Spiraling health insurance costs stymie members of US Senate panel

U.S. senators began debating how to reduce health care costs for Americans during a hearing Wednesday, where experts' varied recommendations and comments from lawmakers previewed the rocky and potentially long path ahead.

Republicans on the Finance Committee argued the Affordable Care Act, or Obamacare, has led to a spike in health insurance costs for individuals that shouldn't be offset by tax credits any longer.

Democrats urged their colleagues to extend the enhanced subsidies for at least another year to give Congress more time to address larger, more complex issues within the country's health insurance and health care systems.

Committee Chairman Mike Crapo, R-Idaho, said the hearing marked "the first step in building the foundation for" health care reform.

"We need both short-term and long-term solutions," Crapo said. "In the short term, we cannot simply throw good money after bad policy. If we keep advancing a system that drives up premiums, we will make this problem even harder to solve."

"Instead, we should set the groundwork for giving Americans more control over their health care choices," Crapo added. "Rather than accepting the current system of giving 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 for medical expenses and generally are used in conjunction with a high-deductible insurance plan, but an HSA "is a trust/custodial account and is not health insurance," according to the Congressional Research Service.

The ACA, signed into law by President Barack Obama in 2010, overhauled the U.S. health care system with the intent of reducing high rates of uninsured people and ending insurance industry practices such as exclusions based on pre-existing conditions and the sale of policies with high costs and skimpy coverage. The law also expanded Medicaid and, for individual coverage, introduced the health insurance exchanges, or marketplaces, that now are at issue.

According to the health organization KFF, the number of uninsured Americans fell from about 14% to 16% in the years preceding passage of the law to a record low of 7.7% in 2023.

Pessimism about health care action

Oregon Sen. Ron Wyden, the top Democrat on the panel, rebuked Republicans for focusing on other policy areas throughout the year instead of making improvements to health care.

"Sitting on your hands has consequences," he said.

Wyden doesn't see a way for Congress to extend the enhanced tax credits set to expire at the end of the year for people who get their health insurance from the ACA marketplace, despite Democrats pressing for that during the 43-day government shutdown that ended in mid-November.

Wyden expressed support for working with Republican senators to address health insurance companies' structure, though he said he is "skeptical" his GOP colleagues will actually approve legislation on that particular issue in the months ahead.

"Now if they are serious about taking on the crooks that dominate big insurance, like UnitedHealthcare, I'm all in," Wyden said. "In my view that starts with a laser focus on lower costs for consumers, going after fraud where it truly exists, and cracking down on middlemen."

'Very little that this Congress can do'

Douglas Holtz-Eakin, president at the center-right American Action Forum and former chief economist at the Council for Economic Advisers during the President George W. Bush administration, told the committee the structure of the Affordable Care Act poses problems.

"As a piece of health policy, economic policy and budget policy, the ACA has always been a troubling construct," Holtz-Eakin said, later adding there is "very little that this Congress can do to change the outlook" for 2026.

Holtz-Eakin testified that Congress is long "overdue for a real rethinking of health care policy at the federal level" that he believes should focus on two primary areas.

The first is to "rationalize the insurance subsidies" and the second is to address what he referred to as "high-value care," which he said should include Medicare, the health program that covers 69 million Americans over 65 and some people with disabilities.

"Medicare is a great budgetary threat, and so I encourage the committee and the Congress as a whole to take a hard look at that and make some progress toward better health care outcomes and better budgetary outcomes," Holtz-Eakin said.

Jason Levitis, senior fellow of the Health Policy Division at the left-leaning Urban Institute and a Treasury employee who led the ACA implementation at the department during the Obama administration, urged lawmakers to address the "too complicated and segmented" health insurance marketplace.

Levitis said the best short-term option for Congress would be to extend the enhanced tax credits for ACA enrollees during 2026, despite the time crunch.

"At this point the only feasible option is a clean extension of the existing enhancements," Levitis said. "The marketplaces have already built that option and have been preparing for months for the possibility of an extension."

Former Trump adviser says ACA 'failed'

Brian Blase, president of the Paragon Health Institute and a former special assistant to President Donald Trump at the White House National Economic Council, said bluntly that the Affordable Care Act has "failed."

"The law entrenched an inefficient insurance-dominated health sector with massive subsidies flowing straight from the Treasury to health companies," Blase said.

The subsidies for ACA marketplace plans, he said, were "ill-designed and inflationary," urging lawmakers not to extend them for another year.

"The enrollee share of the premium is capped regardless of the total premium. When enrollees pay only a small slice of the premium or no premium at all, insurers face almost no price discipline," Blase said. "Insurers can raise premiums knowing the taxpayers will absorb almost all of the increase."

Blase said he believes the ACA's regulations on health insurance companies are one of the reasons costs have spiked.

"For example, under the medical loss ratio, insurers must spend a minimum share of premium revenue on medical claims. In other words, to increase profits, insurers must increase premiums," Blase said. "The ACA's essential health benefits require plans to cover the same set of services regardless of what people want or need. These rules increase premiums and wasteful spending."

The medical loss ratio was included in the ACA in response to insurers who spent "a substantial portion" of premiums on administrative costs and profits, including executive salaries, overhead and marketing, according to the Centers for Medicare and Medicaid Services.

'We all believe we need to reform'

Senate Majority Leader John Thune, R-S.D., told reporters separately from the hearing the debate over how to restructure health insurance to bring down costs has highlighted the "differences of opinion" among GOP lawmakers.

"We've got a lot of people who have strong views, but the one thing that unites us is we all believe we need to reform, and we've got to do something to drive health care costs down," Thune said.

GOP leaders, he added, are "looking for solutions that will lower health care premiums, not increase them. And what we see today is just constant inflationary impacts from some of these policies of the past."

Trump, who would need to support any health care overhaul bill for it to move through Congress, wrote in a social media post Tuesday that he wants lawmakers to send money straight to Americans, without detail on how that would work.

"THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE, WITH NOTHING GOING TO THE BIG, FAT, RICH INSURANCE COMPANIES, WHO HAVE MADE $TRILLIONS, AND RIPPED OFF AMERICA LONG ENOUGH," Trump wrote. "THE PEOPLE WILL BE ALLOWED TO NEGOTIATE AND BUY THEIR OWN, MUCH BETTER, INSURANCE. POWER TO THE PEOPLE! Congress, do not waste your time and energy on anything else. This is the only way to have great Healthcare in America!!! GET IT DONE, NOW. President DJT"