As members of Congress return to their districts this month, they may receive earfuls about extending the Biden administration‘s enhanced subsidies for Obamacare, which are scheduled to expire at the end of this year.
Pundits warn that, unless Congress extends the subsidies, premiums in the individual market could increase by 75%. Republicans should tune out the chatter. The expanded subsidies were intended to serve as temporary, pandemic-era aids — not a permanent fixture of our healthcare system. Extending them will only cement the dysfunction that the Obamacare exchanges have let loose in the individual insurance market.
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In 2022, the Biden administration capped the amount any exchange enrollee pays for premiums at 8.5% of income, with taxpayers footing the rest. People earning below 400% of the poverty line, $128,600 for a family of four, receive increasingly generous installments from taxpayers. Individuals making less than 150% of the poverty line can get exchange coverage for free.
These subsidies mask the problem of rising Obamacare premiums. In 2013, the year before the Affordable Care Act took effect, the average individual market plan was just $244 per month. Today, that figure has more than doubled to $590. Enrollees almost certainly do not realize that their premiums have surged. But taxpayers today and in the future certainly will. Making the expanded subsidies permanent would cost $335 billion over the next decade, according to the Congressional Budget Office.
There are better ways to make health coverage affordable — ones that don’t rely on billions of dollars in taxpayer funding forever. For example, Republicans could encourage people to take advantage of health savings accounts, which were made available to more people as part of the One Big Beautiful Bill Act.
Contributions to HSAs and earnings on the savings aren’t taxed, and neither are withdrawals, as long as they go toward qualified health expenses. Under the One Big Beautiful Bill Act, people with catastrophic and bronze Obamacare plans, which have lower premiums and higher deductibles, are now eligible to contribute to an HSA.
People with HSAs own the proceeds, and so have a strong financial incentive to shop around for the best deals. As a result, their healthcare and pharmacy expenditures tend to be lower. The One Big Beautiful Bill Act also lets people use their HSAs to pay for direct primary care, wherein people pay a subscription fee for generally unlimited access to primary care, including appointments, lab services, and comprehensive care management.
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Pairing direct primary care with a catastrophic or bronze plan for emergencies may prove a better deal for some people than a highly subsidized silver or gold plan with a narrow provider network.
Republicans don’t need to hand out subsidies to help people afford insurance. Giving people more control over their health dollars is a better way to reduce out-of-pocket costs while saving taxpayers billions of dollars.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It (Encounter 2025). Follow her on X @sallypipes.