Republicans and Democrats agree U.S. health care costs too much. Will they do anything about it?

Nov. 22—WASHINGTON — When the Senate Finance Committee met Wednesday for a hearing on the rising cost of health care in the United States, Republicans and Democrats agreed the problem has become a national crisis, but it didn't take long for the parties to demonstrate why they've had such a hard time working together to solve it.

Sen. Mike Crapo, of Idaho and the panel's Republican chairman, kicked off the hearing by saying Congress should "address the root causes of the explosive increase in health care costs," rather than sending billions of dollars to insurance companies to subsidize monthly premiums. Sen. Ron Wyden, of Oregon and the top Democrat on the committee, countered by insisting that with barely a month before the expiration of subsidies millions of Americans rely on to afford their health insurance, the "bare minimum" and "only feasible option" is to do exactly that.

"I'm not going to debate you on this right now," Crapo said to Wyden, before even introducing the witnesses. "We have very big differences of opinion on these issues."

How we got here

Fifteen years after Democrats passed the Affordable Care Act of 2010, the partisan fight over health care policy still revolves around that law, often called Obamacare, which passed without a single Republican vote.

The ACA made numerous changes to the U.S. health care system. It made more people eligible for Medicaid and required insurance companies to cover pre-existing health conditions. The law is best known for the insurance marketplaces it set up in an effort to close the gap between people who earn too much to qualify for Medicaid and those who get health insurance from their employers.

The Democrats who ran the government at the time reasoned that if younger, healthier people bought into the insurance pool, it would bring down the price of insurance for everyone who buys it. While some in the party pushed to make a "single-payer" system like Medicare available to all Americans, that idea faced opposition from many Democrats and all Republicans — not to mention the health insurance industry — so they opted instead to use taxpayer money and government rules to steer people to private insurance companies.

To encourage Americans to buy insurance from a federal or state-run marketplace, the ACA used a carrot-and-stick approach: subsidies to reduce monthly premium payments and a penalty for those who chose to stay uninsured. As it so often does, Congress used the nation's tax system for both sides of that equation, hence why it's in the jurisdiction of the Senate Finance Committee.

When Republicans swept to power in 2017, they failed in their effort to "repeal and replace" Obamacare, but they did start chipping away at it. The GOP's 2017 tax legislation eliminated the penalty for the uninsured, and enrollment in marketplace insurance plans declined during President Donald Trump's first term.

When Democrats retook control of the House, Senate and White House at the height of the COVID-19 pandemic in 2021, they made the existing tax credits far more generous — and costly — to encourage more Americans to buy health insurance from the marketplaces. The subsidies had been limited to households that earn less than 400% of the federal poverty line — in 2025, that's $84,600 for a couple or $128,600 for a family of four — but higher earners now qualified for subsidies to ensure they wouldn't spend more than 8.5% of their income on premiums.

A year later, many Democrats in Congress wanted to make the "enhanced" tax credits permanent, but others in the party were concerned about what that would cost — the nonpartisan Congressional Budget Office estimates that extending the more generous subsidies would cost taxpayers about $350 billion over 10 years. Measured strictly in terms of enrollment, the new spending was a success: The number of Americans enrolled in ACA marketplace insurance plans doubled from about 12 million in 2021 to over 24 million in 2025.

But while the prices those 24 million Americans paid were capped, the underlying cost of the insurance plans — financed through tax dollars and government debt — have kept going up. From 2014 to 2026, the average monthly "benchmark" premium — a figure based on plans available to a 40-year-old in each county — increased by about 129%, from $273 to $625, according to the nonpartisan health policy organization KFF. That's more than three times the rate of inflation, about 40% over that same period.

With a slim majority in the Senate and moderate members of their party concerned about costs, Democrats extended the enhanced subsidies only through the end of 2025. Embedded in that deadline was a political gambit: With most of the tax cuts Republicans had enacted in 2017 set to expire at the same time, Democrats hoped to extend the health insurance subsidies through negotiations with the GOP on a compromise tax bill, assuming neither party had complete control of Congress and the White House.

Come 2025, Republicans did have total control. Rather than work with Democrats, GOP lawmakers just extended the 2017 tax cuts in what came to be called the One Big Beautiful Bill Act. Not only did that law let the enhanced subsidies expire; it also further chipped away at the Affordable Care Act by imposing work requirements and other restrictions on Medicaid, the federally funded health care program that Washington, Idaho and most other states had expanded after the 2010 law let them do so.

As this year progressed and it became clear that most Republicans in Congress didn't want to extend the expiring insurance subsidies, Democrats played their strongest card in a weak hand: Nearly every member of the party refused to give Republicans the votes needed to pass a spending bill, threatening a government shutdown unless GOP leaders agreed to extend the subsidies and reverse their cuts to Medicaid.

