President Donald Trump and congressional Republicans have launched a significant effort to reform the U.S. health insurance system as the new year begins. Amid growing concerns about rising healthcare costs, multiple congressional committees are set to scrutinize insurance executives, focusing on practices that inflate spending. This initiative aims to address the systemic issues plaguing the health insurance landscape, highlighting a commitment to meaningful reform.
Legislators are acutely aware that the root of many healthcare challenges lies within the current insurance system. Insurers have gained considerable control over patient care, dictating which services are accessible, where treatment occurs, and the costs of medications. Despite widespread recognition of the detrimental impact of insurance companies, efforts to reform the industry have stalled for years. The problem is compounded by substantial taxpayer subsidies that bolster an industry often criticized for its inefficiencies.
As of 2026, the average family plan for two adults and two children within the Obamacare exchanges costs nearly $27,000 in premiums. With healthcare costs consistently outpacing wage growth, projections indicate that by 2032, families may spend up to 40% of their income on health premiums. This unsustainable trajectory underscores the urgent need for comprehensive reform.
Challenges of the Current System
The expansion of the insurance system has resulted in significant power shifts away from healthcare professionals and patients. Doctors increasingly find their clinical judgments overridden by insurers, who dictate treatment options and medications. In many cases, patients are directed toward higher-priced medications that yield greater profits for pharmacy benefit managers (PBMs) and insurers, even when more affordable alternatives are available.
Moreover, insurers often impose prior authorization requirements and “fail-first” policies that compel patients to attempt less effective treatments before receiving the recommended care. Recent tactics have emerged wherein insurers and PBMs create offshore entities known as Group Purchasing Organizations (GPOs). This strategy circumvents U.S. tax liabilities and allows insurers to retain negotiated rebates rather than passing savings on to patients, leading to higher out-of-pocket costs.
Real reform demands structural changes. Congress must act to eliminate incentives for insurers and PBMs to inflate drug prices and enforce greater transparency in coverage decisions. Additionally, policymakers must reconsider the allocation of taxpayer funds to a system characterized by fraud and inefficiency. In the past year, the federal government allocated nearly $140 billion to subsidize Obamacare coverage, yet taxpayer support per enrollee has risen by over 50% since 2014, without corresponding improvements in care quality or affordability.
The Paragon Institute estimates that last year, over 6 million individuals received fully subsidized Obamacare coverage despite being ineligible. Furthermore, the Centers for Medicare & Medicaid Services acknowledged that nearly 3 million Americans were improperly enrolled in multiple plans in 2024, resulting in taxpayers covering the same care twice. The practice of “upcoding,” where insurers exaggerate diagnoses to secure higher government reimbursements, further demonstrates the need for reform.
Path Forward for Healthcare Reform
The United States shares the same innovative pharmaceutical manufacturers with Europe, yet American patients frequently face higher costs for identical medications. The disparity arises not from differences in the products themselves, but from the layers of fees, rebates, and opaque pricing mechanisms imposed by insurers and their intermediaries.
To effectively address these issues, there is a pressing need to restore control to patients. One potential solution is to expand the use of health savings accounts, allowing individuals to make direct healthcare spending decisions without intermediaries.
Patients and healthcare advocates are looking to President Trump and congressional Republicans to lead this transformative effort and ensure that the healthcare system prioritizes their needs. As discussions around reform intensify, the potential for significant changes to the health insurance landscape becomes increasingly tangible.
