ACA subsidies: Helping big insurance companies, not you

Dec 9, 2025 by AFP

This is a guest blog written by Dean Clancy, Senior health policy fellow at Americans for Prosperity

America’s health care system should put patients first. Instead, it’s putting insurance companies first, and the 2021 Affordable Care Act subsidy expansions are a major reason why.

Sold in 2021 as a short-term Covid response, these subsidies wiped out critical guardrails and eligibility standards. The result? A targeted program turned into an open-ended stream of government health care funding.

As a result, millions of people are signed up for plans they don’t use, don’t need, aren’t qualified for, or don’t even know they have. The big winners, of course, are the insurance companies that sell these plans.

These temporary subsidies are set to expire at the end of the year, but some politicians in Washington are working overtime to extend them so a few companies can keep lining their pockets at your expense.

They even shut down the government for it.

Congress shouldn’t fall for the trap — it should allow a broken policy to expire as planned.

Who’s really getting enrolled? Meet the phantom enrollees

A common argument for maintaining ACA subsidies is that they increased enrollments from 4 million to 24.3 million in five years.

Sounds good, right? The problem is that enrollment numbers don’t tell us whether people are actually using the coverage, or even paying for it.

Reports have pointed out a growing issue: “phantom enrollees.”

These are individuals who appear in enrollment statistics but rarely use the insurance, often drop coverage, or only sign up because the subsidies make it free or nearly free.

In some cases, people get enrolled automatically without their knowledge.

Here are the numbers:

Nearly half of new enrollees are “phantom enrollees.”
In 2025, 6.4 million people were improperly enrolled, meaning they likely didn’t qualify or weren’t even aware they were on a plan.
And 40% of people on fully subsidized plans filed zero claims, compared to just 15% in normal private insurance.

So these big enrollment numbers aren’t proof that the ACA subsidies are working. Quite the opposite — they show that the program is wasteful and broken.

The real winners of the ACA subsidies? Spoiler: It’s not you

Who benefits from this program?

People who are gaming the system and big insurance companies.

The only one losing out is the taxpayer.

Here’s how:

The extension of the ACA subsidies created plenty of incentives for people to game the system and get coverage they don’t qualify for.
People taking advantage of the system get subsidies they don’t deserve, and big insurance companies get millions of taxpayer dollars by selling plans people aren’t using.
If we keep the subsidies as-is, the system would cost us around $410 billion over the next 10 years.

It makes sense why politicians and insurance lobbyists are pushing so hard to keep the system going:

Insurance companies get billions of dollars.

Politicians get to say they fought for your health care.

All while taxpayers get stuck with the bill.

[You can also read this op-ed from Lauren Stewart, Americans for Prosperity and Concerned Veterans for America’s senior federal legislative affairs liaison, on the issue]

The path forward: More personal freedom, more choice

The last thing we need is Washington pouring more money into a broken system that piles up debt while rewarding a handful of well-connected insurance companies.

What we need is a health care system that works for you, one that’s affordable and gives you the care you need.

At AFP, we call it the Personal Option: health care reforms that put you, not the government, in charge of your health care.

Watch AFP’s senior health policy fellow, Dean Clancy, talk about the road forward on health care by clicking here or on the picture below.