Vague Offers of Cash Fail to Address Looming Premium Spikes for Marketplace Enrollees

President Trump and some congressional Republicans have floated ending or cutting marketplace tax credits that help more than 20 million people afford coverage and instead giving people a fixed sum of money. This would raise people’s costs and undermine protections for those with pre-existing conditions.

It’s also a distracting policy detour from a proven approach that has provided stability to millions while helping bring the uninsured rate to record lows. Premium tax credit enhancements are set to expire at year’s end and open enrollment is well underway; policymakers should act quickly to extend them to prevent imminent premium price spikes that will otherwise leave nearly 4 million people uninsured.

Cash accounts are not a replacement for premium tax credit enhancements, let alone for premium tax credits in their entirety. These credits help people afford health care premiums so they have health coverage. They are well targeted to give the most help to people with low incomes, who are most likely to struggle to afford insurance, and therefore to go without it if they don’t have assistance. And extending the premium credit enhancements could be done fast, in time to help people with their costs for 2026 coverage.

As people look for 2026 marketplace plans right now, details on the cash “accounts” idea are alarmingly sparse. But in general, cash accounts either can’t be used toward premiums or won’t be sufficient for high-quality, affordable coverage, and don’t target help to people who need it to pay for their medical care.

Here’s why. People get health coverage to protect against the health and financial risks of accidents or unexpected health conditions, and to afford care for pre-existing and chronic health needs. Redirecting federal funds toward accounts shifts financial and health risks onto people and diverts resources away from people who need medical care or have higher health spending — like those with pre-existing conditions — toward those who don’t need medical care or have lower health spending.

To understand the accounts’ insufficiency, especially as a replacement for high-quality, affordable coverage, we need only look at a few examples. One proposal would create health savings account deposits of up to $2,000, enough to cover only two months of care for a typical person with diabetes. People who become sick or have an accident could run through their accounts immediately: the average cost for a single day as an inpatient in a hospital is over $3,000, and the average overall cost for an inpatient hospital stay is roughly $17,000. The cash account would barely make a dent in the cost of starting or growing a family, as the cost of pregnancy, delivery, and postpartum care averages over $20,000.

Cash accounts to pay for health services will never provide the kind of access to health care that people who become ill, get into an accident, or have pre-existing conditions need or the kind of financial protection that health insurance provides.

Proposals to repeal existing financial help and replace coverage with cash accounts are divorced from the financial and health realities of ordinary people, 310 million of whom have health coverage to avoid going bankrupt from medical expenses or going without needed health care.

For a marketplace enrollee like M.M., a 45-year-old IT consultant whose premium tax credits help him pay for health coverage to treat his diabetes, “Going without insurance is not an option.” But if premiums aren’t affordable, many people will do just that. The Congressional Budget Office estimates that if premium costs are allowed to spike due to the expiration of the enhanced premium tax credits, nearly 4 million people will become uninsured, while millions more will be stuck with much higher costs.

Trading comprehensive insurance for a fixed sum in an account — and either going without coverage or buying a skimpy plan and hoping to pay for health care needs out of pocket — would be unaffordable and damaging to people’s health and financial security.