The government shutdown has focused the debate on the enormous amount ($136 billion by 2025, as projected by the Congressional Budget Office) that the federal government spends annually to subsidize Obamacare’s perpetually skyrocketing health insurance premiums. The Wall Street Journal reports that regardless of how this fiscal tug-of-war plays out, health insurance premiums paid by Americans are expected to rise another 8% to 9% next year.
The mega health insurers are at the forefront of asking for more subsidies, because this money goes directly into their pockets. Their profits and stock prices have soared, while the rest of us struggle to pay the mounting bill.
One reason health care costs are rising two to three times as much as everything else is because the entire insurance market has stopped functioning. Most Americans pay high monthly premiums (or the government pays for them) for coverage they often don’t use.
In 2024, 11.7 million people, more than a third of those covered by Obamacare, had no medical claims. They, or the taxpayers, paid a lot of premiums – for nothing.
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But the whole point of insurance is to protect your family from big expenses – not small ones. That’s why we take out fire insurance on our homes — to protect against the risk of total loss of your property.
The United States Capitol is seen in Washington, DC, on September 16, 2025 (Celal Gunes/Anadolu via Getty Images)
We need a system that is much more sensible and less costly for patients and taxpayers. We should encourage insurance plans with low premiums that cover major ‘catastrophic’ medical costs, but allow smaller expenses – such as checkups or minor surgeries – to be paid directly by policyholders.
Such policies – known as catastrophic health insurance – have been available for decades. Most of us would be better off financially if we signed up for these plans. With low premiums and coverage for major medical expenses, they are a win-win for families.
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Even as regulated by Obamacare, this coverage charges premiums that are only about half the amount of other Obamacare plans. For example, Forbes recently analyzed the premiums of “77 catastrophic health care plans across the country.” The average premium for a 50-year-old member is $443 per month, or $5,316 per year, compared to almost $10,000 for the average Obamacare plan, according to calculations by the Paragon Health Institute.
This leaves a plan participant with approximately $4,600 in saved premiums to pay for medical expenses covered by the plan’s deductible ($9,450 per person or $18,900 for a family) – or to invest or spend productively.
Democrats and health insurers ridicule these plans as “junk insurance.” Wrong. Forbes notes that these plans provide comprehensive coverage for major medical expenses and have the same “10 essential health benefits” as other Obamacare plans, including emergency services, hospitalization, maternity services, prescription drugs, and treatments for mental health and chronic diseases.
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So why don’t most people choose catastrophic health care plans? Because an Obamacare provision makes it illegal!
This Obamacare provision, 42 US Code 18022(e)(2), only allows people under the age of 30 or who qualify for a “hardship” exemption to enroll. Liberals in Congress want to force people to buy plans they can’t afford because they generally support a government-run system in which all health care services are “free.”
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Congress should immediately repeal this provision of Obamacare. This simple change in the law would allow all of us to choose the kind of health insurance that so many of us want and need. And broader use of these plans would reduce government spending and increase economic growth.
The new tax law that President Donald Trump signed on July 4 makes these plans even more attractive. The new law allows plan participants to contribute to health savings accounts (HSAs). HSAs are special tax-free accounts that allow families to pay for routine medical expenses and convert any unused money in the account into tax-advantaged retirement savings. Obamacare had previously excluded members of catastrophic health plans from contributing to HSAs.
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Sometimes the best solution in life is the simplest: stop the hundreds of billions of dollars in wasteful subsidies, the sky-high premiums, and the “one size fits all” plans that so many of us don’t use, want, or need—and instead legalize catastrophic health insurance that promotes growth for all.
Stop fattening the checks of the fat and happy health insurers like UnitedHealth, who resist paying fair claims but force you to write monthly checks for insurance you don’t use or need.
David M. Simon is a senior research fellow at Unleash Prosperity.
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