What A Day — "The Price of Care: Fixing The ACA"

Host: Jane Coaston
Guest: Mark Shepard, Associate Professor of Public Policy, Harvard Kennedy School
Date: October 28, 2025

Episode Overview

This episode centers on the looming expiration of enhanced Affordable Care Act (ACA) subsidies, which—unless extended—will sharply increase premiums for millions of Americans. Host Jane Coaston and guest Mark Shepard dissect the politics and policy behind healthcare affordability, why U.S. health insurance costs so much, and practical reforms that could make American healthcare more accessible. The conversation is especially timely as the government shutdown drags on due to party-line disputes about continuing these crucial subsidies.

Key Discussion Points & Insights

The State of the ACA & Shutdown Stalemate

• Government Shutdown Tied to Healthcare Subsidies
  • Enhanced ACA subsidies, in place since 2021, are set to expire this year unless Congress acts ([00:48]).
  • Sharp premium spikes are expected if the subsidies vanish: Illinois could see an 80% increase, New Jersey up to 175%.
  • Democrats want to extend subsidies. Republicans resist, risking both public fallout and their own prospects in the 2026 Congressional elections.
• Political Maneuvering
  • House Speaker Mike Johnson claims Republicans have been working on healthcare, but actions such as proposed Medicaid cuts contradict those assertions ([01:53]).
  • Jane’s tone is sharply critical of political spin, emphasizing policy over posturing.

Who Benefits from ACA Subsidies and Who Pays ([02:46])

• The “Missing Middle”
  • Shepard explains: "America doesn't just have one form of health insurance. We have a complex system. And these subsidies are for people who we might call the missing middle..." ([03:00])
  • Target group: not poor enough for Medicaid, not old enough for Medicare, and lacking employer insurance.
  • Without subsidies, roughly 25 million Americans on ACA exchanges would struggle to afford coverage.
• Spillover Effects
  • If more people go uninsured, costs don’t vanish: "They don't stop getting sick. They still show up at hospitals ... someone has to pay the cost." Often it’s hospitals or taxpayers ([04:14]).

Why Is U.S. Healthcare So Expensive? ([05:11])

• Higher Prices, Not Higher Usage
  • Shepard: "America is expensive because we pay higher prices for similar amounts of healthcare..." ([05:20])
  • Unlike national health systems (e.g., England), U.S. lacks centralized cost controls. Many insurers, weak bargaining power, aversion to government price-setting.
  • The U.S. values competition and innovation, but this allows costs to spiral.

What Can the U.S. Learn from Other Countries? ([06:28])

• International Models: Switzerland as a Case Study
  • Switzerland offers universal health insurance through regulated private insurers: "It's been described as Obamacare for all." ([06:38])
  • Key reasons Switzerland’s system is cheaper:
    • 1. Universal Mandate: Everyone must enroll, pooling risk and keeping costs down.
    • 2. Government Regulation: The state negotiates drug prices and regulates payments, using bargaining power to reduce provider costs.
  • In the U.S., fragmented government makes such centralized negotiation difficult.

Could These Reforms Work in America? ([08:33])

• Federalism Is a Barrier
  • Shepard: "They really rely on having an effective government that's centralized. In America, we have a federalist system, 50 state governments..." ([08:57])
  • Unlike Switzerland, U.S. insurance regulation is split among states and the federal government, complicating major reforms.

Potential Reforms Within the ACA ([09:36])

• 1. Public Option Plans
  • Designed by state governments but implemented by private insurers. Could create downward pressure on prices through competition.
  • "Washington state has tried out a public option plan with some success. Colorado has had versions of this." ([10:32])
• 2. Pro-Competition Subsidy Reform
  • Current subsidies rise as insurer prices rise, removing incentive for insurers to compete.
  • "If insurers raise their price, they get bigger subsidies from the government and that weakens competition." ([11:04])
  • Proposals: introduce fixed subsidies or arrangements that reward cost-saving behaviors to promote price competition.

Practical Advice for ACA Shoppers ([12:06])

• Open Enrollment Begins November 1
  • Without congressional action, plan prices may rise dramatically.
• Shepard’s Advice
  • "Health insurance is really important. The costs are going to hurt if enhanced subsidies are not expanded, but the cost of going uninsured could be even higher." ([12:21])
  • Contact your representatives to urge for extension of subsidies, as they are key to affordable coverage and healthy marketplaces.

Notable Quotes & Memorable Moments

• Jane Coaston:
  • “Apparently cutting Medicaid by 15% now constitutes working on healthcare since day one of this Congress…” ([02:07])
  • “There are other countries with private insurance options, where healthcare doesn’t cost so much that people risk going without it. So what’s going on here—and what could America be doing about it?” ([02:29])
• Mark Shepard:
  • “American healthcare—very expensive. That’s not unique to Obamacare’s health insurance exchanges. It’s true everywhere.” ([03:36])
  • “America is expensive because we pay higher prices for similar amounts of healthcare, because ultimately there is less desire to keep costs low.” ([05:20])
  • “In Switzerland, there’s a central program to negotiate the price of drugs that helps keep costs low because the one national government can negotiate low prices with pharmaceutical companies. We don’t do that in America.” ([07:54])
  • “They really rely on having an effective government that’s centralized. In America, we have a federalist system, 50 state governments. Each has their own power…” ([08:57])
  • “Health insurance is really important. The costs are going to hurt if enhanced subsidies are not expanded, but the cost of going uninsured could be even higher.” ([12:21])

Key Timestamps

• 00:48 — Stakes and impact of expiring ACA subsidies
• 02:46 — Who gets ACA subsidies & why they matter
• 04:14 — Potential consequences if subsidies expire (uncompensated care)
• 05:11 — Why US healthcare is more expensive than Europe
• 06:38 — Swiss model: how private insurance can support universal care
• 08:57 — Why US political structure complicates reform
• 09:44 — Realistic reforms under existing US system
• 12:21 — Advice for Americans shopping ACA coverage during open enrollment

Conclusion

This episode offers a nuanced, critical analysis of why U.S. healthcare costs remain stratospheric, even with private insurance, and explores potential (but politically challenging) reforms. The expiring ACA subsidies are just one battle in a larger policy war—one that affects millions of Americans directly and indirectly. Mark Shepard’s expertise provides vital grounding for listeners faced with tough coverage decisions as open enrollment looms and the prospect of higher costs becomes all too real.

Recommended for anyone navigating the ACA marketplace or seeking to understand why American healthcare remains such a stubborn policy knot.