President Donald Trump infamously asserted during the September 2024 presidential debate that he had “concepts of a plan” to replace the Affordable Care Act (ACA). This weekend, almost 10 months into his second term, he offered a glimpse of what that plan might look like.
Posting on his platform Truth Social on Saturday, Trump said that he was recommending to Senate Republicans that they replace the federal subsidies for ACA premiums, which are sent to private health insurers, with money sent directly to the American people. Although Treasury Sec. Scott Bessent said there was no “formal proposal,” Republican lawmakers jumped onboard, and Sen. Rick Scott, R-Fla., said he was “writing the bill right now.”
Setting aside the irony that a Democratic politician would surely be pilloried for pursuing the redistribution of payments from private companies to the masses, let’s dig in.
The insufficiency of HSA funds is just the start of the problems with Trump’s proposal.
This is hardly the first time that Trump has proposed repealing the ACA, on which a record-high 24.3 million people now rely for marketplace plans. The most sweeping of these efforts notably fizzled back in 2017, when the late Sen. John McCain voted against it in the middle of the night. Even in the absence of outright repeal efforts, Republicans in Congress reduced the mandate penalty to $0 in the Tax Cuts and Jobs Act of 2017. This summer, the Centers for Medicare & Medicaid Services finalized a rule that will increase out-of-pocket costs and may lead to as many as 1.8 million Americans losing coverage. At the same time, the One Big Beautiful Bill Act advanced several changes that will limit the ACA’s effectiveness.
Amid such vitriol at the ACA, it can be easy to forget that the law brought America’s uninsured rate to a historic low, improved health outcomes across a range of conditions and reduced health inequities. What’s more — and what’s especially important when evaluating Americans’ health care costs — Medicaid expansion through the ACA is also associated with reductions in medical debt. These gains help explain why 64% of Americans favor the ACA, though it garners considerably less support among Republicans.
Absent the preservation of the ACA’s core provisions, tens of millions of Americans with preexisting medical conditions would be vulnerable to outright denial of coverage by private insurers. In 2017, the health policy research group KFF estimated that 27% of non-elderly American adults had previously declinable preexisting conditions. That share has likely only increased as complications from Covid-19 have become more common and more people have enjoyed the ACA’s protections — whether gaining a primary care doctor or opting for tests that before the ACA might have revealed a preexisting condition.
But perhaps concerns about health care affordability could be offset by the amount of money that would be redirected to the people.
Trump’s first post was characteristically light on details. In a later post, he suggested that consumers bypass health insurers altogether to purchase plans directly, without explaining how or from whom those plans would be purchased. But Sunday morning, he specified that “Republicans should give money DIRECTLY to your personal HEALTH SAVINGS ACCOUNTS.” Through HSAs, people can put money away and withdraw the funds tax-free for qualifying medical expenses if they’re enrolled in a high-deductible health plan.
GOP policymakers have often championed HSAs because, in theory, they reflect Republicans’ preference for individuals’ choices over government intervention. In practice, HSAs tend to benefit people with higher incomes: They’re the ones with the means to contribute to the accounts, and because they’re in higher tax brackets, they benefit more from each dollar saved. Furthermore, researchers at the Center on Budget and Policy Priorities find that HSAs do not significantly benefit those who struggle with health care costs, and relatedly, that they exacerbate the racial disparities the ACA has effectively reduced.
To make matters worse, Trump is proposing these changes amid a shaky economy.
So, how much money are we talking about? The Congressional Budget Office estimated that in 2023, health insurers received approximately $92 billion in ACA subsidies. That would not come close to covering most Americans’ health care expenses — in 2023, Americans shelled out $500 billion just on out-of-pocket costs.
The insufficiency of HSA funds is just the start of the problems with Trump’s proposal. A core concept of health insurance is the spreading of risk across the pool of enrollees, in order to contain the costs of coverage. When the risk pool is diverse, the premiums of younger and healthier patients offset the expenses of covering older and sicker individuals, a principle at the heart of the ACA’s mandate to hold a minimum level of insurance.
With added reliance on HSAs, America would witness what is called “adverse selection” — healthier and wealthier people would more likely switch away from comprehensive health insurance products, leaving the insured population on average sicker and therefore more costly to insure. Thus, insurers would increase the premiums they charge, likely resulting in an increase in the population that only enrolls in insurance when they have more significant health care expenditures.
High health care costs are already a strain on many Americans, leading to delayed or forgone care or — in the case of about 9% of Americans — being uninsured. Trump’s concept of a plan would make this worse: What might appear at first blush to be a welcome move toward more individualized decision-making would ultimately increase costs. The consequences would include higher rates of uninsurance and underinsurance, as well as exacerbated racial and socioeconomic inequities in health care access.
To make matters worse, Trump is proposing these changes amid a shaky economy with considerable strain on Americans’ pocketbooks. In a country whose dominant health insurance model entails tying insurance to employment, when the jobless rate ticks up, it is especially important to preserve access to quality, affordable plans through the ACA. That’s especially true given Republicans’ recent historic cuts to Medicaid, weakening a key backstop for low-income Americans.
The American people would be forgiven if they looked at Trump’s and Scott’s words with skepticism in light of congressional Republicans’ opposition to extending marketplace subsidies for even one more year. That refusal has led to sticker shock for marketplace consumers during open enrollment and helped spark a weekslong government shutdown.
Politicians are right to want to confront the problem of high health care costs. But the president’s new proposal is the latest example of his administration’s policy preferences working against that important stated objective, sabotaging effective programs (the ACA) in favor of programs that research consistently shows are comparatively ineffective (HSAs).
Trump’s pledge to replace comprehensive health coverage with direct payments toward health care offers only a hollow hope, promising individual freedom while actually leaving Americans to fend for themselves.