I think we need to do a better job of explaining clearly why everyone – especially people with employer-sponsored insurance or Medicare – should care about the Affordable Care Act marketplace subsides at the heart of the 2025 government shutdown.
In fact, everyone should care very much. Here is why: If the subsidies expire (as they will if Congress approves the currently proposed budget), I expect there to be a domino effect making health care more expensive and less affordable for everyone, regardless of what plan you have.
First, private insurance companies will lose millions of customers from the marketplaces, meaning less revenue (which will need to be found somewhere else). Second, it is likely that at least some marketplaces might collapse if there aren’t enough people left in them for a sustainable risk pool. That was a concern in 2010 when the ACA was passed. A key aspect of getting the marketplaces up and running was to create incentives so that enough people would sign up for them to make them viable in both the short and long term.
Third, if some or all of the marketplaces collapse, the private insurers who lost those millions of customers should be expected to raise prices on premiums for employer-sponsored plans to make up for their losses. Employers will reduce the benefit packages they offer – meaning fewer “preferred provider organization” plans and more “health maintenance organization” plans, as well as high-deductible plans. That means more out-of-pocket costs for employees, and the amount employees pay each month toward their premiums will also go up.
Some employers may no longer afford to provide insurance coverage to their employees. Vision and dental coverage might be reduced to make up for the extra costs. This could also impact millions of people who have Medicare Advantage plans, because private insurers are backing those plans, and it is likely MA customers will see higher premiums and/or reduced benefits.
I expect that people who lose their coverage will stop receiving care until they show up ever sicker in the very expensive emergency department, where hospitals will provide their care “free of charge,” except for the taxpayers, who will ultimately be paying to bail out safety-net hospitals that can no longer finance themselves.
What is not as widely published is that, before the COVID-19 pandemic, overall health-care costs were showing signs of slowing. Inside the health-care industry, analysts were looking at the possibility that the ACA was finally starting to make progress on its main aim: to reduce how much the U.S. pays on health care while simultaneously improving outcomes and experience for all patients.
We still pay billions more for lower-quality care than other developed countries. While the ACA has not been perfect, it is important to remember that, in order to get it passed, the bill had to be watered down so that it didn’t feel too much like “socialist health care.” The result has been that, while it has made the most significant positive impacts on the industry and on people’s care experience in our nation’s history, it has been very slow and difficult to connect directly to the legislation.
The Congressional Budgeting Office projected that it will cost the U.S. $380 billion over the next decade if the subsidies were to continue. On its own, that sounds like a lot of money. People may wonder why taxpayers should support that. But what is left unsaid is how much society will pay for uncompensated care and sicker Americans if the subsidies disappear.
Some estimates are at almost $8 billion per year in uncompensated care costs if the subsidies expire. I believe that the true cost would be much more, especially accounting for lost productivity of workers who are too sick to go to work, or the lost education of children who are too sick to attend school.
All of us, no matter where you get coverage, will end up paying more for health care, whether it is through higher premiums, higher out-of-pocket costs or through taxpayer dollars that were needed elsewhere. This is why Democrats are fighting for this — it’s not just the subsidies; it’s to avoid crippling the entire health system that we all depend on.
Kathryn Peisert, of San Rafael, develops educational resources and programs for nonprofit hospital boards.
