchange members as “creating an additional administrative barrier to enrolling and staying enrolled.” But what Fiedler views as a bug, many Americans — including this one — would call a feature. The idea of requiring all Americans to contribute something toward their health coverage, even a small amount, would strike most families as both fair and reasonable.
* * *
Source:
https://thefederalist.com/2025/11/20/charging-low-income-americans-just-1-monthly-obamacare-premiums-could-save-taxpayers-7-billion-a-year/
