Senator Collins Questions Health Insurance Experts on Fixes for ACA Subsidies

At a HELP Committee Hearing, Senator Collins pressed witnesses on short- and long-term reforms needed to make health coverage more affordable for American families.

WASHINGTON, D.C. - Today, at a hearing of the Senate Health, Education, Labor, and Pensions (HELP) Committee, U.S. Senator Susan Collins questioned health insurance experts on the growing affordability challenges within the Affordable Care Act (ACA) marketplace and the need for bipartisan reforms.

Senator Collins underscored that current enhanced premium tax credits, which were enacted during the Biden Administration and were intended to be temporary, come with significant unintended consequences for American families, including excessively high deductibles and subsidy eligibility thresholds. Senator Collins also emphasized that addressing these issues will require both short- and long-term solutions.

Hearing witnesses discussed potential solutions such as reinstating a meaningful income cap for premium tax credits, adding guardrails to prevent high-income or high-asset households from being eligible for subsidies, and shrinking the gap between the increase in both coverage costs and average worker earnings.

Senator Collins' Introductory Comments on ACA Subsidies

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Senator Collins: I feel compelled to respond to the Ranking Member's remarks about whether or not Republicans care about this issue. It is obvious that we care deeply about the affordability of health care for our constituents. I would point out that the Chairman of this committee is a Republican. He's the one who has convened this important hearing. He is also the one who has worked night and day, with many of us, to talk about solutions.

By contrast, the policy that we're talking about, during the Biden era, was rammed through with no Republican support, and it was supposed to sunset so that we could have a more thoughtful approach, and it's now placed working Americans in a terrible bind.

Mr. White, in his written testimony, refers to the affordability gap, the growing difference between the high price of coverage and workers' earnings, and that's why we should be putting partisan politics aside and trying to work together to come up with solutions.

The so called "free" bronze plans have huge out of pocket deductibles, enormous, unaffordable deductibles. That is an untenable situation, which is why our Chairman has talked about health savings accounts, has talked about cost sharing reductions. I want to bring up another issue, and let me say, I think there's a limit to what we can do in this first year. I think we're going to need a two-year plan. Senator Murkowski and others have proposed multi-year plans as well.

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Q&A on Solutions to Runaway Health Care Costs

Click HERE to watch and HERE to download

Senator Collins: I want to ask Mr. White about a short-term solution that could be added this year, and then a longer-term solution that I'd like to hear the panel's views on. First, there is no income cap on the enhanced premium tax credits. That means, according to our calculations, that a family of four living in Augusta, Maine, making $325,000 a year-which I can tell you, would cover very few people in Augusta, Maine-qualify for a taxpayer funded subsidy. Mr. White, do you think we should put a reasonable cap-phase it out so we don't have a cliff-on who qualifies for these enhanced premium tax credits?

Joel White, President of the Council for Affordable Health Coverage: Absolutely, yes. We need to understand that those subsidies above 400% of poverty are financed, in part, by taxes on working Americans. Someone working in a bakery, a gas station, a lower income family is paying taxes to subsidize the subsidies for someone making $200,000, $300,000, $400,000 a year. That is not fair. So there needs to be some kind of recognition that we can't tax low-income people to pay for high-income people's subsidies. The second point I'll make is there's no asset test on these enhanced subsidies. And so, as an early retiree, I might have a sizable nest egg, maybe a million dollars, and have an income of $200,000 and still qualify for a subsidy paid for by a lower working-class American-that's not fair either.

Senator Collins: Thank you. Ms. Strouse, same question.

Marcie Strouse, Owner and Partner of Capitol Benefits Group: Yeah, I agree that if we are going to keep the subsidies in place, that we would need to have some sort of an income cap on there. And then also for those people that potentially are underestimating their income to receive subsidies, they should be required to pay subsidies back at the time that they verify their taxes at the end of the year. So, there should be some sort of safety net that makes sure that they're paying the appropriate amount that they should be paying.

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