The GOP cannot escape the real affordability crisis in healthcare
Affordability will be the election theme for the 2026 midterms. This will apply across Americans’ lives. While real wages have indeed mostly kept up with prices of late, there is a serious concern among Americans that getting ahead is out of reach for many, especially younger generations. Affordability very much brought Donald Trump and the GOP to dominate Washington after the 2024 elecions and the same issue could very well be their undoing in 2026 elections.
Affordability issue most pronounced in healthcare
The affordability issue is most pronounced in healthcare. We have seen huge price and inflation trends in healthcare since coming out of the COVID pandemic and there is little sign that the aggressive trends will subside anytime soon. In the biggest world of healthcare, employer coverage, trends have been 6% to 9% the past few years. Family coverage now costs on average almost $27,000, with employees paying almost $7,000 of the upfront cost (before deductibles and cost-sharing kick in).
Researchers from Rice University and Baylor College of Medicine found that average worker contributions toward family insurance premiums grew by 308% between 1999 and 2024. Total premiums increased 342%, while average worker earnings increased by 119% and inflation increased by 64%.
Another shocker was that Part B premiums in Medicare increased 10% for 2026. Beneficiaries pay 25% of total costs in Medicare, with the government covering 75%. Thus, the 10% is a good proxy for annual growth in the program. As well, Medicare Advantage (MA) benefits have eroded for three years in a row now, brought about by rate reductions in some years, surging costs, and poor financial management by plans coming out of COVID.
And finally, the One Big Beautiful Bill Act (OBBBA) erodes Medicaid and Exchange coverage by imposing Medicaid work requirements, limiting Medicaid state matching revenue raising ability, and restricting enrollment in both programs. Much of these changes are programmed for after the midterms, but some states have already begun cutting back coverage.
The sunset of enhanced Exchange subsidies at the end of 2025 likely will mean millions go without coverage, although public data so far has shown enrollment has held up. Final 2026 numbers are still to come. Some states are reporting falloffs as well as that many have chosen to go to less generous Bronze or catastrophic plans (some still free or low cost under the regular premium subsidy scheme). Many of those who continued on the Exchanges in 2026 have seen premiums on average increase 26% nationally. Those who had subsidies in 2025 will see average premium hikes of 114% due to enhanced subsidies sunsetting.
In sum, across every line of business, Americans are feeling the heat of obscene costs.
- More and more employees cannot afford to enroll in employer-sponsored coverage or afford to use it if they can even pay the freight.
- Medicare recipients are facing surging costs and reductions of benefits and choice.
- Millions will lose Medicaid and Exchange coverage over time due to the OBBBA, face huge Exchange premium hikes, or enroll in sparser Exchange coverage due to the expiration of enhanced premium subsidies.
Republicans hope to sway voters
Republicans have this hope that somehow they can pin healthcare unaffordability on the Democrats’ Affordable Care Act (ACA) of 2010, Obamacare. While some criticism of the program is warranted, it remains popular among Americans and voters are unlikely to buy the GOP’s arguments. Republicans, too, may push additional healthcare reform in 2026 to seek to insulate themselves from criticism (see more below).
But Democrats will point to the OBBBA as the reason for coverage losses and premium spikes. Much of unaffordability is driven by a lack of true healthcare vision from both parties, but it won’t matter in the end. Democrats’ unaffordability arguments will resonate generally and specifically on healthcare. Even the good work by President Trump on drug price reform will not save the day.
What may come in 2026?
There is at best a 50-50 shot that the subsidies are extended in some form. Democrats gained some momentum on extending expiring enhanced Exchange premium subsidies when four House Republicans signed on to a discharge petition to force a vote on subsidy extension. The three-year extension could pass the House in January but face issues in the Senate (a similar bill already failed to receive 60 votes there). But that bill could then be used for a master compromise in the Senate that could go back to the House and perhaps pass. A second government shutdown again looms toward the end of January. The GOP likely is more afraid of yet another shutdown than Democrats. This could help efforts to forge a compromise.
But there are barriers. Republican leaders in each house are aligned with conservatives, who oppose any extension of the subsidies. They very much have their head in the sand regarding Americans’ healthcare woes. Democratic leaders would push back on a too-watered-down extension as well as GOP “add-ons” that strip away comprehensive coverage overall. Some Democrats may also favor no resolution so as to gain even more of an advantage in midterms.
But there is the possibility that a grand bargain comes together. Moderates in each house on both sides of the aisle could prevail in this way.
- A shorter extension – perhaps two years.
- Changes to the existing enhancements, including:
- Minimum premiums for everyone.
- A cap on subsidies above 400% of the federal poverty level (FPL) — not unlimited as the expiring law has now.
- Other anti-fraud and enrollment protections above and beyond those in the OBBBA to address rather legitimate concerns regarding improper enrollment. Many of the OBBBA reforms tackling phantom enrollment were indeed legitimate, something Democrats unreasonably cast aside. Some wonder if the fact that enrollment has held up reasonably well so far is a signal that the phantom enrolleess remain on health plan rosters.
- Appropriating cost-sharing subsidies again. While this hurts some enrollees between 200% and 400% of FPL, it does lower overall premiums for those above 400% of FPL by eliminating so-called “Silver loading.”
- Democrats might have to agree to GOP demands for including its priorities, which could include:
- Further expansion of employer coverage reimbursement known as ICHRAs.
- Expansion of Health Savings Accounts (HSAs) and individual options.
- Some expansion of alternative coverage, including Association Health Plans (AHPs), limited duration plans, direct primary care (DPC), and more. I have come to the conclusion that some of these are merited as comprehensive coverage mandates have failed us and these vehicles can serve as a critical bridge (sometimes combined with catastrophic coverage) to real healthcare reform. At the same time, we need to understand that such approaches, including individual access, could have profound implications on the viability and ongoing costs of employer coverage. It has been and should remain the foundation of our nation’s coverage.
Window dressing
As I have argued, though, all of this is window dressing if the parties are actually trying to tackle the affordability challenge. The parties would be smart to begin to tackle the real culprits and look at:
- Site neutral payments in Medicare, which would save hundreds of billions over time in both Medicare and the commercial world.
- Realigning price in both the medical and drug world, including regional and national all-line-of-business pricing.
- Reducing to law many of the things the president has worked on for drugs would be important. Thus far, the president seems to have focused on Medicaid cost and self-pay reductions. Two new models will begin to impact Medicare drug prices. But little has been done to impact commercial and employer drug costs.
- Tackling the primary care crisis in America, which could help control disease states and the pernicious effect they have on costs and outcomes in America.
- Tackling pharmacy benefits manager (PBM) reform.
- Addressing legitimate risk adjustment overpayment in MA.
- Plotting a course on true scrutiny and oversight of the massive horizontal and vertical integration in healthcare that is driving up price as well.
#healthcare #healthcarereform #healthinsurance #medicare #medicareadvantage #medicaid #exchanges #employercoverage #commercial #drugpricing #coverage #siteneutral
— Marc S. Ryan
