The healthcare status quo is failing too many Americans. Democrats blame Republicans for not supporting more government subsidies while the GOP argues continuing to prop up expensive handouts will do more harm than good. But in a rare instance of bipartisanship on Capitol Hill last month, both sides agreed that a mafia of healthcare middlemen is at the center of the mess.
During a pair of congressional hearings in January, lawmakers of all political stripes scrutinized insurance company leaders for their role in inflating healthcare costs. Rep. Debbie Dingell, a Democrat, berated the CEOs for increasing premiums at a time when the companies are “posting record profits.” Meanwhile, Texas Rep. Jodey Arrington, a Republican, referred to them as “a drag on the economy.”
President Donald Trump has even chimed in, calling them “BIG, BAD Insurance Companies.”
The bipartisan frustration is warranted, but tough talk must give way to even stronger policy action if patients are to benefit. Health insurers are simply playing by the rules that were set up under Obamacare. Lawmakers — not corporate executives — have the power to fix it.
At question is the basic Obamacare subsidy structure that the public has been living under for the past decade. It attempts to give low-income people access to cheap medical care by forcing taxpayers to cover some of the costs. It’s a concept that underpins every government safety-net program, though some are designed more poorly than others. From that perspective, Obamacare seems to be engineered to fail.
During the first year of implementation, Obamacare aid dollars amounted to roughly $18 billion — a considerable chunk of taxpayer money on its own. But fast-forward to 2025, and that figure ballooned sevenfold to $138 billion. The acceleration is so dramatic that even progressive stalwarts such as Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) are getting whiplash.
How has the program grown so much so quickly? More generous subsidies and increasing enrollment are certainly playing a role. The broader inflationary effect, however, stems from the federal government paying insurance companies directly rather than giving spending control to the people. The result is millions of people who are unaware of the true cost of care and an insurance industry that treats Uncle Sam as its piggy bank.
The best way to remedy the backward dynamic is to put patients back in the driver’s seat. Rather than going directly to insurance companies, Obamacare payments should be deposited into people’s tax-advantaged health savings accounts. Families could then more easily shop around for the best deal while health insurers compete for subsidy dollars — a competitive environment that would drive down prices.
Although this policy proposal has emerged from conservative circles, it offers a middle-of-the-road reform Democrats should welcome. The change keeps the core concept of Obamacare intact while restructuring subsidies to deliver greater value for patients and taxpayers alike. Policymakers could also consider expanding the use of association health plans, which would similarly give entrepreneurs more control over healthcare dollars.
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America’s healthcare system isn’t broken because patients have too much power — it’s broken because they have too little. Reworking how Obamacare subsidies are distributed is not a silver bullet solution, but it would begin to restore transparency, competition, and accountability to a system that poorly lacks all three.
Elaine Parker is the president of the Job Creators Network Foundation.
