Trump Mails $500 Checks to Obamacare Customers Who Paid Full Price

The Treasury has begun sending $500 payments to nearly one million Americans who bought health insurance on the federal Obamacare exchange and paid the full premium themselves, the White House announced this week.

The administration calls the payments Working Families Obamacare Refunds. Each one arrives with a letter signed by President Trump. "For years, the Biden Administration overcharged you to fund the operation of HealthCare.gov," the letter says, according to CBS News. "That money belongs to hard-working Americans, not the Government, and now, I am returning it to you!"

Who gets a check

The refunds go to people in the 30 states that use the federal exchange, HealthCare.gov, rather than running their own. To qualify, a customer must have bought a plan there without receiving premium assistance. CBS reported that most recipients earn more than four times the federal poverty level, which is the income line above which the law's subsidies stop.

That is a group Washington rarely does anything for. They are too well off for help and not rich enough to shrug at the bill: the self-employed, small business owners, early retirees not yet on Medicare. They have paid the sticker price for Obamacare coverage since the day the exchanges opened.

Texas and Florida have the most recipients, according to the administration's estimates, at roughly 139,000 and 127,900. CBS reported that households with more than one covered person may receive more than one payment, by check or direct deposit.

Where the money comes from

The federal exchange is funded by a user fee that the Centers for Medicare and Medicaid Services charges insurers that sell plans on it. Insurers build that fee into premiums, so customers pay it in the end. The White House fact sheet says the Biden administration collected more than it needed to run the exchange and left a surplus. News reports put that surplus at about $500 million, which matches the arithmetic: a little over 950,000 payments at $500 each comes to roughly $475 million.

"The government is going to pay the money directly to you," the president said in the fact sheet, adding that "the big insurance companies lose and the people of our country win."

What the fact sheet leaves out

Two things are worth knowing. The first is legal. The fact sheet mentions the Working Families Tax Cuts Act but does not spell out the statute that lets the Treasury turn surplus exchange fees into checks. That authority may be solid. It should be stated, because the next administration will inherit whatever precedent this sets.

The second is scale. The checks land after the enhanced subsidies that Congress passed during the pandemic expired, and premiums moved sharply. CBS cited a KFF poll from March in which half of marketplace customers said their premiums were a lot higher than the year before. For a family paying full price, $500 is a welcome correction to an overcharge. It is a fraction of a single month's premium for many of them.

A government that collects more than it needs and gives the extra back is doing something conservatives have asked for through many administrations. The larger problem is the price of the insurance itself, and a refund check does not touch it. That one is still waiting on Congress.