The U.S. Capitol in Washington, DC, amid fog on Tuesday, December 10, 2024. (Photo by Jennifer Shutt/States Newsroom)
WASHINGTON – U.S. senators began debating how to reduce health care costs for Americans during a hearing Wednesday. Experts provided a glimpse of the rocky and potentially long road ahead with various recommendations and comments from lawmakers.
Republicans on the Finance Committee argued that the Affordable Care Act, or Obamacare, has led to an raise in health insurance costs for individuals that should no longer be offset by tax credits.
Democrats called on their colleagues to extend the increased subsidies for at least another year to give Congress more time to address larger, more convoluted issues within the nation’s health insurance and health care system.
Committee Chairman Mike Crapo, R-Idaho, said the hearing was “the first step in laying the groundwork for” health care reform.
“We need both short-term and long-term solutions,” Crapo said. “In the short term, we can’t just throw good money at bad policy. If we continue to develop a system that drives up premiums, this problem will become even more difficult to solve.”
“Instead, we should lay the foundation for giving Americans more control over their health care decisions,” Crapo added. “Instead of accepting the current system that donates billions of taxpayer dollars to insurers, we should consider providing financial assistance directly to consumers through health savings accounts, which are now available on the Obamacare exchanges through a provision in the One Big Beautiful Bill.”
Such tax-advantaged accounts are used to save money to pay medical expenses and are generally used in conjunction with a high-deductible insurance plan, but an HSA “is a trust/custody account and not health insurance.” accordingly the Congressional Research Service.
The ACA, signed into law by President Barack Obama in 2010, overhauled the U.S. health care system. The goal was to reduce the high rate of uninsured people and end insurance industry practices such as exclusions based on pre-existing conditions and the sale of high-cost policies with little coverage. The law also expanded Medicaid and introduced the now questionable health insurance exchanges or marketplaces for individual insurance coverage.
According to health organization KFF, the number of uninsured Americans fell from about 14% to 16% in the years before the law was passed a record low of 7.7% in 2023.
Pessimism about health care measures
Oregon Sen. Ron Wyden, the top Democrat on the panel, chided Republicans for focusing on other policy areas throughout the year instead of making health care improvements.
“Sitting on your hands has consequences,” he said.
Wyden sees no way for Congress to extend the expanded tax credits set to expire at the end of the year for people who get their health insurance through the ACA marketplace, despite Democrats pushing for it throughout the year the 43-day government shutdown that ended in mid-November.
Wyden expressed support for working with Republican senators to address the structure of health insurance companies, but said he was “skeptical” that his GOP colleagues would actually pass legislation on this specific issue in the coming months.
“If they’re now serious about dealing with the crooks who dominate big insurance companies like UnitedHealthcare, then I’m all in,” Wyden said. “I think that starts with a laser focus on lowering costs for consumers, going after fraud where it really exists, and going after middlemen.”
“Very little this Congress can do”
Douglas Holtz-Eakin, president of the center-right American Action Forum and former chief economist of the Council for Economic Advisers during President George W. Bush’s administration, told the committee that the Affordable Care Act’s structure poses problems.
“As part of health policy, economic policy and budget policy, the ACA has always been a troubling construct,” Holtz-Eakin said, later adding that this Congress can do “very little to change the outlook” for 2026.
Holtz-Eakin testified that Congress is “long overdue for a real rethink of federal health care policy,” which he said should focus on two main areas.
The first is to “streamline insurance subsidies” and the second is to address what he called “high-value care,” which he said should include Medicare. the health program That includes 69 million Americans over 65 and some people with disabilities.
“Medicare represents a major budget threat, and that’s why I encourage the committee and Congress as a whole to take a hard look at it and make progress toward better health care and better fiscal outcomes,” Holtz-Eakin said.
Jason Levitis, a senior fellow in the health policy department at the left-leaning Urban Institute and a Treasury Department official who led the department’s ACA implementation during the Obama administration, urged lawmakers to address the “overly complicated and segmented” health insurance market.
Levitis said the best short-term option for Congress is to extend expanded tax credits for ACA members in 2026, despite the time crunch.
“At this point, the only viable option is a clean expansion of the existing improvements,” Levitis said. “The marketplaces have already built this option and have been preparing for the possibility of an extension for months.”
Former Trump Adviser Says ACA ‘Failed’
Brian Blase, president of the Paragon Health Institute and a former special assistant to President Donald Trump on the White House National Economic Council, said bluntly that the Affordable Care Act has “failed.”
“The law has entrenched an inefficient, insurance-dominated healthcare sector with massive subsidies flowing directly from the Treasury to healthcare companies,” Blase said.
It said the subsidies for ACA marketplace plans were “poorly designed and inflationary” and urged lawmakers not to extend them for another year.
“The insured person’s share of the premium is limited, regardless of the total premium. If insurers only pay a small part of the premium or no premium at all, the insurers are subject to almost no price discipline,” said Blase. “Insurers can increase premiums knowing taxpayers will cover almost all of the increase.”
Blase said he believes the ACA regulations for health insurance companies are one of the reasons for the cost raise.
“For example, as part of the health insurance loss ratio, insurers must spend a minimum proportion of premium revenue on health insurance claims. In other words, in order to increase profits, insurers must increase premiums,” said Blase. “The ACA’s essential health benefits require plans that cover the same benefits regardless of what people want or need. These rules increase premiums and wasteful spending.”
The health insurance loss ratio was included in the ACA because insurers spent “a significant portion” of their premiums on administrative costs and profits, including executive salaries, overhead and marketing. accordingly the Centers for Medicare and Medicaid Services.
“We all believe we need reforms”
Senate Majority Leader John Thune, R-S.D., told reporters separate from the hearing that the debate over restructuring health insurance to cut costs highlighted the “differences of opinion” among Republican lawmakers.
“We have a lot of people who have strong views, but the one thing that unites us is that we all believe we need reform and we need to do something to reduce health care costs,” Thune said.
GOP leaders, he added, “are looking for solutions that will lower health care premiums, not raise them. And what we’re seeing today is just continued inflationary effects of some of these past policies.”
Trump, who would have to support any health care reform bill to get it through Congress, wrote in: a social media post On Tuesday, he announced that lawmakers should send money directly to Americans, without providing details about how that would work.
“THE ONLY HEALTH CARE PROVISION I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE AND NOTHING GOES TO THE BIG, FAT, RICH INSURANCE COMPANIES THAT MAKE TRILLIONS OF DOLLARS AND HAVE CHARGED AMERICA LONG ENOUGH,” wrote Trump. “PEOPLE WILL BE ALLOWED TO NEGOTIATE AND BUY THEIR MUCH BETTER INSURANCE. POWER TO THE PEOPLE! Congress, don’t waste your time and energy on anything else. This is the only path to great healthcare in America!!! GET IT DONE NOW. President DJT”
