The end of the shutdown gave Washington something rare: a second chance to fix its health care system. As part of the deal to reopen the government, Senate Majority Leader John Thune has committed to holding a vote in December on extending the enhanced premium tax credits in the individual market. That creates the opportunity to avoid steep premium increases and start building a system that works better for patients.
For the Democrats who voted to end the shutdown, the incentives are simple. They want to show that their compromise will lead to real relief for families faced with higher premiums. They will look for a deal that solves the problem before them, but they will retreat if Republicans turn the bill into a new battle over the repeal of the Affordable Care Act (Obamacare). The task now is to fix what is broken, not to rekindle old conflicts.
This moment also gives Republicans the opportunity to show that they can govern. Healthcare costs are a major driver of the affordability crisis facing families. They reduce take-home pay, raise the price of goods and services and push both households and governments deeper into debt. Employers, who bear the brunt of the cost of coverage for people under 65, are feeling the pressure directly, and workers are feeling it in their wages.
President Donald Trump has already outlined an important principle: Instead of channeling federal subsidies through insurance companies, direct that support to individuals so they can choose the care and coverage that works best for them. Republican Senator Rick Scott of Florida has made a similar argument, calling on Republicans to fix Obamacare. Combined with growing bipartisan support for price transparency, these ideas point toward a practical strategy that empowers patients and employers and fosters a more competitive marketplace.
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Republicans have a chance to finally fix the health care system. (iStock)
The current system is moving in the other direction. Prices are hidden, layers of administration keep expanding, and incentives are misaligned in a way that guarantees prices will rise year after year. These problems are especially serious in the individual market, which has fewer participants, a less healthy risk pool, and limited plan competition. To make this market functional again, more registrations, more choices and more transparency are needed.
The December vote is the right time to start that shift. A package that addresses the immediate subsidy issue and lays the foundation for long-term reforms is both feasible and necessary. Practical solutions have already been developed by center-right institutions such as the America First Policy Institute, the Paragon Institute, leaders in Congress, and Trump’s policy proposals.
The first step is a responsible abolition of the increased premium tax credits until 2026. This will avoid an abrupt closure and give the other reforms time to take effect.
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Second, Congress should adopt a proposal from the Paragon Institute to restore and reform Cost Sharing Reduction (CSR) payments in Obamacare, giving eligible participants the option to receive their CSR subsidies directly into a health savings account (HSA). This one change addresses multiple issues at once.
It lowers premiums and lowers federal costs. When CSR payments were halted in 2017, insurers responded by sharply increasing premiums for silver plans, a practice known as “silver loading.” Because premium tax credits are tied to the price of silver plans, federal spending increased. A 2018 Congressional Budget Office analysis found that restoring CSR funding would reduce the federal deficit by about $30 billion over ten years. Providing the financing is cheaper than continuing the current solution.
It also creates the budgetary space needed to phase out the increased premium tax credits in a responsible manner. The savings could be used to fund the phaseout or to make more generous HSA contributions from the CSRs to strengthen support for lower-income Americans.
Most importantly, it empowers patients. According to Paragon, the typical annual HSA contribution for someone receiving CSR support would be approximately $2,000. That is meaningful support that families have direct control over. If they remain healthy, unused dollars will remain in the account and continue to grow. If they become ill, they can use the money for their own expenses. Because the money belongs to them, they have a clear incentive to compare prices and choose high-quality care, which encourages greater competition between providers.
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Next, Congress should strengthen the risk pool of the individual market by expanding affordable choices. That means allowing any health plan approved by the state insurance commissioner to be included in the exchanges, expanding access to buyer plans, adjusting age rating rules so that younger people pay less, and modernizing individual health reimbursement arrangements (ICHRAs) to allow more small businesses to provide coverage. Practical changes, such as letting employees choose between an ICHRA and a traditional group plan, allowing employees to contribute pretax dollars to close premium gaps, and eliminating unnecessary COBRA requirements, would make ICHRAs more attractive.
The first step is a responsible abolition of the increased premium tax credits until 2026. This will avoid an abrupt closure and give the other reforms time to take effect.
Finally, these reforms should be accompanied by the bipartisan Patient Deserve Price Tags Act, sponsored by Republican Senator Roger Marshall of Kansas and Democratic Senator John Hickenlooper of Colorado. The bill would strengthen enforcement of price transparency rules so that small businesses, self-funded employers and new purchasing organizations can contract directly with suppliers and transparent pharmacies. This would reduce costs, eliminate middlemen and increase competition.
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This is a time for practical governance. The shutdown deal didn’t just reopen the government. It opened a door. If Republicans seize this opportunity, they can solve a real problem for millions of Americans and begin a long-overdue transition to a health care system where patients, not bureaucracies, are in charge.
The December vote could be the start of that transition. It should be so.
Disclaimer: Gingrich 360 has consulting clients in the healthcare industry who may be affected by changes in healthcare laws.
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