In the view of Avik Roy — one of the first and most vocal critics of the Affordable Care Act (ACA), also known as Obamacare — Republicans and Democrats alike have missed the mark in the healthcare debate that has dragged the government into a 24-day shutdown.
‘Both sides are wrong,’ Avik said. ‘I’m sympathetic to the Republican view, but it’s a strategic mistake.’
The way Roy sees things, Republican wariness over renewing expanded government subsidies should be directed at the bigger problem behind them.
‘The subsidies aren’t inherently the problem,’ Roy said. ‘If you want low-income people who are near the poverty line to have insurance, you’re going to have to subsidize. Subsidies have been a part of Republican [healthcare] plans and Democratic plans. I would argue that the approach to subsidies that Obamacare used was actually pretty reasonable.’
That doesn’t mean he believes the government’s current healthcare trajectory is sustainable, either.
The federal government entered a 24-day shutdown at the beginning of October when lawmakers failed to come to an agreement over spending legislation to begin the new fiscal year. Republicans advanced a short-term spending bill that would have bought more time for lawmakers to finalize funding for 2026. But Democrats, led by Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Hakeem Jeffries, D-N.Y., have shot down that measure repeatedly, demanding that Congress first address expiring COVID-era insurance subsidies.
As a part of its American Rescue Plan, the Biden administration greatly widened the pool of eligible applicants who could receive a federal subsidy to help pay for their Obamacare health insurance.
In its original form, Obamacare capped subsidies for anyone making over 400% of the federal poverty level. But that changed in 2021 when, as an emergency response to COVID-19, Congress temporarily removed that cap.
The cap will go back into effect at the end of 2025.
Findings by KFF, a healthcare policy think tank, indicate that over 90% of the 24 million Obamacare enrollees make use of the expanded credits. Letting them expire could leave those Obamacare enrollees suddenly footing a substantially heftier bill. But, according to the Committee of a Responsible Federal Budget, a nonpartisan fiscal policy think tank, continuing the policy would also come with a steep price tag; upwards of $30 billion annually.
Republicans — especially the Hill’s most fiscally conservative lawmakers — have called for the subsidies to expire to help reel the country’s spending back under control.
Despite agreeing with Republicans that Obamacare did little to make health insurance more affordable, Roy believes Republican insistence on letting them expire won’t solve Obamacare’s underlying problems that are driving prices higher: regulations.
Roy believes Republicans should use the moment to negotiate, extending the subsidies for maybe one to two years for existing enrollees in exchange for a permanent fix of the costliest Obamacare regulations driving costs upward.
‘In Switzerland [health insurance] costs $200 a month or $300 a month. The same plan in America costs $1,000 a month or $15,000 a month. Subsidizing it also costs a lot. But having a scale where the subsidy fades out gradually as you go up the income scale — that part is fine.’
Roy praised efforts from the Trump administration to bring the underlying costs of healthcare down, most recently through the most favored nation strategy. Under that plan, the Trump administration had leveraged the price other countries pay for pharmaceuticals to bring U.S. prices down.
In theory, the most favored nation plan would set American prices at the lowest rates other countries pay.
‘They’re not actually deals that truly establish most favored nation status because it’s company by company, and they are on particular drugs. But the general idea — if you want to participate in the U.S. market you’ve got to give us the lowest price you give any other advanced economy — I think that’s eminently reasonable,’ Roy said of the administration’s negotiations.
In response to Democratic demands, Republicans in Congress maintain that the enhanced premium tax credits are completely unrelated to the government’s funding and rejected those demands out of hand.
The Senate has voted on a short-term funding bill 12 times since the beginning of the shutdown and appeared no closer to finding a resolution when the lawmakers left town on Thursday.
The Senate will return to Washington, D.C., at the beginning of next week.