Knowledge at Wharton This Week In Business: Rethinking ACA Tax Credits and the Future of Health Coverage
Nov 28, 2025
Mark Pauly, Professor Emeritus of Health Care Management at the Wharton School, offers insightful commentary on Senator Cassidy’s health savings account proposal. He discusses the complexities of redirecting ACA subsidies and the potential impact on insurers. Pauly also analyzes recent premium spikes linked to post-COVID effects and highlights the political divides influencing health policy. Additionally, he critiques the employer health insurance tax breaks and emphasizes the need for meaningful payment reforms without clear-cut solutions.
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HSA Repurposing Creates Modest Incentives
- Senator Cassidy's plan repurposes the health savings account idea by giving people 'funny money' earmarked for health care.
- The accounts create a modest incentive for individuals to economize on healthcare use or insurance choice.
Subsidy Shift May Still Flow To Insurers
- Moving subsidies from insurers to individuals may not reduce insurer revenue because most people will still buy insurance.
- Mark Pauly warns insurers will 'get you coming and going' since people need coverage to avoid financial disaster.
Premium Blip Tied To Post‑COVID And Politics
- Recent premium increases appear political and may reflect a post-COVID delayed response rather than ACA design alone.
- Republicans favor economizing by converting subsidies to individual accounts while Democrats wanted increased funding to cover rising costs.