Trump and congressional Republicans showed little interest in negotiating with Democrats, and as the government shutdown dragged on for a record six weeks, Democrats narrowed their demand to a one-year extension of the insurance subsidies. They knew that most people enrolled in ACA marketplace insurance live in congressional districts represented by Republicans, according to KFF, and more than three-quarters live in states Trump won in 2024.

Throughout the shutdown, Crapo took to the Senate floor to call on Democrats to end the shutdown and negotiate a solution to what he called a "crisis" of rising health care costs. He reiterated that appeal on Wednesday, but the hearing suggested bitterness left over from the nation's longest government shutdown — coupled with each party's political considerations heading into next year's midterm elections — makes a bipartisan solution unlikely.

Time running out for insurance subsidies

Throughout the hearing, Democrats delivered a clear message: Maybe spending billions to prop up a dysfunctional private insurance system isn't sustainable, but Congress can't just let the subsidies expire, which would cause average marketplace premiums to more than double, KFF estimates. Republicans, meanwhile, proposed a handful of different ideas that involve keeping the money it would cost to extend the premiums through 2026 — roughly $30 billion — and giving it directly to consumers to pay for health care.

Sen. Maria Cantwell began her remarks in the hearing by emphasizing just how little time Congress had to act before Dec. 15, the deadline for Americans to choose a marketplace insurance plan that would take effect at the start of 2026. While some of her fellow Democrats used their allotted five minutes to rail against the Medicaid cuts and other GOP policies, the Washington senator struck a different tone, proposing the expansion of a little-known provision in the Affordable Care Act that lets states create "basic health program" plans as an alternative to private insurance for low-income people.

So far, only Oregon, New York, Minnesota and the District of Columbia have created such a program. Cantwell pointed to New York as an example of how government could provide care at a lower cost than a marketplace insurance plan.

"We need a continuation of this plan, to make stability in the market, at least for the next year or two," Cantwell said, adding that she's willing to work with anyone on solutions to the underlying causes of rising costs.

Only one Republican in the hearing, retiring Sen. Thom Tillis of North Carolina, voiced support for a one-year extension. Crapo hasn't shown support for such a short-term solution, but he also hasn't endorsed another specific proposal or presented his own plan.

Sen. Bill Cassidy, a Louisiana Republican and chairman of the Senate Health Committee, pointed out that the ACA lets insurance companies keep 20% of the enhanced subsidies for administrative costs and profits. In contrast, Cassidy proposed giving that money directly to Americans in tax-advantaged health savings accounts, which the One Big Beautiful Bill Act quietly made available to those who buy high-deductible "bronze" insurance plans.

Trump threw his support behind such a plan in a post on Truth Social on Nov. 8, writing that the money "currently being sent to money sucking Insurance Companies" for ACA marketplace subsidies should "BE SENT DIRECTLY TO THE PEOPLE SO THAT THEY CAN PURCHASE THEIR OWN, MUCH BETTER, HEALTHCARE." On Thursday, Sen. Rick Scott, a Florida Republican, released a proposal to create "Trump Health Freedom Accounts" similar to existing health savings accounts, making an idea with little bipartisan support even more politically toxic for Democrats.

Brian Blase, president of the right-leaning Paragon Health Institute and a former economic adviser in the first Trump administration, backed that approach and argued that making health care prices more transparent and letting consumers choose their health care would make the system more efficient.

"One of the big problems with the ACA is how much power it gave to health insurance companies," Blase said. "We need to move the power away from giant health insurance companies, back to individual patients and families."

Jason Levitis, a senior fellow at the left-leaning Urban Institute who helped implement the ACA in the Obama administration, told the committee that giving money directly to consumers could result in higher prices for everyone who buys insurance, because relatively young and healthy people would choose to leave the insurance market.

Douglas Holtz-Eakin, president of the center-right American Action Forum and former director of the Congressional Budget Office, agreed with Levitis that Congress doesn't have time to create an alternative to the subsidies before premium increases hit in January. But he emphasized that broad reforms are needed to fix the nation's dysfunctional health care system.

Alongside the three policy experts was a fourth witness, Bartley Armitage, a retired construction worker from Eugene, Oregon. Wyden had invited him to put a face on the figures Democrats cite when they argue for extending the subsidies: The Congressional Budget Office projects that 3.8 million fewer Americans would have health insurance by 2034 if they aren't extended. More than 22 million people currently receive the enhanced tax credits, according to the Bipartisan Policy Center.

Armitage shared his own story — he and his wife aren't old enough to qualify for Medicare, and their income is too high to qualify for Medicaid or the smaller tax credits, so they face a nearly 500% increase in monthly premiums — but he also voiced a feeling many Americans share about the country's health care system. After the three policy experts proposed various reforms, Wyden asked for his constituent's thoughts.

"A lot of these ideas that I've been hearing about, I don't have the depth to comprehend a lot of it," Armitage said. "I don't know. I'm pretty confused and I'm concerned."

