People with Obamacare insurance aren’t getting any more health care today than they did a decade ago, before the program was started. Yet the costs of the program keep soaring.
Democrats want more taxpayer dollars to pay for those costs. Republicans are resisting. Both parties should do the public a favor and consider sensible reforms instead of forcing taxpayers to continue throwing good money after bad.
Basic Design Flaw
The problem with Obamacare is not difficult to understand. The program was designed to force people to buy a product that few people would buy on their own if they had to pay the full price.
Originally, there was an individual mandate to buy the insurance, backed by fines for those who refused. Congress dropped the fines, but the government at various times has taken steps to try to prevent alternatives to Obamacare from being sold on the market or offered by employers.
Initially, Obamacare subsidies were available only for people with incomes up to 400 percent of the poverty level. But as costs kept rising, people not getting a subsidy (especially those who were healthy) began to abandon the market.
Between 2016 and 2019, the unsubsidized part of the market was cut almost in half—exhibiting the characteristics of a “death spiral” in which soaring costs drive the healthy away and the remaining pool becomes sicker and more costly. Ever-higher premiums are needed to keep the program solvent, and as premiums rise, the healthiest of those remaining in the pool begin to leave, contributing to a never-ending cycle.
COVID Smokescreen
Democrats passed a second round of subsidies to keep the system afloat. Although these are often called “COVID era” subsidies, they had little to do with COVID. They were enacted to prevent the death spiral from destroying Obamacare completely.
Take a 50-year-old with an income of twice the federal poverty level (roughly the age and income of the average enrollee). From 2014 to 2020, the annual premium for this enrollee increased from about $4,500 to $8,000. With the COVID-era subsidies, government stepped in to pay almost all the increase in cost. This year, 93 percent of the premium is being paid by federal taxpayers.
Private Sector Superiority
So, what’s the alternative? We should begin by recognizing that the way we treat health care is completely different from how we approach other essential goods and services, such as food, clothing, and shelter.
For these other necessities of life, we let the private sector meet all the needs it can, on the theory the market is generally superior to government in doing so. We establish a government-funded safety net for those needs that are socially important but unmet by the market.
Health care should be no different.
John C. Goodman, Ph.D., ([email protected]) is co-publisher of Health Care News and president and founder of the Goodman Institute for Public Policy Research. A version of this article was published in Forbes on October 14, 2025. Reprinted with permission.
