Congressional Republicans have struggled for weeks to counter the Democratic push for an extension beyond 2025 of enhanced Affordable Care Act (ACA) premium subsidies. They should consider the plan developed by Senators Mike Crapo and Bill Cassidy as a potential starting point for an alternative they would be comfortable presenting to voters.
Republicans have known for months that the coming December 31 expiration of the enhanced premium credits was a flashpoint that required a response, and yet the party’s internal divisions led to procrastination. Now party leaders are scrambling to come up with an answer.
Predictably, Democrats have been less reticent and mostly see what is unfolding as a potential opening they can exploit. In the Senate, they have lined up behind a plan calling for a straight three-year extension and a rollback some of the tightened credit eligibility rules approved in the GOP’s recent reconciliation measure. The Committee for Responsible Federal Budget (CRFB) estimates the plan would add almost $300 billion to projected federal budget deficits in the coming years. Senate Republicans will use its costs as one reason to oppose it.
The GOP struggles on health care in part because it has not found a way to encourage insurance enrollment without expanding federal entitlements. For decades, Democrats have pursued a strategy of incremental liberalization, which voters have mostly applauded.
The Crapo-Cassidy plan offers a workaround of sorts for the GOP by endorsing subsidies for Health Savings Accounts (HSAs) owned by individuals in lieu of premium credits sent to insurers. The catch is that potential recipients of the HSA support must be enrolled in either bronze or catastrophic level insurance plans offered on the ACA exchanges, both of which come with high deductibles. In other words, the Crapo-Cassidy plan would incentivize take-up of ACA coverage by offering cash HSA support to enrollees in plans the GOP finds preferable to the other tiers offered on the exchanges (including gold and silver). Eligible individuals who decline to enroll in high-deductible coverage would be walking away from substantial direct cash support from the government.
The Democrats are sure to oppose this approach on the grounds that the value of the HSA credits will fall well short of the annual deductibles. In the Crapo-Cassidy outline, eligible individuals age 18 to 49 with incomes below 700 percent of the federal poverty line would get $1,000 annually in 2026 and 2027, while those age 60 to 64 would get $1,500. Those amounts are far less than the $7,500 average deductible for bronze coverage in 2026 or the $10,600 required by the ACA’s catastrophic insurance plans. This credit-deductible gap is certain to doom the idea with most Democrats and may scare off some Republicans, too.
But that does not mean the concept is meritless. The Crapo-Cassidy plan is worth exploring and developing further because it would provide a pathway to incentivizing insurance enrollment without fully embracing the ACA model. The GOP should consider how to combine the Crapo-Cassidy idea with somewhat lower deductible plans.
The scheme would be strengthened further if the GOP combined it with stronger incentives for lower pricing of common services, which HSAs to date have not induced on their own. Republicans should help HSA owners find lower-priced care options by pushing for three additional and interrelated legislative provisions.
First, Congress should direct the Centers for Medicare and Medicaid Services (CMS) to refine its list of “shoppable services,” which was developed as part of the agency’s price transparency rules, with standard clinical definitions. For instance, for common surgeries, CMS should specify what services should be included in “all in” prices for these episodes of care. Similar standardization should cover primary care services offered through monthly fee arrangements (called “direct primary care”).
Second, Congress should require hospitals, doctors, and other providers of these “shoppable services” to post cash prices for any of the specified services they plan to offer patients. All Americans would have the right to pay these cash prices when accessing care.
Third, Congress should require insurance plans to make available to their enrollees the cash value of what would be paid for the shoppable services if offered by an in-network provider. The plan enrollees could then use the insurance payments to offset what is being charged by the providers they select. This requirement should apply even after enrollees have fully satisfied their deductibles.
With these changes, HSA enrollees could easily compare prices charged by competing providers and cut their costs by finding those offering the highest value for what is being charged.
None of these changes will be easy to get through Congress, but Republicans are finding passivity has political costs too. The Crapo-Cassidy plan is intriguing because it expands the playing field in a way that is more favorable to Republican objectives.
James C. Capretta is Senior Fellow and Milton Friedman Chair at American Enterprise Institute
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