Chris Pope: Republicans Don’t Have a Health Care Trilemma
Here’s what they should do in the pending Obamacare subsidy fight.
The Affordable Care Act’s overhaul of health insurance remains unsettled fifteen years after it was enacted. In 2021, President Joe Biden and the newly-elected Democratic Congress stuck a band-aid over Obamacare’s flaws, with an infusion of additional federal subsidies. But those will expire at the end of this year.
The pain of premium increases resulting from the expiry of these subsidies means that, unlike their failed attempt at repeal in 2017, merely falling back on the status quo is not an easy option for either party. Republicans actually have to do something about Obamacare. But they also have real leverage the first time—if they come up with a reasonable proposal that is hard for Democrats to block.
On his Substack, Josh Barro suggests that this is impossible because Republicans want a healthcare system that:
Doesn’t force people to buy health insurance if they don’t want to.
Doesn’t spend a lot of taxpayer money subsidizing health insurance.
Doesn’t allow insurers to discriminate against people with pre-existing conditions.
He argues that “it is only possible to have, at most, two out of those three things.”
But this is not actually true. Protections for beneficiaries with pre-existing conditions currently exist, despite the absence of a mandate for people to buy insurance, thanks to enormous federal subsidies. And that arrangement could be maintained at much lower cost to taxpayers.
Barro’s lament reflects the original theory of how Obamacare was supposed to work. Under that theory, insurers were supposed to finance care for enrollees with pre-existing conditions by greatly overcharging those who signed up before they got sick. In reality, this caused healthy people to drop coverage altogether.
The original theory of Obamacare relied on penalties for those who tried to opt out, but even the Obama administration was unwilling to punish those (mostly low-earners) who failed to enroll. This wasn’t actually a problem, because the ACA’s direct federal subsidies automatically expand as necessary to guarantee affordable coverage.
But ACA subsidies now greatly exceed what is needed to protect the uninsurable. The Obama administration estimated that 3 to 6 million people with pre-existing conditions had enrolled in individual market plans in 2014. Last year, the federal government subsidized the coverage of 22 million people enrolled on the individual market—with federal funds paying 87% of the cost. It is quite possible for Republicans to rein in those subsidies (which have expanded from $49 billion in 2019 to $110 billion in 2024), without defunding coverage for those with uninsurable pre-existing conditions.
That is not to say that the Biden-era expansion of subsidies was entirely unwarranted. A 61-year-old earning $65,000 would see their Obamacare premiums surge from $5,500 to over $16,000 if these are not renewed. Many older enrollees with incomes more than four times the poverty level could see similarly substantial leaps in premiums, but these likely impact fewer than 5 percent of those enrolled in ACA plans.
Congress should extend subsidies to some of these enrollees. But it should stop well short of rubber-stamping the bulk of Biden-era subsidies, which made federally-funded Obamacare benefits far more generous than employer-sponsored benefits for most Americans with similar incomes—and opened the door to widespread benefit fraud.
In return for providing additional aid, Republicans can and should demand reform. Specifically, Congress should allow individuals to obtain lower-cost, unsubsidized insurance, priced in proportion to their medical risks, if they sign up before they get sick. Under current law, insurers are prohibited from offering discounted coverage to any enrollees.
The first Trump administration used a loophole from Obamacare’s regulations for short-term insurance to make such plans available for a limited duration. But Democrats resisted their expansion, under the original theory that the ACA was a method of redistributing from healthy policyholders to ones with pre-existing conditions, rather than the federally-funded entitlement that it actually is.
Allowing individuals to switch to cheaper unsubsidized coverage would not just directly reduce premiums for unsubsidized higher-income enrollees, it would also reduce Obamacare’s costs to taxpayers by encouraging some to switch from subsidized to unsubsidized coverage.
There’s more consensus than people realize around the idea of letting people purchase unsubsidized insurance from a market parallel to federally funded Obamacare plans. It has the support of Michael Cannon at the Cato Institute, Brian Blase of the Paragon Health Institute, and Mark Pauly of the Wharton School of Business. J.D. Vance advocated the approach during the 2024 election campaign, and it was part of the 2025 budget proposal from the Republican Study Committee.
It also offers a basis for a bipartisan deal. If you want a GOP Congress to expand funding for Obamacare, they should get some deregulation in return. And, if the ACA’s entitlement for low-income workers and those with pre-existing conditions is solidly anchored in federal funding, what reason is there to prohibit people from purchasing better value plans elsewhere?
Critics have long accused Republicans of not having a health care plan to replace Obamacare. Barro quotes former speaker John Boehner, who once claimed that “in the 25 years that I served in the United States Congress, Republicans never, ever, one time agreed on what a health care proposal should look like.”
That is not quite true. House Republicans have voted to repeal and replace the ACA at least 100 times. Some of the plans were good; some less so; but many were real comprehensive reform bills.
The real problem was that Obamacare, with all its flaws, was enacted by a filibuster-proof Democratic Congress. Republicans have always lacked a filibuster-proof majority to thoroughly reform it on a party-line vote.
Now, with the subsidies expiring, Republicans have significant leverage and an opportunity to demand change. They should use it.
Chris Pope is a senior fellow at the Manhattan Institute.
Most GOP reform plans are as follows:
1) Hi-risk pools
2) Med mal reform
3) Sell insurance across interstate lines
4) HSAs with High deductible health plans
5) short term health plans
6) Risk adjusted premiums
Each is an idea. Together they are not a system.
Hey Chris- you said that “House Republicans have voted to repeal and replace the ACA at least 100 times. Some of the plans were good; some less so; but many were real comprehensive reform bills.” Were they reforms along the lines that you have already stated before in your piece? Which of those plans do you consider the top reforms- the best the GOP has viably put forward?
One of the reasons I found the article you were responding to so compelling was that it seemed clear after 15 years of holding my breath for a GOP alternative that none has arisen. Now you seem to indicate there might have actually been such a thing- and the only difficulty was getting it through the senate. But doesn't the fact that none of these plans could get through the senate undermine the sense that the GOP had an actual viable alternative? Shouldn't any such plan meet the standard of “passable” to be a good plan?