Let costly subsidies expire, then encourage real savings

Democrats continue to hold basic government operations hostage in an effort to extend expiring health insurance subsidies and prove economist Milton Friedman's dictum that nothing is as permanent as a temporary government program.

Democrats are pointing to estimates that average premiums for marketplace plans will increase sharply next year. They want subsidies from the COVID-19 era for people earning more than 400% of the poverty line to continue indefinitely.

Democrats have the cause and effect backward. Subsidies don't make coverage affordable. They are a major reason health care costs have skyrocketed and now cost $5 trillion annually, nearly 18% of U.S. gross national product. Hundreds of billions of dollars of annual Affordable Care Act subsidies increase premiums because they shield health insurers from market discipline.

The same dynamic has occurred with college tuition.

Among the biggest victims of runaway premiums are small businesses and entrepreneurs. Data from the Kaiser Family Foundation shows the average annual small business-sponsored family premium is $26,000.

How is a Main Street business supposed to purchase the equivalent of a Toyota Corolla for each employee, year after year, on what are often razor-thin profit margins? No wonder the share of small businesses that offer health coverage has significantly declined in recent years.

Instead of asking taxpayers to shoulder ever-growing premiums — a cycle that only fuels higher costs — Congress should advance genuine reform. The goal should be to make health care affordable and accessible for small businesses and working Americans by restoring competition, transparency and consumer choice.

On the insurance side, deregulation is needed to allow entrepreneurs to come together to form association health plans, which would give them the negotiating leverage and economies of scale of their big-business competitors.

Low-premium, high-deductible health plans also must be made legal to serve relatively healthy Americans. The end of the ACA-mandated "essential health benefits" can help small businesses design less expensive plans. High-risk pools, with some government funding, can address the 10% of Americans who account for two-thirds of health care spending.

On the provider side, direct care that clears the exam room of insurance and government bureaucrats can create a competitive, affordable market. Price transparency is a necessary prerequisite to empower patients and small businesses to choose cheaper options and punish price gougers. Existing cash-based surgical centers, imaging clinics and direct primary care offices show this model is possible and affordable. Expanded health savings accounts can make patient dollars for health care stretch further.

These ideas have been around for decades — even if Republicans haven't always done the best job of explaining them. Yet inertia, politics and massive political donations from the health care industrial complex maintain the status quo.

Additionally, 35% of ACA exchange enrollees did not file a single claim in 2024. That means taxpayers are paying premiums to big health insurance companies for healthy individuals who don't require care.

Families earning hundreds of thousands of dollars a year shouldn't demand their neighbor pay for their coverage — even if (or especially if) it is overpriced. Sen. Amy Klobuchar, D-Minn., learned this lesson the hard way when she presented a couple who make more than $130,000 from investments and pensions as a so-called victim of expiring expanded subsidies.

The debate over expiring subsidies is an opportunity to confront what truly drives unaffordable care: opaque prices, unnecessary middlemen, ridiculous charges and government-distorted insurance markets. Letting the temporary subsidies expire is the first step toward lasting, market-based reform that empowers patients and small businesses — not insurance companies and bureaucrats.