This article first appeared in Health Affairs. It is co-authored with Scott Heiser and Rahul Rajkumar.

Fifteen years after passage of the Affordable Care Act (ACA), the insurance exchanges created under the legislation now cover more than 24 million Americans in all 50 states and the District of Columbia.

But all is not well. Health care costs are the top concern for American voters, outpacing other big ticket items like housing, jobs, and immigration. Absent a late-breaking extension of the enhanced subsidies that were passed by the American Rescue Plan and Inflation Reduction Act in 2021 and 2022, millions of enrollees are expected to drop coverage entirely.

It’s not hard to see why. As the Kaiser Family Foundation found, if the enhanced subsidies expire, a 45 year old earning about $65,000 per year (or 415 percent of federal poverty level) will see their premium grow from $1,207 to $2,419 per month, a whopping 114 percent increase. The consequences for US health care markets could be severe.

The ACA was a generational leap forward, but the law was “a starter home,” as President Obama memorably put it in 2016. Going along with that first purchase is the expectation that “you hope that over time you make some improvements,” Obama continued. We have yet to do so.

With the spirit of improving our American health care home in mind, it is worth revisiting the principles that informed the ACA’s original design. This serves as a reminder of the dysfunction before the landmark law passed and is instructive regarding how we can build upon it. We then offer some potential improvements to the ACA starter home. While legislators are currently understandably focused on the immediate question of whether to extend enhanced ACA subsidies and if so how, we offer some structural improvements to consider that could stabilize the foundation of our starter home and make the costs of maintaining it more affordable.

The Pillars Of The ACA

First, before the ACA many Americans could not practically seek new employment opportunities because of their dependence on employer-sponsored coverage. To combat this “job lock,” the ACA created exchanges where individuals can shop for coverage. By breaking the link between “good” insurance and employment, Congress enabled more personal risk-taking and entrepreneurship.

The second pillar was to make the coverage itself better and more certain, not subject to fine print asterisks that created a bait-and-switch for consumers. ACA-compliant plans meet a minimum floor of standardized benefits; to participate in the marketplaces, plans cannot pursue price discrimination based on a person’s pre-existing conditions (so-called “guaranteed issue” coverage). The ACA also put an end to insurer tactics like unwarranted coverage recission.

The third pillar: ACA plans use “community rating,” constraining the difference in premium that may be charged between the oldest (and costliest) and youngest enrollees at 3:1. To ensure that people can afford this coverage, the ACA included subsidies that phase out at 400 percent of the federal poverty level.

These were not small achievements. We should not walk away from them. But an ongoing challenge remains affordability. While the ACA has many reforms designed to lower the rate of cost increases, we must acknowledge the law did not resolve a problem that the late economist Uwe Reinhardt described over two decades ago: it’s the prices, stupid. Or, as provocateur Jimmy McMillan might observe, health care costs—just like the cost of rent—are too damn high.

Seen through the prism of a given ACA enrollee, it is entirely possible to have coverage but still lack fundamental access to care. For many enrollees, the burden of spending down against an average $5,300 deductible, all while paying steep monthly premiums, is too great. This makes access to routine health care services for some patients prohibitively expensive.

President Trump speaks for many ACA enrollees when he inveighs against this financing and coverage scheme as “bad health care.” We are spending too much money for too little health care. The current debate about whether or not the IRA-related enhanced subsidies will be extended misses something vital: the problem of affordability will not go away.

Three Ways To Improve Affordability

We can do better. It is time to make the ACA work better for the people that depend on it. We think revisiting three ideas could really help.

Give ACA Markets The Pricing Leverage Medicare Has For Provider And Pharmaceutical Payments

To attack the problem of skyrocketing premiums, we must address what drives these increases. Fundamentally, ACA plans cannot dictate payment levels to providers—they must negotiate with them. This is unlike Medicare’s administrative pricing, which is informed by provider cost inputs but not contingent upon them. Thus, to ensure adequate network coverage, ACA plans routinely must pay a significant premium above what Medicare pays for the same services.

Using features of a “public option” design, we could greatly impact affordability. Linking ACA provider fee schedules to the rates that Medicare pays, even with an enhanced rate like the 160 percent paid by the public plan in Washington State, would yield significant savings that could reduce enrollee premiums and cost-sharing. A 2021 Urban Institute analysis modeling such a payment scheme found it would result in upwards of 25 percent lower premiums compared to baseline benchmark plan. It would also, in turn, reduce federal outlays on ACA subsidies, which are tied to the benchmark premium rate.

The same savings mechanism could be applied to prescription drug spending. In 2022, Congress gave Medicare a new tool to begin moderating drug spending by allowing it to enter into binding price negotiations with pharmaceutical manufacturers for its most costly drugs. If ACA plans had access to the same prices as Medicare for costly medications, it would lower costs for patients needing these drugs. This would be a boon to affordability in the marketplaces.

Graduate 55 Year Olds Into Medicare To Stabilize ACA Risk Pool

Another idea that deserves some consideration is an expansion of Medicare coverage to beneficiaries at 55 years old instead of current law, which begins Medicare eligibility at age 65. President Clinton proposed this during his second term, and it was considered during the original ACA debate. More recently, a large contingent of House Democrats urged President Biden include this in his COVID recovery legislation. Enrollees ages 55-65 are currently the oldest enrollees in the ACA marketplaces and thus predictably among the costliest participants. Removing these enrollees from the risk pool would moderate marketplace premiums considerably, in addition to likely improvements in the age 55-65 group’s financial security via reduced out-of-pocket expenditures.

Some may be concerned about the cost or even the principle of expanding Medicare eligibility. But improving the stability of the ACA marketplaces is urgent, and few other policies are capable of acting as such an effective safety valve for the exploding cost pressures we are seeing. We think this tradeoff is worth it.

Give ACA Insurers Incentives To Offer Multiyear Plans And Provide Beneficiaries Incentives To Stick With The Same Plan

Health plans have a persistent concern about incurring costs on behalf of their members during a coverage period, only to see those members churn off their plan to a competitor or perhaps drop coverage entirely. This has the effect of disincentivizing plans from investing in high-value services that improve population health but may take years to pay off in preventing disease progression to acute, expensive events like heart attacks or strokes. Beneficiaries, too, are disincentivized from maintaining their coverage with the same plan when price sensitivity reigns. In the ACA marketplaces, we have seen enrollment travel closely with the price consumers pay—a response to price elasticity.

We should shift these incentives with a different structure. Instead of allowing only ACA products that expire annually, offer bonuses to plans willing to offer multiyear products; these plans should be required in turn to drive these same incentives to the member level, paying enrollees a kind of “loyalty bonus” for sticking with the same plan. This would enable more constructive longer-term behavior by both the ACA plan and its members. A similar theory undergirds CMS’ approval of 1115 waivers for states to adopt multiyear Medicaid enrollment for young children.

The political environment surrounding the ACA is heated. We are under no illusion that these ideas would completely solve the multitude of issues at play here. But to make the ACA starter home into a better place to live over the long term, we need to finally attack the cost of health care. Nearly 25 million Americans are counting on policymakers for just that.

Authors’ Note

Mr. Heiser and Dr. Rajkumar are employed and hold stock in Accompany Health, which is a medical provider serving Medicare Advantage patients. Drs. Kocher and Rajkumar are Board Members of Accompany Health. Dr. Rajkumar is a Board Member of Healthfirst. Dr. Kocher is a Board Member of Aledade and Devoted Health, which serve Medicare patients.