As Congress debates whether to extend the Affordable Care Act’s enhanced insurance subsidies—originally enacted as part of the 2021 COVID relief bill—lawmakers face a familiar dilemma: preserve a failing system through temporary fixes or pursue reforms that empower patients and lower costs in the long run.
In a recent article for RealClearMarkets, Market Institute Senior Fellow Norm Singleton argues that Republicans still have an opportunity to turn this politically risky debate into a policy win—if they are willing to pair any subsidy extension with meaningful free-market reforms.
“Those opposing renewing the subsidies are correct that Republican support for extending the subsidies is a step toward Republican acceptance of Obamacare.”
If Congress allows the subsidies to expire, millions of Americans who rely on the Obamacare exchanges could see their premiums double—prompting many, particularly young and healthy individuals, to drop coverage altogether. That outcome would likely accelerate premium increases and further destabilize the exchanges.
At the same time, Singleton warns that repeatedly extending “temporary” subsidies risks making them permanent, locking in a system that continues to drive up costs while limiting consumer choice.
“If the subsidies are extended under Republicans, they will find it progressively easier to vote for subsequent extensions. Thus, the temporary subsidies will become permanent.”
Rather than accepting this false choice, Singleton outlines a third path: attach reforms that give consumers real control over their health care dollars.
Key among those reforms is expanding access to Health Savings Accounts (HSAs) and other tax-advantaged tools that allow individuals to shop for care based on price and quality—creating a genuine alternative to the Obamacare exchanges.
“HSAs and other types of health care tax breaks can serve as an escape hatch from Obamacare by enabling individuals to find better care than that available on the Obamacare exchanges.”
Singleton also calls for addressing structural distortions that divert taxpayer dollars away from patients. He highlights the Section 340B drug discount program, which allows hospitals to capture large financial windfalls with little accountability for how those funds are used.
“There is no legal mandate requiring 340B facilities to use their savings to subsidize care for the uninsured.”
Additionally, Singleton argues Congress should adopt site-neutral Medicare payments—a common-sense reform that would end higher reimbursements for hospital-owned facilities performing the same procedures as independent physician offices. The current system, he notes, incentivizes hospital consolidation and drives up costs for patients and taxpayers alike.
“The failure to apply site neutrality encourages hospitals to acquire small medical offices, simply to extract higher Medicare payments.”
Republicans still have time to reframe the debate. By pairing any extension of Obamacare subsidies with reforms that promote competition, accountability, and consumer choice, Congress can reduce costs without cementing a flawed system.
“Republicans can turn a defeat into a victory by attaching reforms like expanded access to HSAs that give people real alternatives to Obamacare.”
Read the full article by Norm Singleton originally published in RealClearMarkets.
