The U.S. Capitol building in Washington, D.C., amid fog, Tuesday, December 10, 2024. (Photo by Jennifer Shutt/States Newsroom)
WASHINGTON — U.S. senators began debating how to lower health care costs for Americans during a Wednesday hearing where varying recommendations from experts and comments from lawmakers predicted a bumpy and potentially long road ahead.
Republicans on the Finance Committee argued that the Affordable Care Act, or Obamacare, had led to skyrocketing health insurance costs for individuals that should no longer be offset by tax breaks.
Democrats urged their colleagues to extend the increased subsidies for at least another year to give Congress more time to address larger, more elaborate issues in national health insurance and health care systems.
Committee Chairman Mike Crapo, R-Idaho, said the hearing was a “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 can’t just throw good money at bad policies. If we continue to develop a system that raises premiums, solving this problem will become even more difficult.”
“Instead, we should lay the groundwork to give Americans more control over their health care choices,” Crapo added. “Instead of accepting the current system of giving insurers billions of taxpayer dollars, we should consider providing financial assistance directly to consumers through health savings accounts, which are now available on the Obamacare exchanges thanks to the provision of the One Big Beautiful Bill.”
These tax-advantaged accounts are designed to save money for medical expenses and are typically used in conjunction with a high-deductible insurance plan, but an HSA “is a trust/trust account and is not health insurance.” According to Congressional Research Service.
The ACA, signed by President Barack Obama in 2010, reformed the U.S. health care system with the intention of reducing the high rate 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 thin coverage. The bill also expanded Medicaid and introduced health insurance exchanges for individual insurance, which are currently the subject of litigation.
According to health organization KFF, the number of uninsured Americans dropped from about 14% to 16% in the years leading up to the law’s passage. record low 7.7% in 2023
Pessimism regarding actions in health care
Oregon Sen. Ron Wyden, the top Democrat on the panel, blasted Republicans for focusing all year on other policy areas instead of improving health care.
“Sitting on your hands has consequences,” he said.
Wyden sees no way for Congress to extend increased tax credits that expire at the end of the year for people who buy health insurance through the ACA marketplace, even though Democrats pushed for it during 43-day government shutdown which ended in mid-November.
Wyden expressed support for working with Republican senators to address the structure of health insurance companies, although he expressed “skeptical” that his GOP colleagues would actually approve legislation on this particular issue in the coming months.
“Now, if they’re serious about fighting the fraudsters that dominate large insurance companies like UnitedHealthcare, I’m in,” Wyden said. “In my opinion, it starts with focusing on lower costs for consumers, pursuing fraud where it really exists and cracking down on middlemen.”
“There is very little this Congress can do.”
Douglas Holtz-Eakin, chairman of the center-right American Action Forum and former chief economist of the Council of Economic Advisers under President George W. Bush, told the committee that the structure of the Affordable Care Act creates problems.
“As a piece of health, economic and budget policy, the ACA has always been a troubling construct,” Holtz-Eakin said, later adding that “there is very little Congress can do to change the outlook” for 2026.
Holtz-Eakin testified that Congress is “long overdue to really think through health care policy at the federal level,” which he believes should focus on two main areas.
The first is to “rationalize insurance subsidies,” and the second is to address what he called “high-value care,” which he believes should include Medicare, health program includes 69 million Americans over the age of 65 and some people with disabilities.
“Medicare poses a huge threat to the budget, and I encourage the committee and the entire Congress to take a hard look at it and make some progress toward better health care outcomes and better budget outcomes,” Holtz-Eakin said.
Jason Levitis, a senior health policy fellow at the left-leaning Urban Institute and a Treasury official who led the department’s ACA implementation during the Obama administration, urged lawmakers to address the “overcomplicated and segmented” health insurance market.
Levitis said the best short-term option for Congress would be to extend the enhanced tax credits for ACA enrollees into 2026, despite the lack of time.
“At this point, the only viable option is a pure extension of existing improvements,” Levitis said. “Markets have already built this 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 former special assistant to President Donald Trump on the White House National Economic Council, said bluntly that the Affordable Care Act “failed.”
“The law has entrenched an inefficient, insurer-dominated health industry with massive subsidies flowing directly from the public treasury to health care companies,” Blase said.
He said subsidies for ACA marketplace plans are “poorly designed and inflationary,” urging lawmakers not to extend them for another year.
“The policyholder’s share of the premium is capped regardless of the total premium. When enrollees pay only a small portion of the premium or no premium at all, insurers have almost no pricing discipline,” Blase said. “Insurers can raise premiums knowing that taxpayers will cover almost the entire increase.”
Blase said he believes the ACA’s regulations on insurance companies are part of the reason for the skyrocketing costs.
“For example, under the medical loss ratio, insurers must spend a minimum portion 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 that 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 that spent a “substantial portion” of premiums on administrative costs and profits, including executive compensation, overhead costs and marketing, According to Centers for Medicare and Medicaid Services.
“We all believe we need reforms.”
Senate Majority Leader John Thune, R-S.D., told reporters separately from the hearing that the debate over how to restructure health insurance to lower costs has highlighted “differences of opinion” among GOP lawmakers.
“Many people have strong views, but one thing unites us: We all believe we need reform and we must do something to lower health care costs,” Thune said.
GOP leaders, he added, “are looking for solutions that will lower health care premiums, not increase them. And what we are seeing today is simply the continued inflationary effects of some of these past policies.”
Trump wrote that he would have to support any health care reform bill to pass Congress social media post on Tuesday that he wants lawmakers to send the money directly to Americans, with no details on how that would work.
“THE ONLY HEALTH CARE I WILL SUPPORT OR APPROVE IS SENDING MONEY DIRECTLY TO PEOPLE REFUNDING NOTHING TO THE BIG, POISONOUS, RICH INSURANCE COMPANIES THAT HAVE MADE TRILLIONS OF DOLLARS AND FOUGHT AMERICA FOR QUITE A LONG TIME” – Trump wrote. “PEOPLE WILL BE ABLE TO NEGOTIATE AND BUY THEIR OWN, MUCH BETTER INSURANCE. POWER TO THE PEOPLE! Congress, don’t waste your time and energy on anything else. This is the only way to have great health care in America! DO IT NOW. President DJT”
