Millions of Americans are going to suffer when they do not have to. Next year, over 20 million Americans are going to face thousands of additional dollars in premiums if they want to keep their health insurance. Last week, the Senate failed to pass either Republican and Democratic proposals to address this reality. However, these 20 million Americans are just further casualties in an already incredibly broken health care system. Neither proposal was remotely strong enough to fix that even when there is a known, clear, and feasible solution.

The Affordable Care Act created marketplaces where Americans could shop health insurance plans on a government website where each plan met a set of basic standards for coverage. The ACA also provided income-based subsidies that help cover premium costs for Americans and legal residents without employer-based insurance who don’t qualify for Medicaid or Medicare.

From 2014-2020, the government gave subsidies to American individuals and families earning between 100 percent and 400 percent of the federal poverty level (FPL). However, the Biden administration and congressional Democrats passed the American Rescue Plan in 2021, enhancing these subsidies so that not only were the amounts greater, but some Americans who earned above 400 percent of the FPL ($62,600 for an individual and $128,600 for a family of four) received them as well. This enhancement was only temporary, and the 2022 Inflation Reduction Act extended them through 2025.

Enhanced subsidies have been incredibly important to make health insurance affordable for millions of Americans because they further cap the amount of income a family will spend on their premiums. For example, an individual making $28,000 would only have to pay $325 for their annual premium in a benchmark plan on the ACA marketplace with the enhanced subsidies in place. Without the enhanced subsidies, they would have to pay $1,238. A family of four making $75,000 would see their annual premium more than double from $2,498 to $5,865.

Over 22 million Americans currently enjoy the benefit of enhanced subsidies, but that is about to end given that congressional Republicans and the Trump administration refuse to extend them. The consequence is that several million Americans will lose health coverage, and millions more will face higher costs to retain coverage and/or enroll in lower quality plans.

This catastrophe is what led to the 43-day federal government shutdown, as Democrats insisted on extending the enhanced subsidies. While eight Senate Democrats eventually caved, the deal that ended the shutdown allowed the Democrats to propose an extension of the subsidies. The Democratic bill would have extended the enhanced subsidies for an additional three years, temporarily protecting 22 million people and kicking the can down the road to 2029.

The Republican Health Plan Alternative

With the significant amount of public pressure to protect Americans from high health care costs, the Republicans scrambled to provide a counterproposal. Senators Bill Cassidy (R-LA) and Mike Crapo (R-ID) introduced the counterproposal in the Senate to compete with the Democratic bill.

However, their alternative did not protect against massive premium spikes for the 22 million Americans enjoying the enhanced subsidies. The bill allowed the subsidies to expire, and instead would have allowed certain American adults to get $1,000 ($1,500 for those between 50-64 years old) in Health Savings Account deposits for the years 2026 and 2027. These HSA funds cannot go towards paying premiums; rather, people can use them to pay for actual medical care and to help meet their annual deductible.

Yet, only people enrolled in Catastrophic or Bronze plans could get the HSA funds, and these plans have the highest deductibles and out-of-pocket burdens. According to the policy research group KFF, the average deductible for a Bronze plan in 2026 will be $7,476, far above the HSA deposit. For Catastrophic plans, the deductible will be $10,600 for an individual and $21,200 for a family. HSA funds would be available to eligible individuals making below 700 percent of the FPL, meaning $109,550 for an individual and $225,050 for a family of four. 

While the ACA mostly limited catastrophic plans to people under the age of 30, the Cassidy/Crapo bill incentivizes much greater usage by expanding access to all individuals. In 2025, only 0.2 percent of ACA marketplace enrollees (54,109) chose a catastrophic plan while 29.9 percent (7.27 million) chose a Bronze plan. Thus, the HSA funds would only be available to a minority of enrollees unless millions switched to plans with less comprehensive coverage.

The Republican plan would also have introduced cost-sharing reductions (CSRs) that the first Trump administration had scrapped: federal funding to lower out-of-pocket expenses (i.e. deductibles and copayments) specifically for people enrolled in silver plans. These CSRs only apply to individuals making between 100 percent and 250 percent of the FPL – between $15,650 to $32,150 for an individual and $39,125 to $80,375. This funding would likely reduce premiums for silver plans – as insurers raised silver plan premiums specifically (known as silver loading) after the first Trump administration ended CSR payments.

