Source: STAT News
Republicans have despised the Affordable Care Act since its inception almost 15 years ago. But some health care executives think Republicans may actually help the law as they regain control of Washington.
Enhanced tax credits that help millions of middle-income Americans afford health plans on the ACA’s individual marketplaces, signed into law by President Biden, expire at the end of 2025. Conservatives have railed against those subsidies as wasteful spending, but millions of people now depend on them: More than 21 million people had an ACA plan this year, compared with 12 million in 2021, when the enhanced subsidies started rolling out.
And executives are banking on President-elect Trump and congressional Republicans not wanting to take the blame if millions of people who currently get these subsidies — many of whom live in red states — suddenly find themselves with coverage they can’t afford.
“I’d be hard-pressed to believe that they come in and take a lot of benefits away from the folks who just put them into office,” Kevin Hammons, CFO of hospital chain Community Health Systems, said at an investor conference last week.
The health care industry’s interest isn’t necessarily rooted in political analysis. It’s financial: Those subsidies are worth $25 billion annually. Insurance companies that sell ACA plans retain some of that federal revenue as profit. Hospitals and doctors who treat patients with ACA coverage benefit from those plans’ higher payment rates and avoid bad debt if those patients had no insurance coverage at all.
“There is a vested financial stake,” said Adrianna McIntyre, a health policy professor at Harvard University.
Oscar Health’s business heavily depends on Congress renewing those subsidies. The publicly traded insurer sells only ACA plans. Over the summer, Oscar forecast its ACA membership would decline 18% over a two-year period if the enhanced subsidies went away. The Congressional Budget Office has estimated 4 million people would drop their ACA plans by 2026 if the subsidies expire.
Oscar CEO Mark Bertolini, who tried to use the ACA exchanges as political leverage when he was the head of Aetna, framed the subsidies as a kitchen-table economics issue. During the company’s earnings call after the election, he said Republicans will want to prevent their constituents from seeing big price hikes to their premiums.
“We’re currently at a historic low in the U.S. of below 8% of uninsured. Going the other way would only compound the inflationary impacts that the current race focused around and resulted in former President Trump being reelected president,” Bertolini said. “And so we believe that … the Republicans have … an interest in figuring out subsidies.”
Hospitals have come to love patients with ACA coverage because those plans pay more than Medicare and Medicaid. Chris Wyatt, a senior vice president and controller at HCA Healthcare, said at an investor conference last week that payment rates from ACA plans aren’t quite as high as commercial, employer-based plans. “But it’s roughly our second-best payer,” he said. And it’s why the company intends on lobbying to keep the enhanced subsidies around.
“One of the things that is important on our list is advocacy efforts through various coalitions to make sure there is an awareness of the number of enrollees that would face premium increases if those tax credits sunset at the end of 2025,” Wyatt said. “So we’ll be working hard on that front.”
However, Republicans — who attempted to repeal the ACA in 2017 but failed — have shown no interest in extending the enhanced subsidies beyond 2025. And since Democrats do not hold any majorities, they can’t use the subsidies as a bargaining chip for other Republican priorities, such as extensions of Trump’s tax cuts.
McIntyre said she thinks the prospects of funding the subsidies are “low.” But the Democrats’ lack of power, counterintuitively, may raise the chances that Republicans extend the subsidies if they want to avoid the fallout from people losing their insurance.
“It’s really hard to say, ‘Well, it’s the other guy’s fault,’ when they’re the ones in power,” McIntyre said. “That becomes a messaging challenge for them.”
