As this edition of Mass Market Retailers went to press, members of Congress were once again wrangling over the renewal of enhanced subsidies under the Affordable Care Act, the expiration of which will cause premiums for millions of enrollees to soar next year, in many cases by more than a hundred percent. Enacted during the COVID pandemic, the subsidies were the casus belli for the recent shutdown of the federal government.
Fearful that many people could no longer afford coverage without the enhanced subsidies, Democrats refused to support a continuing resolution to maintain current spending levels; Republicans insisted on funding the government before addressing any other issue. The standoff was ended when Senate majority leader John Thune (R., S.D.) promised Democrats a vote on ACA subsidies later this month. However the issue is ultimately resolved, it points to bigger problems — health care in this country is too expensive, and there is no end in sight to further cost increases in the years ahead.
The U.S. spent $4.9 trillion, or 17.6% of GDP, on health care in 2023, almost twice the per capita average of other industrialized nations. The impact of the disparity is felt not only by consumers, but businesses, government and health care providers themselves. The Business Group on Health Care, a nonprofit organization that represents the views of employers, including Walmart, indicates that its members expect a median increase in health care costs of 7.6% for 2026, more than double the current overall inflation rate of 3%. In a new trends report, the group says that companies need to act quickly to alter the trajectory of a system that fails both employers and workers.
“A volatile cost environment has been fueled by a complex and fragmented health care ecosystem, and it is faltering,” notes Ellen Kelsay, president and CEO of the Business Group on Health.
Divisions among legislators about the right level of health care funding, concerns in the business community about escalating costs, and the struggle of many providers to remain profitable (consider the plight of rural hospitals and the proliferation of pharmacy deserts) all point to the urgent need for reform. After the immediate fight over the extension of Obamacare subsidies is resolved, Congress, the Trump administration and other stakeholders must take bold action to reimagine how health care in this country is paid for and delivered.
