The 2010 Affordable Care Act, known as ObamaCare, led to a surge in health insurance premiums and nearly collapsed the market. The Biden administration responded by flooding the system with expanded federal subsidies, which are set to expire at the end of 2025. Republicans must extend part of this additional funding to prevent premiums for older workers with pre-existing conditions from suddenly leaping by $10,000. The Affordable Care Act required health insurers to cover individuals with pre-existing conditions at the same price as enrollees who signed up before they got sick. However, the legislation allowed insurers to charge older enrollees up to three times what they do the youngest, leading to huge unsubsidized premiums for near-retirees.
The American Rescue Plan Act, which expanded eligibility for subsidies to higher earners, reduced the cost of health insurance for a 61-year-old earning $70,000 from $15,402 to $5,950, with federal taxpayers covering the difference. This approach has been hugely expensive, with the Congressional Budget Office’s revised cost estimate for 2024 rising to $129 billion.
Fiscal conservatives have little appetite to pay for renewing all the expanded ObamaCare subsidies or letting the American Rescue Plan Act’s enhanced subsidies expire entirely, as this would result in a $10,000-per-year premium hike on thousands of middle-income near-retirees. Republicans should insist on reforms to allow healthy Americans to purchase better value insurance with their own money.
