Lowering health care costs starts with real reform, not temporary subsidies

Health care affordability remains one of the most pressing challenges facing American families. The United States has one of the best health systems in the world in terms of quality of care, access to cutting edge treatment, and medical innovation, but one of the worst systems in the world when it comes to cost. For too many families, rising premiums, high deductibles, and increasing prescription drug prices have made healthcare feel increasingly out of reach.

The Affordable Care Act promised to make health care more affordable. In reality, it has proven to be anything but affordable. Premiums have climbed, choices have narrowed, and millions of Americans remain frustrated by a system that feels stacked against them. Too often, the response in Washington has been to paper over these failures with temporary taxpayer subsidies to health insurance companies to artificially “lower” rates, rather than addressing the structural problems that are driving costs up in the first place.

The Democrats’ push to extend the Affordable Care Act’s Enhanced Premium Tax Credits is the latest example. This was a short-term program developed to address health insurance challenges during the economic disruption of COVID. While these credits provide some relief for the small percentage of Americans enrolled in marketplace plans, they only reduce premiums by an estimated 6%, and they do not meaningfully fix what is broken in our health system. They leave untouched the policies and market distortions that continue to push premiums higher year after year. Simply writing bigger checks to insurance companies may mask costs in the short term, but it does nothing to bring them down for everyone else.

That is why I support a different approach, one focused on real, structural reforms that lower health care costs for all Americans while expanding choices for workers, families, and small businesses. The Lower Health Care Premiums for All Americans Act that passed the House of Representatives last week does exactly that.

First, the bill expands access to Association Health Plans. Small businesses, independent contractors, and self-employed workers often lack the bargaining power enjoyed by large employers. By allowing small businesses to band together across industries to purchase coverage, Association Health Plans will help pool risk, increase competition, and reduce premiums without sacrificing consumer protections. This approach gives job creators and workers more options, not fewer.

Second, the bill strengthens CHOICE arrangements, which incentivize employers to contribute tax-advantaged dollars toward health coverage chosen by their employees. Instead of forcing workers into one size fits all plans, CHOICE arrangements empower families to select coverage that fits their needs while giving employers a predictable and affordable way to offer health benefits. For many small businesses, this flexibility makes the difference between being able to offer coverage to its employees or not.

Third, the legislation brings much needed transparency to pharmacy benefit managers, commonly known as PBMs. These middlemen play a major role in determining drug prices, yet they operate largely behind closed doors. By requiring clear reporting on drug costs, rebates, and fees, this bill exposes hidden incentives, empowers employers to negotiate better contracts, and will drive down prescription drug prices without imposing government price controls that stifle innovation.

Finally, the bill addresses one of the most overlooked drivers of rising marketplace premiums, a practice known as silver loading. When cost sharing reduction payments were discontinued years ago, insurance companies responded by artificially raising premiums. Permanently funding these cost sharing reductions ends that practice, stabilizes the market, and lowers marketplace premiums by more than 11 percent. That reduction is nearly double the premium relief that would be achieved by merely extending the expiring tax credits. This reform lowers costs not just for subsidized enrollees, but for everyone buying coverage on the individual market, while saving taxpayers billions of dollars.

Taken together, these reforms reflect a simple principle. Lowering health care costs requires competition, transparency, and flexibility, not more bureaucracy and temporary bailouts. Americans do not want Washington deciding their health care for them. They want affordable options, real choices, and a system that works.

The Lower Health Care Premiums for All Americans Act is an important step in that direction. I am hopeful that the Senate will advance these reforms that reduce health care costs for all Americans, not just the 7% who buy plans on the ACA marketplace. American families deserve high-quality, affordable health care, and I will continue fighting to ensure they have it.

Jay Obernolte represents California’s 23rd congressional district.