Last month, the Trump administration proposed a new rule to ensure "Marketplace Integrity and Affordability" on Obamacare's health insurance exchanges.
Washington is awash in proposed rules. But this one stands out.
It has the potential to save taxpayers $150 billion over the next decade and reduce premiums by more than 5%, according to a new paper by the Paragon Health Institute's Brian Blase.
Even for the federal government, that's a lot of money.
The savings are there because Obamacare's exchanges have become hotbeds of fraud, waste, and improper payments. And Biden-era reforms are almost entirely to blame.
As part of the Inflation Reduction Act of 2022, the Democrats made Obamacare's premium subsidies considerably more generous. People earning between 100% and 150% of the federal poverty level — between $32,150 and $48,225 for a family of four this year — are eligible for exchange coverage at zero cost, after accounting for subsidies.
The enhanced subsidies also ensured that no American, no matter their wealth, would pay more than 8.5% of their income on premiums.
Biden coupled this historic giveaway with reforms that made it much easier for consumers to misrepresent their income in order to maximize their subsidy.
For instance, under the previous administration's policy, if a health insurance exchange couldn't verify someone's income through a tax return, that exchange was required to take that customer at his or her word — a policy that all but encouraged prevarication on the part of exchange enrollees, insurance agents, and brokers.
The Biden administration also created new "special enrollment periods" which allowed people to sign up for coverage outside the standard window in certain circumstances — circumstances the government rarely confirmed.
Simply put, Biden made billions of dollars in new government subsidies available not just to people who were actually eligible for them but to anyone who claimed to be — and scarcely bothered to check. So it's hardly shocking that the result has been a dramatic increase in fraudulent exchange enrollment in recent years.
By Blase's estimate, between 4 million and 5 million Americans are improperly enrolled in the exchanges — at a cost to taxpayers of between $15 billion and $26 billion last year alone.
Against this backdrop, the new proposed rule represents a triumph of sanity and common sense.
Among other things, it would fortify income verification standards on the exchanges.
It would adopt more rigorous standards for confirming a person's eligibility for a special enrollment period. And it would hold insurance agents and brokers to account for enriching themselves at the expense of taxpayers.
As Blase points out, some of the rule's provisions could be stronger.
For example, the proposal requires those receiving no-cost coverage to confirm their income and eligibility before reenrolling each year — a plainly reasonable demand. But the penalty for failing is effectively a fine of just $5 a month.
That's not much of a deterrent, even for less well-off patients.
The sheer magnitude of savings promised by this proposed rule — some $150 billion — leads Blase to call it "one of the most fiscally responsible regulatory actions in American history." But what is perhaps most laudable about the proposal is that it achieves these savings not by denying assistance to those who deserve it but by cutting off those who don't.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It (Encounter 2025). Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.