A deep dive into the proposal to reroute ACA subsidies into direct payments, phased vs. all-at-once rollout, impacts on insurers, jobs, and systemic stability
By Together for the Republic Editorial Board
November 9, 2025
Introduction
Day 37 of the shutdown finds the nation’s healthcare system pulled into the budget crossfire. a Truth Social post of November 8 urged Congress to “stop sending billions to money-sucking insurance companies” and instead send Affordable Care Act (ACA) funds “directly to the people.”
That line has electrified Washington. Senate Majority Leader John Thune called weekend talks “promising,” yet negotiations remain gridlocked over one question-can a president redirect ACA subsidies without Congress?
Part I The Proposal in Focus
The proposal would reroute federal subsidies-currently paid to insurers on behalf of consumers-into direct payments or health savings accounts (HSAs). Individuals could choose how to spend the money: purchase coverage, pay medical bills, or save it.
This would upend the ACA’s architecture, which stabilizes prices by pooling healthy and sick enrollees through structured insurer payments.
Phased Rollout (Pilot Path)
Year 1: Offer direct payments to younger enrollees (under 30 or incomes < 200 percent FPL).
Year 2: Expand gradually as insurers adapt product lines.
Year 3: Convert legacy plans; evaluate outcomes.
Advantages: smoother adaptation, data for Congress, fewer market shocks.
Risks: partial segmentation of risk pools, early premium drift.
Sledgehammer Approach (Immediate Shift)
An all-at-once conversion would mail checks or load HSAs for all enrollees immediately.
Pros: political clarity, consumer appeal, rapid rollout.
Cons: actuarial chaos, insurer withdrawals, legal challenges.
Part II Constitutional and Legal Limits
Article I of the Constitution vests Congress with spending authority; the Impoundment Control Act (1974) forbids presidents from redirecting appropriated funds without legislative consent.
Legal scholars from the Brookings Institution and Committee for a Responsible Federal Budget (CRFB) note that any unilateral redirect would violate both the spending clause and the Article II “Take Care” obligation to execute laws faithfully.
In short, no executive order can lawfully rewrite Congress’s appropriations.
Part III Economic and Market Impacts
Premiums and Risk Pools
Subsidies aren’t just checks-they balance markets. If turned into cash, healthier people could opt for skimpier plans, leaving sicker enrollees behind. The Kaiser Family Foundation (Sept 2025) warns that ending enhanced credits could raise benchmark premiums up to 114 percent for some income groups.
Insurers and Hospitals
Insurer trade group AHIP says sudden subsidy changes would “destabilize pricing and participation,” especially in rural exchanges. Premiums for 2026 were already filed under current law; mid-year rule changes would break actuarial assumptions.
Hospitals fear coverage losses will revive pre-ACA levels of uncompensated care. In June 2025, AHA President Rick Pollack said delays in treatment already “overburden emergency departments and shift costs to the insured”-a warning echoed by the AHA’s $40 billion annual estimate of potential unpaid care.
Employment Effects
The Urban Institute’s 2017 repeal modeling projected 300 000+ job losses across healthcare and insurance. Updated Commonwealth Fund (2025) estimates approach 340 000 if subsidies lapse. Fintech health-account jobs would grow, but not at regional parity-Nebraska, Ohio, and Texas could face the steepest cuts.
Part IV Scenarios in Motion
Scenario A: Pilot Path – Controlled Experiment, Contained Risk
In 2026, Congress authorizes a limited five-state pilot program to test direct ACA payments. Enrollees under 35 and households below 200% of the federal poverty level receive a $4,000 annual health credit instead of traditional subsidies. States volunteer for the pilot to attract federal innovation grants and gain data on consumer behavior.
At first, participation looks promising. Younger enrollees, enticed by cash flexibility, flock to stripped-down “consumer-choice” plans. Uptake of lower-cost options rises 20 percent within months. But insurers warn of turbulence: as healthier individuals shift to minimalist coverage, the remaining ACA-compliant pool grows older and sicker. Non-pilot states experience 8 percent average premium increases, driven by risk-pool migration and actuarial uncertainty.
The pilot also tests new payment infrastructure. Treasury issues electronic deposits through a secure portal linked to IRS data, but rollout glitches delay thousands of payments-prompting emergency administrative fixes. Hospitals in pilot areas note a 10 percent increase in unpaid bills as some consumers use credits for non-insurance expenses, then face uncovered emergencies.
By late 2026, a Government Accountability Office (GAO) review calls the pilot “informative but destabilizing,” urging Congress to maintain current subsidy formulas until full-year results clarify whether direct payments improve affordability or just fragment the market.
Outcome: Controlled but costly experiment; policymakers gain data but also warnings about consumer behavior and insurer stability.
Both paths reshape markets; only one preserves room for correction.
