James Capretta writes in The Dispatch about problems linked to federal health care subsidies.
Providing more generous support for insurance enrollment is a politically convenient way to avoid the core problem, which is that health insurance is too expensive for many households to purchase coverage without assistance, or else its perceived value exceeds what they are willing to pay for it themselves (which increases the chances that taxpayers will end up subsidizing their consumption of medical services through other channels such as direct payments to hospitals for uncompensated care). In 2021, Democrats increased the generosity of the ACA’s subsidies for health insurance—called “premium credits”—because take-up of insurance was below what they had hoped would occur and was at risk of falling further due to job loss during the pandemic. As is often the case, a temporary entitlement expansion is now proving hard to roll back.
A more straightforward and fiscally sustainable solution to low take-up of insurance would be to lower overall health care costs, thereby bringing down health insurance premiums. But, as a political matter, it is much easier to increase government support for insurance enrollment than to impose more cost discipline on hospitals, doctors, and other providers of services.
It is not just the Democrats who avoid tackling costs; Republicans are reticent too. To break the cycle of reliance on ever-more generous public subsidies for insurance, Congress will need to become less risk-averse and consider reforms that disrupt that status quo. In particular, it should look at cost-cutting options that push providers of services to become more efficient and reward patients who are willing to opt for lower priced clinicians and facilities. …
… During the debate over the ACA, the Obama administration and the Democratic majority in Congress assured voters the planned premium credits would be sufficient to ensure affordable health insurance for all Americans. But by 2021, the party was arguing that a substantial expansion of support was needed to sustain enrollment in view of the disruptions from the COVID-19 pandemic.
