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In its initial lightly sketched form, Senator Bill Cassidy’s ACA reform plan is the least bad of several Republican proposals, in that it extends funding for the enhanced ACA premium subsidies (eAPTC) that will otherwise expire at the end of 2025, while redirecting them.
As outlined to the Washington Examiner, Cassidy’s proposal would end eAPTC but use the $26 billion estimated cost to fund Flexible Spending Accounts (FSAs) for subsidy-eligible ACA enrollees — that is, funds to spend directly on out-of-pocket costs (or other medical costs, e.g., dental). As Charles Gaba notes, it’s unclear whether each enrollee’s FSA would be funded with the amount of eAPTC she would have been eligible for, or whether the FSA would be flat-rate or allocated by some other formula. (Cassidy emphasizes that HRAs, unlike Health Savings Accounts, are use-it-or-lose it, saving the federal government money from enrollees who access little or no medical care in a year.)
The incentive for most enrollees would be strong to use their reduced premium subsidies to buy a bronze plan (average deductible about $7,400) and use the FSA to cover first-dollar expenses. That’s donut-hole coverage, as the FSA wouldn’t cover all expenses up to the deductible or annual out-of-pocket maximum (as high as $10,600). It would work for a lot of people, while leaving lots more who would otherwise have been in high-CSR silver (actuarial value 94% or 87%, in contrast to 60% for bronze) saddled with thousands more in out-of-pocket expense.
It’s highly unlikely that this repurposing of federal subsidies can be rigged up for 2026. For the longer term, Republicans won’t consider a plan like this seriously, just as they didn’t consider the Cassidy-Collins ACA repeal/replace plan of 2017, which also would have preserved core ACA funding and taxes while emphasizing an ACA alternative centered on Health Savings Accounts. Republicans are about cutting federal spending on benefits for low-income and middle-income people, not remixing it.
If Republicans were to “reform” the ACA by centering spending accounts, via a second bill using budget reconciliation to bypass the filibuster, the blueprint would more likely resemble a plan by the Paragon Health Institute’s Brian Blase, whose arguments and proposals are often sock-puppeted by the Wall Street Journal editorial board and right-wing Republicans on Fox. Blase has proposed letting the enhanced subsidies expire and giving ACA marketplace enrollees who qualify for Cost Sharing Reduction (CSR) subsidies, which raise the actuarial value of a silver plan to a roughly platinum level for enrollees with income under 200% FPL (i.e., for 65% of current enrollees), the option to replace CSR with Health Savings Accounts (HSAs). These would be funded with federal grants ranging roughly from $600-2,500, depending on the level of CSR (94%, 87% or 73% AV).
Blase would fund the HSAs by reverting to the original (and statutory) way of funding CSR — directly reimbursing insurers for its value (i.e., for the difference between a plan with a baseline silver 70% actuarial value (AV) and one with a CSR-enhanced AV of 94%, 87%, or 73%). At present, since Trump cut off this direct reimbursement in October 2017,* the value of CSR is priced directly into premiums — mostly, though not always strictly, into silver premiums, since CSR is available only with silver plans. Since income-adjusted premium subsidies are set to a silver benchmark, subsidies rise with silver premiums. As a result, this “silver loading” made bronze plans free (net of subsidy) to millions more potential enrollees than previously, boosting enrollment by an estimated 5% by OEP 2019. Moreover, since thanks to CSR the average silver plan enrollee has a plan with an AV higher than a gold plan’s 80%, gold plans are now available at premiums below the premium for benchmark silver in 20 states (several states require this, and in other states insurers do it voluntarily).
Blase’s plan would hit current and prospective marketplace enrollees with a double whammy — wiping out not only the enhanced subsidies but also the effective discounts created by silver loading, and luring millions of low-income enrollees who do stick with the marketplace into bronze plans. Taken together, and in concert with new “program integrity” measures that throw up administrative barriers to enrollment, the Blase plan would set the stage for the lowest marketplace enrollment since the marketplace reached full maturity in 2015.
