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By Hugh Cameron
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The Trump administration plans to send out $500 checks to hundreds of thousands of Americans it says were “overcharged” for coverage under the Affordable Care Act (ACA), otherwise known as Obamacare.
On Thursday, the White House posted a video of President Donald Trump announcing the “rebate checks,” which he said would be delivered to “nearly 1 million hard-working Americans who were wrongly overcharged through Obamacare.”
A subsequent executive order said that the money would go to Americans in 30 states and would “directly refund the Americans most exposed to the higher costs imposed by the Biden administration’s gross mismanagement of Obamacare.” The rebates would be funded from a $500 million surplus that the White House says was accumulated from ACA exchange fees wrongly charged to consumers under President Joe Biden.
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Jonathan Gruber, an MIT economics professor and former healthcare official often described as one of Obamacare's "architects," told Newsweek that this "misleading claim" from the administration was simply "an effort to score political points."
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"Any organization that provides services, like insurance, has some administrative overhead," he said. "The exchanges under the ACA were very low overhead operations—the user fees were totally reasonable compared to the 20 percent overhead allowed for insurers of firms in the U.S. Why is Trump not issuing rebates for private insurance 'overcharges?'"
The announcement comes one day after Trump revealed a $5,000 “dividend” payment to voters if Republicans retain control of Congress after November’s midterm elections.
The White House directed Newsweek to Trump’s announcement and Thursday’s executive order when approached for comment.
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Who Will Be Eligible for the $500 Payment?
The White House said the rebate will return "hundreds of millions" of dollars in what it says were Obamacare overcharges.
Eligible recipients, the executive order states, are those who did not receive premium assistance—subsidies—and therefore paid the full cost of exchange-related fees in states that use the federal Obamacare marketplace.
The refunds apply to 30 states: Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Hawaii, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin and Wyoming.
“They were forced to pay excessive fees totalling at least $500 million. The last administration knew about this, they studied it, but they kept the money,” Trump said, adding that the $500 checks would “in many cases” cover “the entire spike in your insurance caused by Democrats.”
Checks are due to be sent to eligible Americans beginning in October.
Axios had reported on the plan ahead of the White House announcement, which has already drawn a negative reaction from some advocates of expanded federal health coverage. In response to Axios’ report on Wednesday, the left-leaning Protect Our Care called the plan a “gimmick” and “insult to working families grappling with the GOP healthcare crisis.”
“Five hundred dollars is a drop in the bucket compared to what Americans are paying because Trump and Republicans gutted healthcare to bankroll massive tax breaks for billionaires and big corporations,” Protect Our Care President Brad Woodhouse said. “Since Republicans took away tax credits from working families, millions of people have seen their monthly premiums rise by hundreds, if not thousands, of dollars.”
The group said that $500 would fail to cover the average cost of one month of health insurance—around $611, per an Urban Institute estimate—and fall significantly short of the price of a three-day stay in hospital, one month of diabetes medication or one month of cancer treatment.
Trump’s Paycheck Promises Stack Up
The announcement comes one day after the president revealed plans for a $5,000 “Trump dividend” for every U.S. citizen if his party wins control of both chambers of Congress in November.
"If the Republicans win the House of Representatives and the United States Senate, both of them," he told attendees at the party’s first midterm convention in Dallas on Wednesday, "I will issue a dividend to every adult citizen in the United States of America for $5,000."
Lawmakers and economists have already raised several questions about this proposal, notably whether the offer of money for votes is legal, whether Trump has the authority to spend the more than $1 trillion that the plan is estimated to cost, and how the administration would fund the expenditure.
Shortly after the announcement, Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, posted on X that the plan “would cost about $1.2 TRILLION in just one year. That's more than ALL THREE ROUNDS of COVID relief checks, despite no recessions.”
Cato Institute policy analyst David Ditch told Newsweek that the checks would “almost certainly be funded by adding to the national debt, which already stands at $300,000 for every household in the country.”
He added that “increasing demand by artificially injecting money into the economy would lead to higher prices” and said that the required increase in federal borrowing would result in higher interest rates.
*“*Both problems would linger after the money from the checks is gone,” he said.
Contact Newsweek editors on this story: Ben Kelly and Dave Siminoff.
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