Washington again finds itself in a government shutdown crisis. Obamacare, by contrast, is in a permanent state of crisis. This time, lawmakers can trade brinkmanship for genuine progress by fixing the broken economics of the Affordable Care Act.
The ACA undeniably reduced the number of uninsured Americans. Roughly half of that gain came from Medicaid expansion, and half from enrollment in the ACA’s private insurance marketplaces. Yet this success came at a steep and growing price. Roughly 92% of marketplace enrollees, 19.7 million people, received federal premium subsidies in 2024, and the total cost of those subsidies has far outstripped early projections.
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Part of the surge stems from pandemic-era “enhanced” premium tax credits that eliminated the ACA’s original income cap and are set to expire at the end of 2025. Rather than serving as a safety net for struggling low- and middle-income families, the subsidies represent a form of corporate welfare: They benefit insurers who make generous margins from selling ACA plans, and they benefit employers whose workers choose ACA plans over employer-sponsored plans.
In exchange for a one-year extension of the enhanced premium tax credits — giving enrollees, employers, and insurers time to adjust — Congress should pair the reprieve with meaningful, market-oriented reforms to make the ACA sustainable.
- Tie premium subsidies to the bronze tier instead of silver to curb overinsurance, reduce federal costs, and restore price competition. Those who want richer coverage can pay the difference, just like in any other defined-contribution system. Critically, the subsidy should fall slightly below the cheapest plan — just $5 or $10 less — to eliminate the $0-premium loophole that fuels broker gaming and fraudulent enrollment.
- Let cost-sharing reductions follow the enrollee, not the metal tier, so low-income families can choose the plan that fits best without forfeiting assistance. This simple change restores real competition across plan types.
- Count after-subsidy premiums toward out-of-pocket limits, turning the ACA’s fragmented cost-sharing rules into a single income-based catastrophic cap. Once total spending hits a set share of income, small copays replace deductibles, using systems insurers already have.
- Let people who choose lower-cost bronze or catastrophic plans keep the savings in a Health Savings Account, with a modest government match for lower-income enrollees. Real money in HSAs makes coverage more visible and encourages smarter spending.
Critics will say these changes “raise premiums” for many enrollees. What they mean is that the government will pay less because subsidies will again focus on those who actually need them. Ending taxpayer support for affluent families isn’t a cut in coverage; it’s a correction of priorities toward families most in need.
Others will warn that lower benchmark plans will narrow networks or increase deductibles. But consumers can always buy up if they prefer richer benefits. The current system forces everyone to pay for generosity they don’t value, leading to fragile risk pools where the healthiest are the first to drop coverage.
Most importantly, these reforms move the ACA away from its unhealthy obsession with headline premiums and toward total affordability — what families actually spend, not just what appears on the monthly bill.
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The result would be a marketplace that protects Americans from true financial catastrophe, rewards cost-conscious choices, and stops sending taxpayer dollars to the already-insured and upper-middle-class. It’s the kind of pragmatic, fiscally responsible bargain both parties claim to want.
As the government shutdown drags on, Congress should use this impasse to accomplish something lasting. Rather than another short-term funding patch, lawmakers can trade a one-year extension of enhanced premium tax credits for reforms that finally put the Affordable Care Act on a stable footing. The shutdown can end with reopened offices and a better deal for taxpayers and patients alike.
Tony LoSasso is a professor of economics at DePaul University.