Part V Expert and Political Reactions
The proposal to redirect ACA subsidies has divided the health policy field in ways that defy simple partisan labels. Economists, insurers, lawmakers, and advocacy groups each see the plan through their own prism-law, markets, or ideology.
Health Policy and Economic Experts
Larry Levitt, executive vice president at the Kaiser Family Foundation (KFF), told The New York Times on November 8 that converting ACA credits into health accounts “would almost certainly splinter the risk pool that keeps premiums stable.” Levitt’s warning echoes KFF’s September 2025 report projecting that if enhanced subsidies expire, benchmark premiums could spike 114 percent for lower-income enrollees.
At Brookings, senior fellow Matthew Fiedler called the direct-payment idea “fiscally neutral but operationally reckless,” noting that “the federal dollar would still be spent, but the coverage per dollar would shrink.” He added that such a change would “move the market from one of insurance to one of cash transfers-at the worst possible time.”
Libertarian analyst Michael Cannon of the Cato Institute, while supportive of cutting insurer dependence, warned in an October 2025 interview that “changing who gets paid doesn’t change the underlying cost drivers.” He added, “If healthier people keep the money and opt out, taxpayers will still fund the high-cost pool, only less efficiently.”
Meanwhile, Brian Blase, head of the Paragon Health Institute defended the spirit of the idea, saying, “We should trust people to choose how to use their healthcare dollars, not force them into overpriced exchange plans.” But even Blase conceded that it “requires a law, not a shutdown standoff.”
Hospitals, Insurers, and Providers
Industry reaction has been nearly unanimous in caution. The American Hospital Association (AHA) issued a statement warning that coverage losses would “return the system to pre-ACA levels of uncompensated care,” citing an estimated $40 billion annual burden if millions lose coverage. AHA President Rick Pollack added, “Every dollar of unpaid care is a dollar shifted back to insured patients.”
The insurer trade group AHIP called for stability above all else: “Markets cannot price chaos,” CEO Mike Tuffin said. “Sudden shifts in subsidy mechanics mean midyear premium recalculations and carrier withdrawals.”
Political Landscape
In Congress, the idea has opened fissures inside the Republican caucus. Senators Bill Cassidy and Lindsey Graham, veterans of the 2017 repeal fight, praised the concept as “a return to choice” and floated a hybrid: allowing states to deposit ACA credits into local health accounts while maintaining subsidies for high-risk enrollees.
More pragmatic Republicans, like Thune and Susan Collins, have framed the proposal as “negotiation leverage” to reopen government rather than a ready-to-launch plan. On the Democratic side, Senator Chris Murphy called it “a recipe for mass bankruptcy masquerading as empowerment,” while Senate Majority Leader Schumer urged Republicans to “fund government first, reform later.”
Beyond Capitol Hill, conservative media hails the idea as a populist reset, while health policy veterans view it as a replay of the 2017 “repeal by administration” effort. On X (formerly Twitter), populist influencers applaud the notion of “keeping government hands off our subsidies,” while health economists counter that those subsidies are what make coverage possible in the first place.
The debate is less about ideology than about governance-whether reform should come through constitutional process or executive brinkmanship.
Outcome: The plan sparks the broadest ACA debate since 2017, uniting insurers, hospitals, and policy experts in caution, even as political strategists see opportunity in its populist appeal.
Part VI Jobs Lost, Markets Shifted
While the political debate has centered on consumer choice and constitutional power, the less visible fault line runs through the healthcare workforce. Subsidy redirection would not only change how money flows-it would reshape who earns a living administering that flow.
The Insurance and Health Administration Workforce
America’s insurance ecosystem employs roughly 2.8 million workers, including underwriters, claims processors, brokers, actuaries, and compliance specialists. An estimated 600,000 of these jobs are tied directly to ACA exchange plans or the infrastructure supporting them.
Analysts at the George Washington University Center for Health Workforce project that a full-scale conversion to consumer-direct subsidies could compress that segment by 10 to 12 percent, the equivalent of 250,000 to 300,000 jobs. Many of those positions exist in mid-sized regional markets-Ohio, Iowa, Texas, and Nebraska-where insurers and call centers form economic anchors.
When asked about potential displacement, a senior vice president at a major insurer told Politico Health, “If subsidies stop flowing through carriers, we can’t justify the current staffing footprint. Automation and attrition would do the rest.”
The ripple effect would extend to brokers and navigators, whose livelihoods depend on helping people enroll in subsidized plans. The National Association of Health Underwriters estimates that ACA marketplace brokers handle nearly 40 percent of individual plan enrollments-a share that could collapse if the direct-payment model bypasses traditional enrollment altogether.
The Fintech and “Consumer-Direct” Offset
Proponents argue that a new ecosystem would emerge: fintech platforms managing health accounts, wellness programs, and digital payment tools. The Mizuho Financial Group’s 2025 Health Finance Outlook anticipates growth of 6–8 percent annually in health-tech account services if consumer-direct models scale nationally.
