A Time Bomb In The Affordable Care Act Is Set To Go Off In 2025

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“Folks, he’s coming for your health care, and we’re not going to let that happen.”

Those are the closing words of a new 30-second ad from the Biden campaign, focusing on the Affordable Care Act and the possibility of repeal if Donald Trump becomes president again.

The ad buy is significant: $14 million to run the spot in a half dozen swing states, as my colleague S.V. Date reported. And it’s not difficult to understand why.

Trump’s attempt to repeal the Affordable Care Act in 2017 washighlyunpopular. The backlash was almost certainly a big reason Republicans managed to lose both houses of Congress and the presidency over the next two elections. Reminding voters of this history can only help Biden and the Democrats, especially amid polls that show the 2010 health care law to be more popular than ever.

And the threat to the law is real. Trump spent his entire presidency trying to tear down the program; when legislation failed, he tried to undermine the law by ― among other things ― taking away funds for advertising and promotion. Last fall, he returned to the subject in a Truth Social post, declaring, “The cost of Obamacare is out of control, plus, it’s not good Healthcare. I’m seriously looking at alternatives.”

Trump followed up with what was supposed to be a clarification, stating, “I don’t want to terminate Obamacare, I want to REPLACE IT with MUCH BETTER HEALTHCARE. Obamacare Sucks!!!” But of course, that was just another version of the promises he made before taking office last time ― you may remember vows like “I’m going to take care of everybody” or “We’re going to have insurance for everybody.” He then proceeded to push bills that, according to the Congressional Budget Office, would have added more than 20 million Americans to the ranks of the uninsured.

But the new Biden ad promises more than just preventing the repeal of the Affordable Care Act, as it exists now. It also promises to extend a vital but temporary change to the program that Biden and the Democrats have implemented.

That change has reduced what millions of Americans pay for insurance. Letting it expire would have the opposite effect — namely, raising the cost of insurance for millions. And it could really happen, depending on who wins in November.

A Big, Quiet Change To The ACA

The story of this change starts with the creation of the Affordable Care Act itself.

As you may recall, one of the law’s big goals was to reorganize the market for people buying health insurance on their own rather than getting it as a benefit through employers. In the old days, these people frequently couldn’t get insurance because carriers could charge them more or deny coverage if they had pre-existing conditions. And even for those who were healthy enough to qualify for a policy, many couldn’t afford one unless it was a cheap, bare-bones plan with huge gaps in coverage.

To remedy this, the Affordable Care Act prohibited insurers from charging more or denying coverage to people with pre-existing conditions and set higher standards for what plans must cover. It also began offering subsidies, scaled to the income of people buying insurance, that effectively reduced premiums for individuals and families by hundreds or even thousands of dollars a year.

The hope was that these subsidies would make coverage affordable to everybody who needed it. (Hence, the word “affordable” in the law’s name.) But to secure the votes of conservative Democrats who were queasy about too much government spending, party leaders agreed to downsize the legislation— which meant, among other things, settling for less generous subsidies.

In practice, that led to higher premiums for some people buying insurance through the Affordable Care Act. Those whose income made them eligible for only slight assistance, or none at all, had it especially tough: For some, premiums worked out to nearly a quarter of their income, creating what came to be known as “rate shock.”

Democratic leaders vowed to address that issue by increasing the subsidies, effectively realizing their original vision for the law. And they did precisely that in 2021. The American Rescue Plan, which Democrats passed and Biden signed, boosted the Affordable Care Act’s financial assistance so that nobody has to pay more than 8.5% of household income on a standard plan.

It was a temporary measure tied to the pandemic, but in 2022, they extended the subsidies through 2025. The impact has been substantial.

Roughly 15 million Americans are saving an average of about $800 a year on their insurance, according to calculations by the Department of Health and Human Services. And like all averages, that covers a range of people. The savings amount to only a pittance for some, but it’s literally thousands of dollars a year for others.

The enhanced subsidies have also had more subtle effects.

Some insurers still sell “non-compliant” plans that resemble the old policies. These plans can be sold more cheaply because they have big coverage gaps that can leave beneficiaries exposed to punishing, catastrophic medical bills. (Loopholes in the law allow this.)

However, fewer people are now buying those policies, opting for the more comprehensive plans available than the Affordable Care Act, according to a study from the non-partisan health research organization KFF. That’s because, with the extra subsidies, the more comprehensive plans don’t cost as much as they did before.

“These enhanced subsidies have not only led to record ACA enrollment but also made insurance much more affordable for existing enrollees, putting hundreds and in some cases thousands of dollars back in their pockets,” Larry Levitt, KFF’s executive vice president for health policy, told me over email.

Not coincidentally, overall enrollment in the Affordable Care Act marketplaces is now at an all-time high of more than 20 million.

And if the extra subsidies go away? Then, warns Gideon Luken, a senior fellow at the left-leaning Center on Budget and Policy Priorities, “Nearly all marketplace enrollees will face higher premium costs, some dramatically higher, and almost 4 million people will lose coverage and become uninsured.”

A Familiar Debate, An Uncertain Political Future

The new Biden ad says he wants to make the assistance permanent, consistent with a proposal in his latest budget. That wouldn’t be cheap. CBO pegged the cost at about $25 billion a year back in 2022. It’d probably require more money more now.

The inability to find enough offsetting cuts or revenue to cover that cost is one reason Biden and the Democrats didn’t make the bigger subsidies permanent last time. That could happen again. But it’s safe to assume that, at the very least, Biden and the Democrats would approve another temporary extension if they are in office and have enough leverage in Congress after 2024.

If Democrats don’t have that kind of power come next year, the fate of these increased subsidies will be in the hands of Trump and the Republicans. And while they haven’t had much to say about the issue, it’s hard to imagine they’d be enthusiastic about extending the subsidies given their traditional hostility to government spending on social welfare, to say nothing of their animus towards Obamacare.

Conservative intellectuals are already laying the groundwork. Brian Blase, the former Trump administration official now president of the conservative-leaning Paragon Health Institute, has assailed the extra subsidies as regressive because they have made higher-income Americans eligible for assistance.

Blase has also warned about the extra burden these subsidies place on the federal budget, especially when the money is padding insurance company revenues.

“Congress should stop giving massive gifts of taxpayer dollars to health insurers,” Blase told me over e-mail. “These expanded subsidies open the program up for tremendous waste, fraud, and abuse as most enrollees now have access to fully taxpayer-subsidized plans.”

Blase, who in a second Trump term would be an obvious candidate to advise Republicans in some official or unofficial capacity, is right about the extra government spending that comes with the higher subsidies. It also gets at one of the fundamental divides between the two parties ― and more broadly between liberals and conservatives ― when it comes to the inevitable trade-offs of health care policy.

Democrats and liberals think the federal government should guarantee health care as a right, even if that means tightly regulating private markets and spending a lot of taxpayer money. Republicans and conservatives think such efforts are wasteful and inefficient and leave Americans worse off in the end.

It’s an honest and important philosophical dispute that has been going on for about a century and is likely to continue well into the next one. But it also has practical effects — in this case, on what millions will pay for insurance and what extending a temporary program would mean for the federal budget.

Biden’s new ad is a wager that the majority of Americans are on his side, and it’s not a bad bet given the polling and recent history of health care debates. But it depends on voters realizing how big the stakes are in November.

Correction: A previous version of this article incorrectly stated that CBO’s cost estimate was $25 million. The actual figure is $25 billion.