Trump wants subsidy dollars to go to people, not insurers. It can work if Congress protects the risk pool.
The Trump administration has begun mailing $500 checks to about 950,000 Affordable Care Act enrollees in the 30 states that use the federal exchange. The money is a refund of overcharged exchange fees, and most of it goes to people who received no subsidy. The checks are small. The idea President Trump has attached to them is not. Since January he has urged Congress to pass his Great Healthcare Plan, under which some federal money now paid to insurers would go directly to eligible Americans to buy coverage.
That idea deserves a serious hearing, along with a serious account of what could go wrong.
The case for it starts with a simple observation. American healthcare rarely asks the person making a decision to bear its cost. The ACA’s premium tax credit is a good example. It is tied to the price of a benchmark silver plan, so when insurers raise premiums, the subsidy rises with them and the enrollee barely notices. An enrollee who picks a plan cheaper than the subsidy gets a $0 premium but keeps nothing. Suppose an eligible family is entitled to $6,000 and can buy acceptable coverage for $4,500. Today the remaining $1,500 simply disappears. Let it go into a health savings account for deductibles, prescriptions and future care, and shopping suddenly pays. Insurers facing customers who shop have a reason to compete on price.
The timing helps. Since January, bronze and catastrophic exchange plans qualify for HSAs, so the low-premium plans most likely to leave money on the table can now be paired with the accounts that would hold it.
The broader context cuts the other way. The enhanced subsidies Congress enacted during the pandemic expired at the end of 2025, and many enrollees’ premiums rose sharply. Redirecting the remaining subsidy money doesn’t settle how much subsidy there should be. Families whose premiums jumped this year won’t be persuaded by an argument about incentives that ignores what they now pay.
There is also a tension inside the plan. It proposes funding the ACA’s cost-sharing reductions, which Washington stopped paying in 2017. Insurers responded by loading the cost onto silver premiums, which inflated the benchmark and with it every enrollee’s tax credit. That is why many low-income families can buy bronze plans for nothing. Funding the reductions would save money, roughly $36 billion over a decade by the White House’s estimate, but it would also shrink the gap between subsidy and premium that an HSA deposit is meant to capture. Congress should decide which goal comes first.
The harder problem is adverse selection. Give consumers a stake in the price and they will sort. A healthy 28-year-old will take the cheap high-deductible plan and bank the difference. A 58-year-old with diabetes will stay in comprehensive coverage. As the healthy leave, the comprehensive plans’ average cost rises, premiums follow, and more healthy people leave. Left unchecked, consumer choice can unravel the pools that make insurance work.
That isn’t an argument against the reform. It is a list of conditions for it. The first is stronger risk adjustment, so an insurer enrolling sicker people is compensated and gains little by courting the healthy. The second is reinsurance that absorbs catastrophic claims above a threshold, so one cancer case or transplant doesn’t sink a small plan. The third is a continuous-coverage rule. Guaranteed issue should protect people who get sick; it shouldn’t reward those who stay uninsured until they do. Temporary premium surcharges after avoidable lapses, with exceptions for job loss, would do it.
Employer insurance has to be part of the conversation, because it covers more than 150 million Americans and anchors the nation’s risk pooling. Employers’ broad pools are a strength, since people choose jobs for reasons that have little to do with their medical bills. But the financing hides the price. A family policy now costs about $27,000 a year, most of it paid by the employer and excluded from the worker’s taxable income. Economists broadly agree that workers ultimately pay through lower wages, yet few employees ever see a $27,000 price tag. If an employer will contribute $18,000 and a worker picks a $20,000 plan instead of a $24,000 one, let the worker keep part of the $4,000 in an HSA. The logic that applies to the exchanges would then reach most insured Americans, and a change in one market wouldn’t simply push risk into the other.
Interstate sales, a perennial Republican favorite, belong in the same frame. Health insurance is still local, because insurers must build networks of hospitals and doctors where patients live. Letting carriers sell across state lines would add competitors at the margin, but without compatible risk-adjustment rules it would also let plans chase healthy customers into lightly regulated states.
None of this is a reason for Congress to wait. Paying people to economize is one of the few health-policy tools that pushes costs down instead of shifting them around. But the reform will be judged by the insurance pools it leaves behind. Send the money to consumers, and write risk adjustment, reinsurance and continuous coverage into the same bill. Do the first without the second and the savings will show up as higher premiums for the sick.