Yet those gains would be geographically concentrated in urban innovation hubs-Austin, San Francisco, and Boston-rather than the communities losing traditional insurance jobs. In short, the next-generation jobs would not appear where the old ones vanish.
Hospitals, Rural Economies, and Secondary Effects
Hospitals-especially rural and safety-net providers-face a dual shock: higher uncompensated care and fewer insured patients. As coverage declines, hospital systems respond by cutting administrative and support roles first, then clinical staff when revenues fall.
A Commonwealth Fund simulation from September 2025 found that an ACA subsidy lapse alone could cost 340,000 healthcare jobs, most in states with the largest coverage losses. The majority are non-clinical positions, from billing clerks to medical technicians, whose employment depends on steady insurance reimbursement streams.
Rural hospitals, already on razor-thin margins, could face consolidation or closure. The National Rural Health Association reports that 190 rural hospitals remain “at immediate risk” if marketplace coverage shrinks by even 10 percent-a figure well within projections under a sledgehammer rollout.
Human Consequences
These statistics translate into human uncertainty: an Arkansas claims processor wondering whether her job will exist next year; a Texas hospital CFO balancing budgets between insured and uninsured care; a broker in Iowa watching commissions evaporate. As one Kansas enrollment navigator told Reuters, “If they send people a check instead of a policy, I don’t have a job-and they don’t have a safety net.”
Outcome: A policy framed as empowerment could, without careful design, hollow out the very workforce that keeps the health system running. Economic realignment would favor tech corridors and urban centers, while rural and midwestern communities absorb the shock.
Part VII Guardrails for Lawful, Stable Reform
If the U.S. moves toward redirecting ACA subsidies into direct payments, the difference between reform and rupture will be the guardrails Congress and regulators construct. Change of this scale demands not only political will but institutional discipline-clear laws, transitional buffers, and accountability mechanisms.
- Pilot First, Legislate Second
Before any national rollout, Congress should authorize pilot programs through statute, not executive order. State-based pilots-limited by population, geography, and time-would let policymakers measure real behavior: how people spend health credits, how markets price risk, and how hospitals respond. The Government Accountability Office (GAO) and CBO could then report empirical data to guide further legislation. Reform by evidence, not by impulse.
- Preserve Core Protections
Consumer freedom cannot come at the expense of security. Any direct-payment model must retain ACA protections for pre-existing conditions, essential health benefits, and annual out-of-pocket caps. These guarantees are not optional-they are the moral backbone of modern health reform. Without them, “choice” becomes an illusion reserved for the healthy.
- Stabilize Insurer Risk
Market exits are preventable with foresight. Congress should establish temporary reinsurance and risk-adjustment funds for insurers during the transition. This would buffer carriers against abrupt shifts in enrollment or claims, keeping premiums from spiking. Federal actuaries estimate that every $10 billion in reinsurance spending can reduce premiums by roughly 10 percent in the first year-an investment that protects consumers and stabilizes markets.
- Support Displaced Workers
Policy innovation must also mean economic stewardship. If administrative jobs vanish, retraining programs should redirect that workforce into adjacent sectors-healthtech, claims analytics, or patient navigation. Congress could expand the Trade Adjustment Assistance model to a “Health Workforce Transition Fund,” ensuring that innovation does not abandon those who built the old system.
- Mandate Transparency and Public Reporting
Each phase of reform should include quarterly public data on enrollment, premiums, job impacts, and uncompensated care levels. The Department of Health and Human Services (HHS) and the Treasury should publish open dashboards-accessible to journalists, economists, and citizens alike-so the public can track whether direct payments truly improve affordability. Sunlight builds trust.
- Uphold Constitutional Spending Limits
The ultimate guardrail is the Constitution itself. Any change to federal spending must originate in Congress, as mandated by Article I. No administration-Republican or Democratic-should unilaterally reallocate appropriated funds. Fidelity to the Impoundment Control Act of 1974 is not procedural trivia; it is the foundation of lawful governance. A Republic survives not by shortcuts but by adherence to its own design.
Conclusion
The idea of sending subsidy dollars “directly to the people” speaks to legitimate frustration with bureaucracy. Yet the ACA’s subsidy architecture is the scaffold holding the market upright.
A phased, legislated, data-driven pilot could responsibly test consumer-direct reforms. A unilateral “sledgehammer” shift would likely spark legal crisis, premium inflation, and job loss.
Policy is not rhetoric-it is engineering. To preserve both freedom and stability, leaders must respect the constitutional design that guards fiscal integrity and public trust.
Truth. Justice. Law. Unity.
Together for the Republic.
Will you stand with us for the Republic? 💙🇺🇸