Trump's Latest Con is On: Presenting the $500 User Fee Flim-Flam

 

Less than 24 hours after making an absolutely absurd and utterly illegal attempt to literally bribe voters with $5,000 cash if they vote for Republicans this November, the Trump White House just announced a prototype of sorts:

RETURNING BIDEN OVERCHARGES TO WORKING FAMILIES: Today, President Donald J. Trump announced that the federal government will return to the American people hundreds of millions in Obamacare overcharges, collected by the Biden Administration, by issuing refunds of $500 per person to nearly 1 million Americans in 30 states. Today’s actions directly refund the Americans most exposed to the higher costs imposed by the Biden Administration’s gross mismanagement of Obamacare.

So what the hell is this all about? Let's take a look, shall we?

The Biden Administration overcharged Americans through Obamacare plan exchange “user fees” that were passed on to consumers in the form of higher premiums, funding the operations of the federal Obamacare exchange far in excess of what was needed to run the exchange.

ACA "User Fees" are a small percentage tacked onto premiums for policies sold through the federal ACA exchange, HealthCare.Gov. These user fees are what funds the federal exchange:

These fees cover a range of essential services, including technology support, call center operations, and outreach efforts to enroll more Americans in health insurance plans. By charging insurers a percentage of the premiums collected from plans sold through Healthcare.gov, the government created a self-sustaining financial model that helps ensure the long-term viability of the exchange.

The federal user fees only apply to the 30 states which utilize HealthCare.Gov; the other 20 states (+DC) which operate their own ACA exchanges fund their operations & marketing/outreach via a variety of means. Some of them also have "user fees" similar to the federal exchange, others have insurer or provider taxes, others just utilize the general fund.

In any event, the claim that the Biden Administration "overcharged" for operating the ACA is sheer nonsense. Federal exchange user fees were set to 3.5% of premiums up through 2019 before being knocked down to 3.0% in 2020. It was the Biden Administration further reduced the fee to just 2.25% in 2022, and while they did bump it back up to 2.75% in 2023, they cut it back down further yet to 2.2% for 2024 and all the way down to 1.5% for 2025.

In fact, it was the TRUMP Administration which raised the federal user fee back up to 2.5% for 2026. Technically this was changed by the outgoing Biden Admin, but Trump 2.0 could certainly have reduced it if they wanted to via a revised proposal...and even if you disagree, for 2027, the Trump Regime was originally proposing to keep it at exactly the same 2.5%, although in the final version of the rule they're cutting it down to 1.9%.

As a result, the Biden Administration accumulated a significant surplus of funds that were not used to benefit the Americans who paid these higher premiums.

Again, if there really was a massive "excess" of HealthCare.Gov user fees left over from the Biden Administration, the Trump Regime could have simply further reduced the 2027 user fee level accordingly. Instead of 1.9%, they could have further knocked it down to 1.5% or whatever and just used the "excess" money to fill in the gap next year. This would have saved those same full-price payers a few bucks while also, ironically, saving the federal government several hundred million dollars in reduced subsidies.

Of course, all of this assumes that the 2.5% rate was "excessive" to begin with.

President Trump is refunding these excess fees to Americans who do not receive premium assistance under the Unaffordable Care Act – and therefore paid the full cost of Biden’s premium tax – in the 30 states that use the federal exchange for the operations of their Obamacare markets.

In other words, instead of refunding the money to everyone who was supposedly "overcharged" (around 19.2 million Americans as of February 2026, although this has likely dropped by another couple of million people as of today), the vast majority of whom are very low income, the Trump Regime is instead giving ALL of it to just the million or so who aren't receiving federal subsidies this year...the vast majority of whom earn more than 400% of the Federal Poverty Level (FPL), meaning they're basically middle or upper-middle class.

These states include 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.

Did you notice anything about that list? By an amazing coincidence, 15 of the 21 states which operate their own ACA exchanges also happen to be fairly solidly blue states...which means that 26 of the 30 listed above are either red or swing states (DE, HI, NH & OR are the exceptions).

Thanks to President Trump’s actions, nearly 1 million Americans will receive a refund check of $500 per person. Checks will be sent to eligible Americans beginning in October 2026.

Ah yes, just ahead of the midterms. Imagine that.

Here's the true irony of this gimmick by Trump 2.0, however: The very people that he's "offering" a $500 apiece cash "refund" to also happen to be the same people who he and Congressional Republicans just RAISED premiums on by up to $50,000/year this year by letting the enhanced tax credits expire.

LET ME REPEAT THAT: Trump & Congressional Republicans caused premiums for this exact subset of the population to skyrocket by thousands or even tens of thousands of dollars, and is now tossing a one-time $500 payoff at them in return.

Or, as Apocalypse Now put it more crudely, "We’d cut them in half with a machine gun and give them a Band-Aid."

