Hundreds of thousands of Americans have switched to health insurance that covers a lot less of their care this year.
Republicans hope a lot more will follow them.
The shift since January was driven by GOP lawmakers’ decision at the end of December to reduce the help the government provides to people who don’t get insurance through work, but instead buy it in the Obamacare marketplace. The reduction in those subsidies sent Obamacare customers searching for plans that cost less.
There’s a catch: The cheaper plans don’t cover the first several thousand dollars in sick visits, drugs and surgeries a patient needs. Nearly 4 in 10 Obamacare enrollees are in these “high-deductible” plans now, compared to 3 in 10 a year ago.
President Donald Trump and GOP senators want to encourage more to go that route by shifting remaining Obamacare subsidies, which are now used to reduce monthly premiums, into tax-advantaged savings accounts that come with the high-deductible plans. That would be very good for some — affluent people in good health who use the savings accounts to accrue wealth — but not so much for others: sicker and poorer people who incur medical bills they can't afford.
For many Republicans, that’s a worthwhile trade-off, considering the plans also reduce overuse of the health care system and put downward pressure on prices. “The president clearly has said we need to send money to patients rather than insurers in the system, and building out policies that are consistent with that is important,” said Brian Blase, president of the right-leaning Paragon Health Institute and an adviser to Trump in his first term.
But the inequitable outcomes for patients trouble others.
Many high-deductible customers are “chasing after that lower premium, but they actually do need to use care on an ongoing basis, and then they end up with a lot of debt or being terrified to use their insurance or seek care and ignoring symptoms,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, a progressive health care-focused philanthropy.
The president touted his “Great Health Care Plan” at a Turning Point USA event two weeks ago, promising “to get it done one way or the other.”
Among Republicans on Capitol Hill, both Trump allies, like Sen. Rick Scott of Florida, and adversaries, such as Sen. Bill Cassidy of Louisiana, are trying to help.
Cassidy told POLITICO he thought most people would come out ahead given the lower premiums and tax savings. “Your total cost of being insured is less,” he said. (Trump and Cassidy are still at odds over Cassidy’s 2021 vote to convict Trump of inciting that Jan. 6’s riot at the Capitol.)
For Scott, it’s about giving patients greater control. The change would “radically re-empower the American people and let them dictate more of where their money goes,” he said.
The shift in Obamacare coincides with one in the employer-provided insurance market, where now 40 million Americans are enrolled in high-deductible plans. The percentage of people opting for the plans has nearly quadrupled, to more than 40 percent, in the last two decades.
For healthy people with disposable income who’ve joined the plans, it’s worked out. The amount people have banked in health savings accounts has grown from $3.4 billion in 2007 to an estimated $189 billion now. The money goes in, and comes out, tax-free to pay health care bills. The money can be invested in stocks and bonds. When owners of the accounts turn 65, they can use the money for anything if they pay tax on the growth.
But many people opting for the plans do so because the cheaper premiums are the only way they can stay insured, and the average amount enrollees are spending out of pocket on health care has ticked up as the plans gained popularity.
That’s likely to be the case for Obamacare enrollees going with high-deductible “bronze” plans this year. In 2026, the average out-of-pocket deductible payment for a bronze plan is over $7,000. Studies have shown that people with chronic diseases who are enrolled in the plans often skip necessary care or struggle to afford medical services.
A mass shift to high-deductible plans could leave millions of Americans who recently lost access to Obamacare subsidies vulnerable to unexpectedly high costs, health policy experts said. And Republicans’ push to expand access to nontraditional health plans on the ACA marketplace might create confusion for consumers shopping for the most affordable coverage options.
“You're going to have parallel-marketed plans — next to comprehensive ACA plans — that are loosely regulated, that may look attractive at first because they they appear to have lower premiums, but then you come to find out when you actually need to use the plan you're stuck with much higher out-of-pocket costs and fewer consumer protections,” said Michelle Long, a senior policy manager for the Program on Patient and Consumer Protections at KFF, a health policy research organization.
The GOP health insurance blueprint
Republicans are eager to move ahead anyway.
Cassidy, the Health Committee chair, is leading a bill with the Finance chair, Mike Crapo (R-Idaho), that would direct federal funds used for Obamacare subsidies instead to individuals’ HSA accounts when they enroll in low-premium, high-deductible plans. Cassidy unveiled a health care agenda in April outlining a similar plan, which he told POLITICO he’s in the process of drafting legislation on and “should be something which has bipartisan support.”
Despite the higher deductibles people would face on the bronze plans, Cassidy said the policy would limit Americans’ out-of-pocket exposure, noting deductibles for the more expensive silver plans are also high. An average silver-plan deductible on the ACA in 2026 was about $5,000, though low-income enrollees who qualify for cost-sharing reductions would pay much less before coverage kicks in, sometimes as little as $100.
