YSPH expert: Renewing ACA subsidies is essential, but real crisis is soaring health care costs

With a crucial decision on whether to extend Affordable Care Act (ACA) tax subsidies looming in Congress, Yale School of Public Health Professor Zack Cooper urged lawmakers to rein in spiraling health care costs that are “crushing” American families.

Testifying before the Subcommittee on Oversight and the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust on December 10, Cooper said Congress should extend the expanded ACA subsidies that have helped 22 million people obtain health insurance and are set to expire at the end of the year.

“Enrolling an American in an Affordable Care Act Marketplace plan makes them less likely to die,” Cooper said during his opening remarks, noting that approximately 4 million people will lose coverage if the ACA subsidies are not extended.

But Cooper, an associate professor of public health (health policy) and economics at Yale, also encouraged lawmakers to look at the larger issue of what is driving soaring health care costs that make the subsidies necessary in the first place. “If we focus only on whether the subsidies remain in place, we are having the wrong conversation,” he told lawmakers. “The real problem we’re facing in this country is the underlying cost of health care.”

In a related essay in the New York Times also published Wednesday, Cooper, who is also Director of Health Policy for Yale’s Tobin Center for Economic Policy, explained what is behind the nation’s escalating health care costs and spending. He shared his research during Wednesday’s testimony.

Cooper noted that employer-sponsored insurance premiums are projected to rise 10% next year, with premiums on ACA marketplaces expected to climb 18%. These increases, he said, are “largely being driven by the growth we’re seeing in hospital and provider prices—think mergers, staffing shortages, and the impact of tariffs on medical devices—and then there is increasing use of GLP-1s.”

“Price growth is our core problem,” Cooper testified. “Over the last two decades, prices in the hospital sector…have grown faster than prices in virtually any other sector of the economy. We have seen huge numbers of hospital mergers, mergers of hospitals and physician practices, and mergers of pharmacy benefit managers.”

Cooper noted that more than 1,500 hospital mergers have occurred since 1998. As health care prices rise, he said, employers pass their costs on to workers through lower wages and higher premiums.

“Rising health care spending is crushing families; it’s slowing wage growth; and reducing employment,” Cooper said.

The extended ACA subsidies have been pivotal in helping millions of Americans obtain health insurance, Cooper said, but larger system reforms are necessary to address the root problem: health care affordability.

Said Cooper: “The reason I think the subsidies are important is because lower- and middle-income Americans shouldn’t be left uninsured or be stuck paying astronomical premiums because policymakers and health care purchasers, like large employers, have failed to make tough choices and rein in health care spending.”

“Subsidies alone aren’t a solution; they buy us time,” Cooper said. “The point is to use the time they provide to build a system where coverage is affordable because care is affordable.”

He encouraged Congress to pursue targeted reforms, including site-neutral billing. This reform, Cooper said, would address a current practice where Medicare often pays more—sometimes double—for identical services when they are delivered in a hospital versus an independent physician’s office.

“[The current practice] encourages consolidation; it raises prices, and drives up premiums,” he said.

Cooper also encouraged legislators to increase antitrust enforcement funding and to follow through on the proposed creation of a bipartisan commission to develop long-term cost-reduction strategies that could be implemented over the next decade.