When Democrats pushed through a two-year expansion of the Affordable Care Act in the COVID-19-relief bill this month, many people celebrated the part that will make health insurance more affordable for more Americans.
But health care researchers consider this move a short-term fix for a long-term crisis, one that avoids confronting an uncomfortable truth: The only clear path to expanding health insurance remains yet more government subsidies for commercial health plans, which are the most costly form of coverage.
The reliance on private plans — a hard-fought compromise in the 2010 health law that was designed to win over industry — already costs taxpayers tens of billions of dollars each year, as the federal government picks up a share of the insurance premiums for about 9 million Americans.
The ACA’s price tag will now rise higher because of the recently enacted $1.9 trillion COVID-19 relief bill. The legislation will direct some $20 billion more to insurance companies by making larger premium subsidies available to consumers who buy qualified plans.
And if Democrats want to continue the aid beyond 2022, when the relief bill’s added assistance runs out, the tab is sure to balloon further.
“The expansion of coverage is the path of least resistance,” said Paul Starr, a Princeton University sociologist and leading authority on the history of U.S. health care who has termed this dynamic a “health policy trap.”
“Insurers don’t have much to lose. Hospitals don’t have much to lose. Pharmaceutical companies don’t have much to lose,” Starr observed. “But the result is you end up adding on to an incredibly expensive system.”
By next year, taxpayers will shell out more than $8,500 for every American who gets a subsidized health plan through insurance marketplaces created by the ACA, often called Obamacare. That’s up an estimated 40% from the cost of the marketplace subsidies in 2020, due to the augmented aid, data from the nonpartisan Congressional Budget Office indicates.
Supporters of the aid package, known as the American Rescue Plan, argue the federal government had to move quickly to help people struggling during the pandemic.
“This is exactly why we pay taxes. We want the federal government to be there when we need it most,” said Mila Kofman, who runs the District of Columbia’s insurance marketplace. Kofman said the middle of a pandemic was not a time to “wait for the perfect solution.”