The government shutdown has continued for weeks with no end in sight. Although Affordable Care Act subsidies have been at the center of the debate, one of the most basic questions remains unanswered: Where is the money actually going?
And we cannot answer that, because the U.S. still lacks real price transparency in health care.
In 2024, the federal government spent roughly $125 billion on Affordable Care Act subsidies. According to the Congressional Budget Office, federal spending on these subsidies will exceed $1 trillion over the next decade. These numbers are far higher than initial cost estimates, and increases in premiums are at least part of the story. Benchmark plans’ premium rose between 70 and 90 percent in the last decade, defying early budget expectations that competition among health care exchanges would restrain increases. But neither the government nor businesses nor patients can benefit from competition if we don’t have markets. And we can’t have markets if we don’t have actual prices we can see in advance.
The Affordable Care Act was sold as a way to help families afford coverage, but it’s become a guaranteed revenue stream for insurers. Most markets remain dominated by just a few insurers. Subsidies were paid directly to insurance companies — not as flat fee vouchers but as a percentage of the annual premium. The Affordable Care Act expansion led to millions more covered lives — new customers for insurers — and these companies returned the favor by hiking their rates, knowing that taxpayers would make up the difference.
What’s the reason for the increase in premiums since Obamacare began? We could cynically assume greed, but there are multiple plausible explanations, none of which we can quantify with great confidence. Some argue that because the subsidies rise with premiums, insurers face less pressure to keep prices down. Insurers point to rising hospital and pharmaceutical prices, consolidation among health systems, and the increasing number of high-cost enrollees.
All of these may be true to a degree, but the real problem is we can’t say for sure.
Federal law requires insurers and hospitals to disclose negotiated prices, under the Hospital Price Transparency Rule (2021) and the Transparency in Coverage Rule (2022). But unfortunately, compliance has been largely performative. Insurers post massive “machine-readable” files that are nearly impossible to download, let alone interpret. The information exists in theory, but in practice it is unusable for patients, employers and policymakers trying to answer the most basic question: What does care actually cost?
The prospect of premiums going up by hundreds of dollars each month frightens families. But we need to balance compassion for those individual circumstances with the reality that we are spending billions of dollars each year to prop up a fundamentally broken system. The largest beneficiaries of taxpayer subsidies are not hospitals, doctors or even patients — they are insurers.
If Congress extends the Affordable Care Act subsidies that families have come to depend on, it should demand something in return: real price-transparency. Reporting should be mandatory, not voluntary. Readable, easy-to-understand disclosures should be made public of what insurers pay for care and what patients are expected to pay. Ordinary people should be able to tell exactly how much of every subsidy dollar is going to patient premiums and patient care, and how much is funding administrative costs, executive bonuses and shareholder revenue. Taxpayers deserve to see where their money is going.
Empathy for families facing rate hikes and a demand for fiscal responsibility are not mutually exclusive. But in a debate about health care costs, we are focusing on the smaller expense (what households pay) rather than the larger one: what the federal government pays insurers on their behalf, without transparency or accountability in return.
Congress can continue funding the system as it is — expensive, opaque, and insulated from scrutiny. Or it can seize the opportunity to make a basic correction that should have happened years ago. If insurers want the check, taxpayers should get to see the bill.
Monique Yohanan, M.D., MPH, is a senior fellow at Independent Women, a physician executive and health care innovation leader, and chief medical officer at Adia Health.