However, premium tax credit amounts for everyone – which would still exist, they would just no longer be enhanced – are based on the premiums for benchmark plans, which are the second-lowest-cost silver plans available in specific geographic areas. With the end of silver loading causing lower silver plan premiums, higher CSRs would also further lower the amount of premium tax credits for everyone, not just those enrolling in silver plans. This reality is why the Congressional Budget Office (CBO) in June 2025 estimated that funding for CSRs would cause 300,000 more people to be uninsured in 2034.

The Root Cause: High Health Care Costs 

All in all, the Republican plan amounts to massively increasing premium payments for millions of Americans while permitting a fraction of them to spend $1,000 or $1,500 to partially cover their march larger deductible. However, several key Republican arguments against the enhanced ACA subsidies are true when applying them to the wider picture of the health care system.

Republican politicians have lambasted the enhanced subsidies as large giveaways to health insurance companies while claiming they help fuel a system of incredibly high health care prices. While the subsidies are for Americans, it is true the money eventually reaches the hands of insurers in the form of premium payments. 

Additionally, the United States has the highest health care costs in the world while achieving worse health outcomes compared to other wealthy nations, and the prices keep increasing at a disproportionately high rate. These higher prices subsequently cause insurers to increase premiums. Subsidizing Americans to afford these higher premiums does not lower the actual amount of money spent on health care, it just has the government pick up more of the tab. By allowing more Americans to afford health coverage, the subsidies to help maintain and even fuel a system of higher prices.

However, the Republican proposal of eliminating the subsidies does not actually address the root issues behind high health care costs; rather, it simply makes obtaining coverage unaffordable for millions of Americans. Putting aside the estimates that predict significantly higher deaths, it is purely logical that causing people to not be able to afford and thus receive health care will mean less prevention, more sickness, and more death.

There are several reasons behind high health care costs in the United States. Consolidation has decreased the number of providers, insurers, and other health care entities, allowing them to raise prices while the supply and availability of care is restricted. The financialization of health care entities, such as hospitals, has led them to rely on profiteering and move away from prioritizing care for those in need. Health care prices are not transparent while also highly variable, with the costs of the same services sharply differing from one provider to the next. 

Doctors, especially specialists, in the United States make significantly more than they do in other countries due to both the American Medical Association helping to set doctors’ payment rates and the fact that the supply of doctors is artificially limited (raising prices and restricting access for patients). Government-enforced patent monopolies allow drug makers and device manufacturers to charge not just exponentially higher prices than it costs to manufacture their products but also exorbitantly more than it reasonably takes to make a profit and incentivize innovation.

Taking on the Insurance Industry

Tackling each of these causes requires policymakers to combat embedded special interests which Republicans arguing against extending the enhanced subsidies have not seriously discussed. In all fairness, many Democrats do not engage these issues either. However, the one special interest President Trump and congressional Republicans have singled out that does significantly contribute to higher prices is the insurance companies.

A massive contributor to higher health care prices in the United States is that our system is grossly inefficient with way more spending on administrative services. The United States spent over 5 times more on administrative costs per person than other wealthy nations in 2023. Behind such exorbitant spending rests the incredibly complex American system with various public plans like Medicare and Medicaid on top of thousands of different private plans that cover different services, pay different amounts, and engage in different processes. Not only do insurers have to spend a lot on administration, but providers have to as well to deal with the complex and different coverage situations for each individual patient.

Luckily, there is a policy solution that doesn’t just lower administrative spending but also overall health care spending in addition to guaranteeing health care coverage to all Americans: single-payer health care otherwise known as Medicare For All. It would build off of the existing Medicare program and guarantee health coverage to every single man, woman, and child. 

While 12-18 percent of private insurers spending has gone towards administration, Medicare is much more efficient, spending just 1.1 percent in 2024. Additionally, various estimates show that the policy can lower national spending on health care overall while providing comprehensive health care coverage. Indeed, other countries like Norway and Canada with single-payer systems spend far less per person than the United States.

Working families would also need not worry about paying significant out of pocket expenses. Medicare For All prohibits cost-sharing (including deductibles, copayments, etc.) except for up to $200 annually for prescription drugs.

Importantly, the United States would still spend more on health care than other wealthy nations, and policymakers would still need to address the other causes of high costs. However, Medicare For All lowers spending while expanding access to health care to everyone, rather than kicking people off their coverage – which is what the Republican plan to not extend the ACA enhanced subsidies and their previous cuts to Medicaid are going to do.

Ultimately, if policymakers really want to lower health care costs and stop subsidizing exploitative health insurance companies, the pathway is clear: Medicare For All.