Voter outrage at Obamacare helped Republicans capture the House of Representatives in 2010, the Senate in 2014, and the White House in 2016. In 2020, a debate over whether to replace private insurance with a single-payer health-care system dominated the Democratic presidential primary. But health policy has since fallen away from the news headlines. In November 2016, 10 percent of Americans surveyed by Gallup identified health care as the most important issue facing the country. This year, only 1 percent did.
Americans remain dissatisfied with rising health-care costs, but Democrats and Republicans are wary of committing too much to an issue that has caused trouble for them. Nonetheless, unsustainably growing health-care entitlement costs are likely to force Congress to enact reforms, regardless of who is elected president this November.
To cover Americans with major preexisting medical conditions, the 2010 Affordable Care Act required health insurers to sell plans to healthy enrollees for the same premiums as paid by those who waited until after they became seriously ill. As a result, many healthy enrollees dropped coverage, the average cost of plans more than doubled, and most insurers pulled out of the marketplace. With Obamacare effectively reduced to a federally subsidized entitlement for enrollees with preexisting conditions, the Trump administration sought to allow the re-emergence of more affordable traditional insurance plans. But the absence of a filibuster-proof Republican Senate majority limited these efforts to loopholes in the ACA’s legislative framework, and the Biden administration later reversed even these minor reforms.
In 2021, the newly elected Democratic Congress responded to Obamacare’s shortcomings by expanding subsidies for ACA coverage. Federal funds now directly support the purchase of 79 percent of Obamacare plans, while the majority of enrollees receive plans entirely paid for by federal taxpayers.
Yet, these expanded subsidies are due to expire at the end of 2025, which would reopen debate over the ACA—and potentially give Republicans leverage to insist on reform. In recent interviews, vice presidential candidate J. D. Vance has advocated letting Americans again purchase non-Obamacare plans. Such proposals have run into fierce resistance from Democrats and the insurance industry, who fear it may reduce enrollment in subsidized plans.
Due to the growth of Obamacare, Medicaid managed care, and Medicare Advantage, the United States has seen a rapid shift into publicly subsidized private health insurance over recent years. From 2010 to 2021, the number of Americans enrolled in such plans soared from 37 million to 102 million. This presents a new challenge, as insurers have been eager to inflate federal payments by exaggerating the eligibility and medical needs of enrollees for whom they can claim subsidies.
This problem is particularly acute in Medicaid, where enrollment has surged from 54 million to 94 million in the years since the ACA was enacted, boosted by a Covid-era suspension of eligibility audits. Remarkably, the growth in the program’s enrollment has been concentrated among beneficiaries with incomes substantially above the supposed cut-off for eligibility associated with the ACA.
From 2010 to 2022, annual Medicaid spending has surged from $397 billion to $806 billion, while the cost of Medicare has swelled from $520 billion to $944 billion. Over the next decade, Medicare costs are expected to double again—accounting for most of the projected growth of the federal budget deficit.
On receiving her party’s nomination, Kamala Harris immediately disowned her 2020 endorsement of Medicare For All. Her main health-care proposals are to extend Biden’s expansion of subsidies for Obamacare plans, along with his caps on Medicare payments for prescription drugs. Donald Trump has not endorsed any specific plan to reform Obamacare or Medicaid, but any prospect of his renewing the $30 billion per year increase in ACA subsidies is likely to depend on the balance of power in Congress.
Trump has promised not to “cut one penny from Medicare or Social Security.” Harris has responded, absurdly, by pledging to “protect Social Security and Medicare against relentless attacks from Donald Trump.” Given already-unsustainable federal deficits and each party’s desire to blame the other for benefit cuts, decisive victory by either candidate next month is unlikely to open the way to major health-care reform.
That said, every recent president (including Trump and Biden) has proposed pruning Medicare spending growth in his budget proposals. And Congress has generally embraced cuts to the program as the easiest way to reduce the deficit or pay for other spending. A period of divided government—if that’s what we get next month—may wind up supporting reforms to health-care entitlements, as happened in 1997 and 2011.
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