In laying out this planned mass shrinkage of the marketplace (ultimately by well over 50%), Blase articulates two noteworthy assumptions. First, citing an analysis by the consultancy firm Milliman that Paragon commissioned for an earlier iteration of this plan, he boasts that “nearly seven-in-ten enrollees with income below 200 percent of the FPL [i.e., 67%, per Milliman] would benefit from selecting the HSA option, with an average financial benefit of around $1,500 over the year.” True, perhaps, but in the sense that 95% of homeowners would benefit in a given year from having no homeowner’s insurance, since only about 5% annually file claims. As Milliman, which by creed “does not advocate for or against policies,” puts it,
A one-in-three chance that an insurance benefit will pay off in a good year is actually a high ratio. The high deductibles and high OOP maxes attached to most bronze plans are a very poor match for most low-income enrollees. In fact, even the relatively low out-of-pocket costs to which 94% AV CSR silver plans expose enrollees with income up to 150% FPL tends to deter enrollees from seeking needed care. As a rule, Republicans undervalue risk, or rather risk mitigation, and tout benefits that favor those subject to less risk — the healthy and the wealthy. Tax-favored savings products fit that model.
The second noteworthy assumption is embedded in this claim: “At least 5 million individuals could benefit since more than 5 million people received CSR payments in 2020.” That made me rub my eyes and check to see whether I’d pulled up a plan written in 2020. The footnote explains: “We are disregarding the current surge of pandemic-related enrollments because it is presumably temporary.” In 2025, 12.3 million ACA enrollees received CSR. Oh well. Blase is happy to embrace a 59% reduction — and lure the remainder into donut-hole coverage that could result in severe financial distress for a significant minority of them. That’s because he denigrates the doubling of marketplace enrollment in the years since eAPTC was established by the American Rescue Plan Act (ARPA) as a product mainly of fraud — though even his wildly exaggerated estimates of 6.4 million “fraudulent” enrollees** would suggest a 50% enrollment increase in the ARPA era. Blase is a prime practitioner of the well-worn conservative/Republican means of attacking public benefits: exaggerate real weaknesses in program design and implementation to discredit the benefit and radically restrict access and funding.
Cassidy is a senator and Blase is not, so why focus so much attention on Blase’s plan? First, it’s worked out in detail (with a 2022 predecessor), and Cassidy’s is not. Second, if Cassidy reverts to form, he may well embrace plans far more toxic than his current sketch. In 2017, as noted above, he co-sponsored the first and least-bad ACA repeal/replace plan, in March. In September 2017, he co-sponsored the last and worst such plan, Graham-Cassidy, which would have liquidated both the ACA marketplace and the Medicaid expansion, replacing both with inflation-capped block grants to states, inequitably distributed to favor red states (penalizing blue states for expanding Medicaid). Then as now, Cassidy unctuously claimed he was advancing a “nonpartisan” approach— which likely would have increased the uninsured population by more than 30 million, with losses increasing over time as per capita caps on block grants bit progressively deeper.
Of course, Cassidy, a medical doctor, cast the effective deciding vote allowing confirmation of RFK Jr. as HHS director and the resulting destruction of the CDC, FDA, and a host of other HHS programs and capacities.
Let’s hope that the prospect of electoral doom deters Republicans from doing more damage to the ACA than the (eventually reversible) refusal to continue the enhanced subsidies.
* The ACA statute mandates direct reimbursement of insurers for CSR but left it to Congress to fund it, which Congress has never done. The Obama administration funded CSR anyway, finding the money in couch cushions. Republicans in Congress sued; a court upheld their suit but stayed the ruling pending appeal. In October 2017 Trump cut off this direct reimbursement, a move that had been anticipated since he took office, and state regulators responded by allowing or encouraging insurers to price CSR directly into silver plan premiums.
** Broker-induced enrollment fraud did in fact become a major problem in the ACA marketplace in 2023-2024 in particular — spurred by too-easy broker access to all ACA enrollee accounts, the wide availability of zero-premium plans, and the availability of monthly Special Enrollment Periods for enrollees with income under 150% FPL. At least hundreds of thousands of enrollees had their plans switched without their permission or were enrolled without their permission. That problem can be, and to a large extent already has, be addressed by tightening broker access, requiring enrollee signoff on changes, and cracking down on bad broker behavior.
Image: Courtesy of the Trustees of the British Museum. Shared under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0) licence
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