Near the end of the hearing, Sen. Peter Welch, a Vermont Democrat, complimented the four witnesses and said they each made good points about the U.S. health care system's flaws. Congress has a responsibility to fix those problems, he said, but the immediate question facing lawmakers is how to help the families whose monthly payments are about to spike.

"They did not cause the problem," Welch said. "There's something fundamentally bogus about us having this discussion about ideas about how we can bring down health care costs when families in Vermont, when families in Idaho, in Oregon, have no capacity to deal with these macro issues we're talking about."

Why Americans pay more for worse health outcomes

The United States spends twice as much on health care as the rest of the world's wealthy countries, on average, according to an analysis by the nonpartisan, fiscally conservative Peter G. Peterson Foundation. But compared to 13 other developed nations, Americans rank last in health outcomes including life expectancy, infant mortality and unmanaged diabetes.

U.S. spending on health care has risen steadily over the past half-century, both in dollar terms and as a percentage of the nation's gross domestic product. In 1975, the country spent 7.9% of GDP or $595 billion, adjusted for inflation, on health care. In 2023, it spent 17.6% of GDP, more than $4.8 trillion.

Neither party in Congress denies that's a problem, but they rarely agree on solutions. One notable exception is a bill Crapo said he and Wyden plan to reintroduce soon to crack down on pharmacy benefit managers, companies that act as middlemen between drug companies and customers, often deciding which drugs are available to a patient and what they cost. That legislation nearly passed last year, until Elon Musk, then a close Trump ally, pressured Republicans to kill it.

Generally speaking, Democrats want to use government to get more Americans insured and lower what Americans pay, even if that means spending additional tax dollars to make those prices more palatable. Republicans want to get government out of health insurance with the theory that market forces will push insurance companies to compete and reduce prices.

Paul Fishman, a professor at the University of Washington School of Public Health, said the current focus on insurance premiums misses the underlying problems with the U.S. health care system.

"The 'affordability' discussion that's happening right now is focused on affordability of insurance, but it's not focusing on affordability of care," Fishman said. "One of the biggest mistakes we make is failing to distinguish between prices and costs."

No country in the world has a perfect health care system, Fishman said, but the United States has managed to combine the worst parts of each of them into a uniquely dysfunctional conglomeration. Like any kind of system, he said, it begins with what the U.S. health care system rewards.

"The biggest issue with American health care is that the goal of the system is not to keep people healthy; it's to generate revenue from contact opportunities," Fishman said. "The physician isn't paid to keep you healthy or paid to keep you from getting worse. The physician is compensated by what he or she does to you."

Fishman said U.S. policymakers should take more lessons from other countries, and not just nations with entirely government-run health care systems. Countries with more successful market-based systems, like Germany, simplify how people get their insurance. In contrast, he said, the ways to access insurance and health care in the United States "are, in ways that no other system in the world has created, ridiculously disconnected."

Sixty years after Medicare was created to provide health care to the nation's seniors, nearly half of federal spending on the program goes to Medicare Advantage, a private alternative. Medicaid, which is administered by states using mostly federal funding, often reimburses providers at a lower rate than private insurance, making it harder for low-income patients with Medicaid to find a doctor.

Fishman, an economist who worked for Group Health Cooperative before it was acquired by Kaiser Permanente, gave the example that his former employer accepted Medicaid in Spokane County but not in the counties west of the Cascades around Puget Sound.

In the simplest terms, rising health care spending can be boiled down to two factors: higher costs for care and people using more of that care.

Unlike in the United States, governments in most other wealthy countries play a bigger role in negotiating and setting the prices of drugs and health care services. They also require residents to have health insurance coverage, whereas that coverage is optional for Americans.

In a more integrated health system, both the provider and the payer — whether an individual or a government — has an interest in doing relatively low-cost preventive care, which reduces costs in the long run. But a "fee-for-service" model like the U.S. health care system creates different incentives, with providers paid for each service rather than being rewarded for good long-term outcomes.

Some factors behind increased use of drugs and medical services, such as an aging population, aren't unique to the United States. Others, like the recent boom of expensive GLP-1 drugs for weight loss and treating diabetes, and the rates of chronic conditions like diabetes and heart disease, apply to Americans more than their counterparts in other wealthy countries.

After Congress funded most of the government only through the end of January, lawmakers have just over two months to come up with a compromise on health care — or risk another shutdown on Feb. 1. Members of both parties agree the nation's health care system is critically flawed, but whether they can find common ground on a solution remains to be seen.

Orion Donovan Smith's work is funded in part by members of the Spokane community via the Community Journalism and Civic Engagement Fund. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper's managing editor.

© 2025 The Spokesman-Review (Spokane, Wash.). Visit www.spokesman.com. Distributed by Tribune Content Agency, LLC.