“Americans are right to be fed up with the rising cost of health insurance,” writes health expert Sally Pipes. “Congress needs to give patients more control over where and how their healthcare dollars are spent.”
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Congress has returned to Washington. Democrats are renewing their call to extend COVID-era health insurance subsidies to shield people from hefty premium increases. Just last week, some Republicans in the House joined them to pass a bill that extends these subsidies—putting the question squarely before the Senate.
That approach would double down on exactly what’s broken in our healthcare system. Rather than funneling billions more taxpayer dollars into our insurer-dominated system, lawmakers should focus on reforming the insurance industry itself, whose practices have helped drive the affordability crisis patients now face.
Last year, insurance companies received an estimated $138 billion in Obamacare premium subsidies. Yet premiums continue to soar. Those for individual coverage have nearly tripled since 2013. The cost of employer-sponsored health coverage is expected to increase 8.5% this year—the third consecutive year of increases at that level.
Despite paying more, patients are discovering that their insurance offers less protection than expected. In 2023, HealthCare.gov plans denied one in five in-network claims and more than one in three out-of-network claims. That same year, 45% of insured patients reported receiving bills for care they believed would be fully covered.
Americans, in other words, are paying ever-higher premiums for coverage that often isn’t there when they need it. It’s long past time for lawmakers to take action.
They can start by rooting out fraud and abuse within the insurance market. In 2024, an estimated 12 million enrollees in Obamacare exchange plans filed no medical claims at all.
Many were doubtless signed up for plans without their knowledge by unscrupulous brokers and insurers, who were happy to collect commissions and federal premium subsidies without worrying about whether they’d have to pay claims.
The Paragon Health Institute’s Brian Blase estimates that federal taxpayers spent $40 billion on subsidies for these “phantom enrollees” in 2024. That kind of fraud has no place in our health system.
A renewed focus on pharmacy benefit managers, or PBMs, is also overdue. These middlemen are employed—and in some cases wholly owned—by insurers to negotiate with pharmaceutical companies over drug prices.
PBMs use their control over health plans’ formularies, or lists of covered drugs, to extract sizable discounts. In 2024, the difference between drug list prices and manufacturers’ net revenues after rebates and discounts was $356 billion.
Patients do not see much of those savings. Insurers typically base patient cost-sharing and coinsurance obligations on a drug’s higher list price rather than the lower net price they actually pay.
Lawmakers came close to reining in PBMs’ abusive behavior in December 2024. They need to take up that cause again this month—particularly by requiring PBMs to pass along the savings they negotiate to health plan sponsors and patients.
More broadly, Congress needs to find ways to reduce the influence of third-party payers—and give patients more control over where and how their healthcare dollars are spent.
Expanding access to health savings accounts is an important step in that direction. HSAs allow patients to set aside money tax-free, which they can use to cover future health expenses. When patients are spending their own money, they have a strong incentive to shop around for the highest-value care.
Over time, such consumerism can stoke competition among providers—and put downward pressure on health costs.
Americans are right to be fed up with the rising cost of health insurance. But the solution isn’t endless subsidies that paper over Obamacare’s systemic failures. It’s reform that reins in insurers’ abuses, restores transparency, and puts patients back in charge.
As Congress sets its healthcare agenda for the year ahead, lawmakers must resist calls for more subsidies and instead focus on fixing the insurance industry itself. Patients deserve nothing less.
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