Yesterday’s inflation report showed slower cost increases overall, which may have been tied to an absence of information on rents and some healthy assumptions thrown in to compensate for that. But it’s a little quaint to talk about inflation at 2.7 or 2.8 or 3 percent, when in 13 days, health insurance premiums for the 24.3 million people on Affordable Care Act exchanges are going to increase by an average of 93 percent.
The way that the Bureau of Labor Statistics calculates health insurance inflation, dividing the premium by the claims paid by the insurer, does not in any way correspond to how this spike feels to people. To use a simplified example, if you are paying double out of pocket for insurance, but insurance companies spent the same percentage of premium revenues on paying claims, that would read as a zero percent increase in health insurance inflation.
Moderate Republican House members on the brink of losing their jobs certainly understand the intense concern about health insurance costs. That’s why several of them joined a Democratic petition to defy the wishes of Speaker Mike Johnson (R-LA) and force a vote on a straight three-year extension of ACA subsidy enhancements that expire on December 31. It is now too late to avoid that deadline, and that vote won’t happen until the House returns to session in January, but the maneuver does ensure that health care will remain atop the political conversation well into 2026, a nightmare scenario for Republicans.
LET’S EXAMINE HOW WE GOT HERE, and how Republicans walked into a blind corner on health care, a topic where they haven’t had any answers for the last 15 years. Democrats made the political decision to raise the salience of an issue where they are favored by the public by seeking an extension of the enhanced ACA subsidies as a condition for ending the government shutdown. Republicans had no wins here: Either they cave and extend a Democratic policy of affordable health insurance, or they “win” the shutdown and are saddled with blame for millions of people’s premiums doubling.
Hard-line Republicans strongly oppose extending the subsidies, and that’s who calls the shots in Mike Johnson’s House. Moderates at severe risk of losing re-election have been walking the plank on messaging bills, few of which get Senate votes, all year long. They just wanted a vote on extending the subsidies, so they could at least tell their constituents that they tried to help them. Johnson initially agreed to this, setting the vote as an amendment to their official response to the ACA subsidy mess: a health care bill that packaged up a bunch of old conservative standbys, offering little value and counterproductive consequences in some cases. (The Congressional Budget Office found that the bill would actually make more people uninsured.)
But moderates were told they would have to offset the spending on the enhanced subsidies in some way. (Enhanced subsidies cost about $35 billion per year, a small fraction of the tax cuts for the rich advanced just six months ago.) GOP leaders have shoveled through plenty of show votes that cost money with no offsets attached, but this one had to be fiscally responsible. Clearly, the hard-liners would have scuttled the whole bill if the amendment was attached, and the leadership was siding with them.
As a result, talks broke down and the amendment was canceled. Keep in mind that these are the “majority makers,” the only reason that the leadership is the leadership. They endured every unpopular vote in the House this year and couldn’t even get a token vote to save their political skins.
So after the weak GOP health care bill passed, four House Republicans—Reps. Mike Lawler of New York and Brian Fitzpatrick, Rob Bresnahan, and Ryan Mackenzie of Pennsylvania—signed a discharge petition to force a three-year subsidy extension to the floor. This separates the extension from the conservative elements of their bill, and it is also a clean extension, without any “reforms” like income tests, or any offsets for the funding.
With 218 signatures in hand, the extension is likely to pass the House next month. That puts pressure on the Senate, which rejected the same three-year extension last week on a party-line vote. Four Republican senators joined all Democrats on that vote; nine more would be needed for passage over a certain filibuster, with complaints about skyrocketing insurance rates rolling into their offices every day.
To the extent that there will be a negotiation, it starts out on Democrats’ best terms, with a clean three-year extension earning bipartisan support of a majority of the House. Keep in mind that government funding once again runs out January 30, with no agreement on the outstanding appropriations bills in place. We could be back in “subsidies for appropriations” territory again soon.
IT’S TRUE THAT LESS THAN 10 PERCENT of the population is on ACA exchanges. But employer-provided insurance—which the majority of Americans have—is also going up by 6.5 percent on average, the biggest increase in 15 years. The Medicare Part B premium is going up by over 9 percent for the poorest cohorts, and even more at higher income levels. And four million people are expected to drop out of ACA coverage if premiums nearly double, leaving a sicker population in the risk pool and near-certain additional increases in the future. Future Medicaid cuts that lead to coverage loss and greater uncompensated care burdens on hospitals will trigger the same dynamic. All of this is caused by cutbacks in public funding and deregulation of what constitutes insurance, put in place by this regime.
Our system of regulating and subsidizing private health insurance is well beyond imperfect. We pay more and receive less than practically any other industrialized nation. We have birthed a small army of middlemen and subcontractors and gatekeepers and Wall Street financiers employed to exploit the rules and extract the money on offer. We need more fraud prevention and direct public provision, and we need it fast.
But there’s no way that the current government is going to advance that. The Make America Great Again version of health care is a return to the bad old days when the insurance available was junk and the insurance that actually pays for things was unavailable to the non-rich. It’s highly unappealing for a Republican Party whose credibility on cost of living has completely waned.
Yet Republicans are now consigned to repeat these desires in public for as long as they hold out on extending the subsidies, in an election year. Like a freakish version of Groundhog Day, they are reduced to replaying the “repeal and replace Obamacare” debate forever, as voters seethe with anger. It takes real effort to get caught in such an obvious political trap that’s over a decade in the making. But the truth is, these are not very bright guys, and things got out of hand.