Ge Bai and Elizabeth Plummer make clear that “ObamaCare is a money pit for taxpayers.” A slice:
Congress may yet extend ObamaCare “enhanced” premium subsidies. A new study shows why that would be a reckless act toward taxpayers.
Using health insurers’ mandatory filings, our study, published Friday in JAMA Health Forum, shows that the ObamaCare individual market has become a money pit for taxpayers. In 2024 they paid nearly 80% of the premiums for subsidized plans—compared with only 30% in 2014.
Taxpayers paid more than $114 billion directly to insurers in 2024—one-third more after inflation than in 2023, more than double the amount in 2020 (before the enhanced subsidies), and more than six times as much as in 2014. According to the Congressional Budget Office, this acceleration continued in 2025.
Why? Through regulations, ObamaCare banned affordable insurance options and destroyed independent physician practices, damaging the insurance and provider markets. Consolidation, administrative bloat, high prices and soaring premiums followed. Our study shows the correlation between premium growth and subsidy growth is nearly perfect.
That’s by design. Subsidies are calculated so that the premiums paid by subsidy-eligible enrollees for benchmark plans fall within a set percentage of their income, thereby transferring the financial exposure from rising premiums to taxpayers. In 2021 Congress expanded subsidy eligibility to higher-income households and lowered income caps for others, further burdening taxpayers. In August 2022, it extended these Covid-era subsidies through 2025.
Zero or near-zero premium plans proliferated as the subsidies approached or exceeded the premiums. In 2024, 90% of subsidy-eligible enrollees had access to plans with net premiums of $10 a month or less.
It is because the jobs are relatively few in number that they are relatively high in compensation. These newer, successful manufacturing companies in Bridgeport don’t have assembly lines with workers performing repetitive tasks. They have high-skilled workers meeting exacting specifications for a relatively small number of picky customers.
That’s what most American manufacturing firms look like today. Ninety-eight percent of U.S. manufacturing firms employ fewer than 500 people, and 93 percent employ fewer than 100, according to 2022 data.
These workers receive a lot of help from robots. Automation is what helps them be as productive as they are, and more productive workers are paid more. Overall, real value added by U.S. manufacturing is at all-time highs, even though fewer people work in manufacturing than in the past.
“Regime uncertainty” should be our bywords for understanding the economy of 2025. Trump’s push for “state capitalism,” ranging from tariffs to taking federal stakes in companies to industrial policy to jawboning companies to fire executives to targeted regulatory carveouts, has created a chaotic, pay-to-play environment in which firms find they can get favorable treatment by contributing to Trump’s political success, but the basic rules of the economic game are unpredictable and open to constant negotiation. That unpredictability has in turn deterred private investment and brought on stagflation.
Economist Robert Higgs developed the concept of regime uncertainty to explain why American recovery from the Great Depression was so slow. Investors feared for the security of their contracts and their private property rights as FDR turned explicitly anti-business during the 1936 presidential campaign. As a result, private investment stagnated and the economy tipped back into recession, prolonging the Great Depression. Investor confidence didn’t return until after the war, when it launched an economic boom.
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The evidence suggests that to turn the American economy around, the Trump Administration needs to work through Congress to pass statutory deregulation, end its experiments with industrial policy, government ownership, and tariffs, and shift from a “deal-making” posture of transactional politics to a firm, credible commitment to enforcing a level playing field for private business. Without a believable shift in strategy, this administration risks incurring an economic malaise that could last for another three years.
Here’s the abstract of a new paper by Tamar den Besten and Diego Känzig: (HT Tyler Cowen; emphasis added)
We study the macroeconomic effects of tariff policy using U.S. historical data from 1840–2024. We construct a narrative series of plausibly exogenous tariff changes – based on major legislative actions, multilateral negotiations, and temporary surcharges – and use it as an instrument to identify a structural tariff shock. Tariff increases are consistently contractionary: imports fall sharply, exports decline with a lag, and output and manufacturing activity drop persistently. The shock transmits through both supply and demand channels. Prices rise in the full sample but fall post-WWII, a pattern consistent with changes in the monetary policy response and with stronger international retaliation and reciprocity in the modern trade regime.
Ramesh Ponnuru reveals just how clueless – to put it mildly – is Rep. Ro Khanna (D-CA).
Decrying the Trump administration’s hostility to classical liberalism, Ebenezer Obadare warns of the consequences for Africa. Here’s his conclusion:
The administration is wasting an opportunity not only to drive home a point about the inextricability of commerce and freedom, but about the cornerstone principles of liberalism more broadly. At a time when the African continent needs more liberalism, the U.S. sells itself and Africa short by disavowing it, while also blurring the line between the U.S. and its geopolitical competitors, particularly China and Russia.
Liberty and commerce depend on each other to thrive. The world’s leading democracy should not be in the business of separating them.
Arnold Kling offers some advice to today’s college students.
Richard Reinsch asks if there is “conservative life after Trump.”