In fact, even if you include those still receiving subsidies, on average, ACA enrollees are paying $780 more apiece in premiums this year (largely due to the subsidies expiring)...plus an additional estimated ~$716 in out of pocket expenses. That's nearly $1,500 more per enrollee...and again, for those no longer eligible for federal subsidies the average is much, much higher.

Trump is playing one of the oldest con games in history: He took $100 out of your back pocket and wants you to thank him for putting $10 back in.

But wait...perhaps there's a silver lining? After all, the fact sheet says it's going to "Americans who do not receive premium assistance" which could also include the hundreds of thousands of recent documented, legally-residing immigrants who earn less than 100% FPL who have also had their subsidy eligibility cut off, right?

Wrong, silly! According to this Politico story, the refunds will only go to "to people who earn too much to qualify for an income-based subsidy to lower their health insurance costs" which, by definition, means those who earn over 400% FPL (of course anyone earning less than 100% FPL would never be able to afford to enroll at full price in the first place, much less pay any user fees, which I guess makes this a moot point).

Oh yeah...as you probably already guessed, this scam of his may be illegal anyway (unfortunately this story is paywalled so I only caught the sub-head):

Right before midterms, Trump dangles $500 refunds for select ACA enrollees

It’s unclear what legal authority Trump has to give cash to only some ACA plan holders

UPDATE: I decided to actually dig in deeper to see if I could figure out just how much revenue the HealthCare.Gov user fees have actually generated over the years. In order to do so, I first plugged in the annual average effectuated enrollment for the FFM (Federally-Facilitated Marketplace) states and the SBM-FP (State-based Marketplace-Federal Platform) states, all of which utilize the federal ACA exchange:

State-based Marketplace (SBM): States running a State-based Marketplace are responsible for performing all marketplace functions for the individual market. Consumers in these states apply for and enroll in coverage through marketplace websites established and maintained by the states.

State-based Marketplace-Federal Platform (SBM-FP): These states are considered to have a State-based Marketplace, and are responsible for performing all marketplace functions for the individual market, except that the state will rely on the federal Healthcare.gov website for eligibility and enrollment functions. Consumers in these states apply for and enroll in coverage through Healthcare.gov.

Federally Facilitated Marketplace (FFM): In a Federally Facilitated Marketplace, HHS generally performs all Marketplace functions, although some states may conduct plan management activities to support certification of qualified health plans. Consumers in FFM states apply for and enroll in coverage through Healthcare.gov.

It's important to distinguish between FFM and SBM-FP states because the federal exchange user fee has been lower for SBM-FP states than for FFM states since 2017...and because some states have shifted between FFM and SBM-FP status over the years. I acquired the official user fees for each by looking up the FINAL HHS Notice of Benefit and Payment Parameters (NBPP) for every year from 2016 - 2027.

Next, I plugged in the average monthly premiums for the various FFM and SBM-FP states for each year, which are included with the Health Insurance Exchanges Annual Effectuated Enrollment report. I had to separate out the SBM-FP states from the FFM states for each year to do this.

Doing the above gives the following spreadsheet (I've broken it out into two sections for easier readability):

I only have hard enrollment data through February for most states for 2026, of course, so I had to use an educated guess as to what the annual average effectuated enrollment for each category will end up being.

Otherwise, the data in the spreadsheet above should be fairly accurate. If so, it looks like the total revenue generated via the HC.gov user fees over the years has ranged from ~$1.2 billion in 2016 to as much as ~$2.5 billion this year.

Now, is any of this excessive? Well, that depends on your point of view. I have no idea what the actual operational costs of running HealthCare.Gov is from year to year, which also includes the call centers, servers, software updates/maintenance and so forth. There's also the marketing & outreach budget...which is typically pretty robust under both the Obama and Biden Administrations but which has been slashed by up to 90% by the Trump Regimes. Obviously if you're spending less on outreach/marketing, you "don't need" as much money to operate those efforts.

IF you assume a "baseline" total budget of $1.5 billion/year (I'm basing that on the average of the first three years) and you adjust that for inflation each year, it looks like HealthCare.Gov has operated with a significant budget surplus some years...but a significant budget shortfall other years. In 2025, when the fees were only 1.5% & 1.2% respectively, they came up ~$360 million short based on this model, while in 2026 they should come in ~$410 million ahead (again, assuming ~11.2 million HC.gov enrollees on average and assuming that the "target" budget is around $2.09 billion when adjusted for inflation).

Obviously that $1.5B baseline is arbitrary, but the point is that IF the Trump Regime really feels that there's an extra $500 million lying around, they could have simply dropped the 2026 user fee down from 2.5% / 2.0% to 2.0% / 1.5% this year and voila, no more surplus while every ACA enrollee in an HC.gov state would have saved an average of $33 this year without requiring a convoluted & unfairly targeted "refund" stunt.