White House proposes direct HSA payments to replace ACA premium subsidies

The White House rolled out a framework called the Great Healthcare Plan that would redirect Affordable Care Act premium subsidies away from insurers and into individual Health Savings Accounts in consumers' names, and pursue a codified most-favored-nation drug pricing approach. The administration framed the change as a way to "deliver money directly to the American people," with President Donald J. Trump saying, "The government is going to pay the money directly to you. It goes to you, and then you take the money and buy your own health care."

Under the outline released Jan. 15, federal premium subsidies now routed through marketplace insurers would instead be deposited into HSAs for eligible Americans. The fact sheet also promotes expanded price-transparency requirements and insurer accountability measures, asking insurers to publish the percentage of claims they reject and wait times for routine care. The plan seeks to make more drugs available over the counter and to enshrine the administration's most-favored-nation approach to drug pricing; in the rollout video the president claimed drug costs could fall "300, 400, even 500% starting this month" via his direct-to-consumer portal TrumpRx.

Administration officials say the package includes an insurance cost-sharing reduction program that could reduce the most common Obamacare plan premiums by "over 10%." Centers for Medicare & Medicaid Services Administrator Mehmet Oz described the outline as "a framework that we believe will help Congress create legislation that will address the challenges that the American people have been craving." The White House also said consumers outside the ACA market would qualify for the proposed direct payments.

Critical technical and legal questions remain unanswered in the framework. Current HSA rules generally do not permit account funds to be used to pay premiums, meaning the plan would require either a change in tax and Treasury rules or the creation of a new vehicle to allow premium purchases. The fact sheet does not specify eligibility criteria, payment amounts, how payments would interact with protections for pre-existing conditions, or whether the money could be used to purchase non-ACA-compliant plans. "I do think it's a bad idea," said Gerard Anderson of Johns Hopkins, reflecting concerns from health policy experts that redirecting subsidies into HSAs could push lower-income Americans toward short-term or high-deductible coverage and raise the number of uninsured.

Market implications could be large. Insurers now receive subsidies as a steady revenue stream underwriting marketplace plans; redirecting those flows to individuals would alter insurer incentives, potentially changing plan design, networks and premium-setting. Pharmaceutical companies would face pressure from new pricing mandates, while retailers and pharmacy channels could see growth if more drugs move to over-the-counter status. Fiscal effects are uncertain: shifting the subsidy mechanism may change who benefits most and could alter federal outlays depending on participation and utilization patterns.

The announcement arrived as open enrollment for ACA marketplaces closed in most states, and the White House offered no legislative text or timetable. Enacting the plan would require major statutory changes overseen by Congress, Treasury and regulators, and would likely trigger legal and implementation fights over tax treatment, coverage standards and drug-pricing authority. The proposal taps long-term trends toward high-deductible plans and consumer-directed care, but its impact on coverage, cost and equity will hinge on details that the administration has not yet provided.