With the end of the government shutdown, the discussion on health care and the ACA shifts to an upcoming vote in the Senate next month. Without an extension of the expanded ACA subsidies, inflation in health care premiums hits 22 million people. The solution that Republicans have arrived at is some change in the ACA subsidies from applying payments to health insurance premiums to direct payments to Americans. Today, I’ll discuss how dumb an idea that is.

First a brief primer on our health care financing system before the ACA. This country had 48 million uninsured, or about 16% of the population. This resulted in overcrowded emergency rooms, high levels of uncompensated care, and poor access to care. The ACA made a dramatic difference in access to insurance and thereby care. The uninsured rate fell to 9% initially, and further fell to 7.7% after the expanded ACA subsidies during the pandemic (the focus of current debate). Uncompensated care has a disproportionate impact on rural hospitals, with older and poorer populations.

Going backwards with federal funding for health insurance only unravels all of the progress made by the ACA. There is already a plan to cut access to Medicaid in 2027 and make it administratively difficult for poor people to sign up and stay enrolled. Cutting subsidies for health insurance through the ACA (as the Republicans intend) will likely result in 4 million more uninsured. The communities most impacted (and least prepared to absorb those uninsured) are rural ones. Lower funding to these communities will mean struggling hospitals have to question their viability. Small business owners and small farmers either face the prospect of no insurance or pray for no health care events.

Which leads us to the Republican ‘solution’. Their idea is to redirect the ACA subsidies from health insurers directly to taxpayers (in flexible spending accounts). But let’s be clear – while the ACA subsidies were deemed tax credits by the Supreme Court, Americans do not have to pay taxes to get them – they merely have to be eligible (citizens and lawfully present immigrants who choose ACA eligible health plans from their state’s insurance marketplace). Also, unlike most tax credits, they are not based on marital status and size of family. The credits are based on household income and the cost of the insurance plan chosen (with limits on what percentage of your income you will pay for insurance). Tax credit systems that are simply income based (like the Earned Income Tax Credit) are likely to benefit some (young healthy individuals) and disadvantage others (older individuals who already are charged up to 2.5 times as much as the youngest subscribers).

The Republican concept is to not advantage insurance purchasing. What will that do? It will likely mean that younger, healthier people will drop out of the health insurance market and keep the money for other purposes. This will result in a ‘death spiral’ in the individual insurance market, raising rates. It will also result in uncompensated care increases, as the unexpected health events hit the uninsured. This will drive up insurance rates for everyone, as hospitals pass their losses on to insurers. And older people in the risk pool? They will find both their insurance rates rising and less money to pay for that insurance.

In the words of Senator Bill Cassidy, by having ‘flexible spending accounts’ (assumably with their own administrative overhead) money would be directed “away from health insurers” and directly to consumers. The consumers today are controlling the ACA subsidies now – they are telling the government they want to buy a particular health insurance policy and want the government to pay that insurer the health care credits they are due to reduce their premiums. The Republican plan is premised on a series of lies – that people can afford insurance, can afford to pay for health care without insurance, and that there are positive impacts from consumers paying for their own care (at higher non-contracted rates, mind you). They end the lies by saying insurance premiums will fall – if they are talking in the aggregate they are correct, fewer people will buy insurance and total premiums will fall. But premium rates will increase. And the money from the American taxpayer will be wasted.

And the national disgrace continues…