A Reminder of Why Healthcare Insurance is a Hill to Die On

As we approach a government shutdown tomorrow night, and with the Democrats demanding rescission of Medicaid cuts and the re-imposition of subsidies for low wage earners under the Affordable Care Act (aka Obamacare), I thought this might be a good time to review why the ACA was structured i a very specific way to make it work.

First, a reminder. Prior to the implantation of the ACA, this is where healthcare insurance stood:

• Uninsured rates in the USA were in the 16-18% range (roughly 50 million Americans did not have health insurance); in 2008, nearly 17% of the population was uninsured

• The working poor were the hardest hit. They earned too much to go on Medicaid and yet couldn’t afford insurance premiums. In 2009, the uninsured rate of 18-64 year olds was approximately 42.5%

• Even among employed people in 2008, 17.7 % were uninsured

• Also, let’s remember that health insurance companies could do the following:

  • deny and/or limit insurance for pre-existing conditions

  • cap insurance benefits (lifetime and annual dollar limits on health benefits) so they only had to pay out a certain amount over the life of a policy

  • charge higher rates based on internal company criteria (age, health condition, sex, etc.)

  • children of adults age 18-26 had to find separate insurance

  • insurers could exclude whatever coverages they wanted (i.e., they did not need to cover preventive care, maternity/newborn, mental health, emergency services, hospitalization, etc.)

The ACA changed all that. While not perfect by any means, in essence, it made health insurance more inclusive, standardized, and consumer-friendly. And it was passed by Democrats with no Republican votes in either the House or the Senate.

Now, why was the ACA structured the way it was? Well, here goes:

• The ACA expanded Medicaid to cover more poor people. Note: In National Federation of Independent Business (NFIB) v. Sebelius (2012), , SCOTUS struck down the Medicaid expansion mandate, saying it must be voluntarily up to each state to decide to expand Medicaid. As of today, 10 states have not expanded Medicaid covering approximately 20+% of the US population.

• The ACA introduced community rating (premiums can only vary based on age, location, family size, and tobacco use — not health status or gender) to standardize insurance rate

• In order to do this, the ACA had to ensure that both healthy and unhealthy people (low risk and high risk) signed up ( in insurance parlance, the ACA required the largest “pool” possible - all uninsured Americans); so the original ACA law had a penalty for not signing up if otherwise uninsured; this was known as the “individual mandate”. Note: the penalty for not signing up was reduced to $0 in 2019, effectively gutting the individual mandate

• In order to have the largest possible pool of people, the law needed to make premiums affordable for low-income people. It did this by providing subsidies (tax credits) and cost-sharing reductions. Many low-income people who earned too much to qualify for Medicaid effectively had their monthly premiums reduced to $0 or nearly $0 (Thx to Paul Krugman and Charles Gaba for the following chart

Where are we today? Well, in the Republicans BBB Act of 2025, they included something on the order of $800 billion in cuts to Medicaid (which they deny) and refused to extend the ACA subsidies.

I’ll let Nobel Prize winning economist Paul Krugman fill you in on the potential impact of those actions/non-actions in the BBB Act: Understanding the Coming Premium Apocalypse.

Final note which I have previously written about. In the BBB Act, Republicans did an end run around the Seante rules by ignoring the Senate Parliamentarian’s ruling and asserting that extending the 2018 Trump Tax Cuts somehow did not impact the deficit/debt going forward since they were already in place - even though they were set to expire this year purposely by the Republicans when they voted on them in 2018 because - they blew up the deficit/debt (yes, that makes my head hurt). However, in the very same situation with the ACA premium subsidies, the Republican House/Senate took the exact opposite approach - not extending the expiring subsidies because continuing with them would increase the deficit/debt. Yes - cynical and sleazy, but perhaps understandable when on looks at Republicans’ core ethos of helping the rich and hurting the poor/regular working Americans.

I believe Dems should have asked for more in the shutdown impasse (getting rid of rescission of already passed bills and releasing the Epstein files), but this healthcare fight is a fight worth fighting for and on which to take a firm stand.