If the government were to put $2,000 into enrollees’ health savings accounts, Cassidy said, that would cover the annual medical expenses of the average American.
Patients with higher bills aren’t better off in silver plans, he said.
Scott said his proposal would do more to lower costs by allowing people to save in new Trump Health Freedom Accounts in any type of insurance plan. Currently, only people in high-deductible plans can open HSAs.
Scott’s plan would also let states waive certain ACA requirements, including coverage of essential health benefits, to lower premiums. That could leave enrollees who get sick on the hook for unexpected bills.
The plan is consistent with Trump's efforts to offer more choices for Obamacare enrollees outside traditional ACA plans, including expanding short-term health plans, which Democrats have derided as “junk insurance.”
The Trump administration has also proposed a marketplace rule that would crack down on fraudulent ACA enrollments and expand several alternative plan options, including catastrophic plans — lower-premium plans that cover Obamacare’s essential health benefits but come with a more than $10,000 deductible for an individual in 2026. Trump also proposes allowing the sale of so-called non-network plans on the ACA marketplace, which typically come with high deductibles but have no networks of doctors or providers, an option some employers currently offer.
The proposals are roiling major players across the health industry, as insurers and some providers have spoken out against the GOP’s strategy. They argue consumers will be confused and could end up without the coverage they need.
“This model assumes a level of medical and insurance literacy that would be exceptionally challenging for Marketplace consumers and represents a fundamentally different experience from the one Exchange enrollees navigate today,” AHIP, a trade group representing health insurers, wrote in its comment letter on the proposed rule.
If insurers take a financial hit as a result of the policies, they might hike premiums across the market, raising costs for large swaths of Obamacare enrollees regardless of what plans they’re in.
“You're certainly further fragmenting an already pretty fragile, fragmented health insurance market in this country,” Long said.
The cost of more coverage options
People who qualify for Obamacare subsidies, with incomes between 100 and 400 percent of the federal poverty level, will likely continue to opt for traditional marketplace coverage — like bronze, silver, gold or platinum plans — because of lower costs and more robust benefits, said Matt Mize, a member of the Individual and Small Group Markets Committee at the American Academy of Actuaries.
But the millions of people who no longer qualify for subsidies might be attracted to newer options like non-network plans and expanded catastrophic coverage or short-term insurance — "lower-cost products that may also have lower benefits,” he said.
Those plans might work well for healthy people who rarely seek medical care, and having some form of coverage is better than going uninsured, said Hempstead. An estimated 4 million people are expected to lose their health insurance coverage in 2026 with the lapse of the enhanced subsidies. So far, federal data shows about 1 million people have dropped off Obamacare this year.
But the plans might not provide much protection for an unexpected medical event.
Disrupting industry standards
Blase thwarted arguments that Republicans’ proposals, like shifting people onto plans with HSAs or allowing non-network plans to be sold on the Obamacare marketplace, would make health care more expensive for consumers. He said there’s demand for more alternatives as ACA premiums have skyrocketed this year, and “people should be able to finance their health care in the way that makes the most sense for them.”
He added that opposition from insurers and providers to some of the GOP’s proposed expansions is a good sign that the ideas will “break the mold or put additional pressure” on the health care industry to lower pricing.
“When the industry opposes something, it's generally a pretty good sign that whatever they're opposing is going to lower the amount, which is going to make health care more affordable,” he said.
Insurers and providers have raised concerns about the Trump administration’s non-network plan proposals because those plans would make it difficult to satisfy the ACA requirement that they provide a “sufficient choice of providers.” They also argued that adding the plans to the exchanges would destabilize the ACA marketplace, prompting young, healthy Americans to leave the risk pool and raising costs for remaining enrollees.
But Blase and Sidecar Health, a benefits company that administers non-network plans for employees, said the companies are crying wolf. Blase is an adviser for Sidecar.
Insurers and providers argue the plans would leave consumers vulnerable to high out-of-pocket costs. Sidecar Health CEO Patrick Quigley said while he can’t speak for all non-network plans, under his company’s model, consumers often have no deductibles and greater access to providers than many ACA plans, which have narrow networks. Enrollees in the plans are allowed benefit amounts based on the median price of care in a given market, and they can shop around to choose doctors based on their budget.
Transparent health care prices create competition, ultimately lowering the cost of care, Quigley said.
But health policy experts aren’t sold on non-network plans or the other alternatives, like expanding HSA accounts, that Republicans are proposing. Hempstead said she welcomes new ideas that disrupt the status quo in health care — as prices are skyrocketing — but it’s “fantastical” to think that ACA consumers would be market movers just because they’re armed with pricing data.
“What you might see instead is somebody who gets duped into thinking it'd be better to have a lower-tier plan and $2,000. That could be a really terrible trade-off for them, because that $2,000 won't last long if something really happens, and they're just going to have a way more exposure to debt,” she said.
