In gaining the White House a second time, Donald Trump is plainly determined to leave no policy unchanged.

The seemingly unending list of shocks to business as usual has included everything from sending paramilitary to cities to root out undocumented immigrants to tearing up trade treaties with allies. And while the president’s abandonment of health insurance subsidies for middle-income households competed only briefly for headline attention with assaults on Venezuela, criminal investigations of the Federal Reserve Board and hardball efforts to annex Greenland, there’s little doubt that the president remained fixated on putting his stamp on health care policy.

Much of the early effort to this end focused on rolling back the expansion of access to insurance coverage built up during the Obama years. And though Republicans don’t seem to have a coherent alternative vision for how they would deliver care or to whom, it makes sense to review the proposals on the table. For it’s just possible there may be some constructive synthesis to emerge from the muddle.

The ACA, Trump and Health Care

After the landslide 2008 election, Democrats not only controlled the White House but also held a filibuster-proof majority in the Senate and outnumbered Republicans in the House by almost 80. Democrats also formed majorities in more than half the state legislatures. The party that first proposed universal health insurance (under President Truman in 1945) finally saw its way clear to sweeping reform.

Well, sort of. Few initiatives have reflected so much disagreement within the Democratic Party or triggered partisan division as fierce as the Affordable Care Act (aka Obamacare), which squeaked through Congress in 2010. And while the ACA proved to be politically popular once the public got a taste of the benefits, it has never enjoyed the untouchable status of once-controversial programs like Social Security or Medicare.

Fast forward just a few years. Democrats lost 13 governorships and more than 800 seats in state legislatures. Republicans took control of both the Senate and the House, with Democrats losing a combined 69 seats in 2010 and another 22 in 2014. Yet, the ACA held on by the slimmest of margins in Congress through President Trump’s first term, at least in part because Republicans couldn’t agree on an alternative.

Then the pandemic happened. With Democrats back in the White House, efforts to repeal the ACA faded. Indeed, in the teeth of the emergency, even some deep red states like Oklahoma, Louisiana and Utah took advantage of the offer built into the ACA to expand Medicaid at no short-term cost to state budgets. Case closed.

Or maybe not. In the euphoria of the return to the White House, a more ideologically consistent conservative bureaucracy brought in by President Trump seemed determined to roll back the ACA. And they were able to hold together the Republican congressional majority to include major cuts to the ACA marketplaces in the One Big Beautiful Bill Act (OBBBA). The most dramatic impact was on Medicaid, the means-tested insurance system program for low-income households. Long opposed to the expansion of Medicaid to include financially pressed middle-income families, Republicans managed to cut more than a trillion dollars allocated to this purpose over the next decade.

Aware that Medicaid is popular with voters in purple districts, Republicans delayed most of the cuts past the 2026 congressional elections. They also gave the pruning some political cover: for the most part, instead of flat-out kicking people off Me dicaid, th ey made it harder to qualify for the program and, once on board, to remain qualified. Th e added bureaucratic hoops haven’t generated much anger among the public, yet will have as profound an impact on enrollment as a tighter means test.

And while the work requirements added to qualify for Medicaid are getting some media coverage, it’s hard to catch voters’ attention with tales of how frequently Medicaid enrollees have to certify their incomes, or how increases in co-pays deter doctor visits. Icing the cake, OBBBA makes it harder for states to come up with their share of Medicaid costs because they are no longer able to tax Medicaid providers to generate the needed revenue.

But what’s likely to work politically with backdoor Medicaid cuts is more problematic for cuts in ACA subsidies to middle-income buyers of private insurance. Enrollment in the ACA marketplaces soared from 11 million to 24 million thanks to the “enhanced” means-tested subsidies added during the pandemic, and extended once afterward, that made insurance more affordable. Set to expire at the end of 2025, the OBBBA essentially deep-sixed those subsidies. But for reasons not entirely clear, Republicans decided to let the marketplace subsidies expire at the end of 2025 rather than delaying their demise until after the 2026 election as they planned for Medicaid cuts.

One could argue that the Trump administration knew what it was doing. Without the subsidies, ACA market insurance is simply too expensive to lure younger, healthier people to buy insurance they don’t think they’ll need. That leaves sicker people to pay more to pick up the slack, creating a potential doom loop in which the least healthy people are priced out of insurance.

Ironically, the pain is likely to be felt most in red states. While the Urban Institute estimates that the average marketplace premium nationwide will rise by 22 percent thanks to the OBBBA, the figure is 39 percent for Tennessee and a whopping 69 percent for Arkansas.

To be sure, even prior to the major changes implemented via OBBBA, government health insurance was in the crosshairs of the Trump administration. For example, the FDA and the CDC were hit particularly hard by the DOGE rampage through federal agencies. Countless research grants were paused or canceled. And a slew of regulatory and administrative changes made it harder to qualify for benefits.

The Mess We're In

So far, the Trump administration’s focus has been on undoing Democrats’ handiwork. Little focus has been on solving the problems of access, cost and distribution across the U.S. health care system.

Not only are costs higher than in any other country in the world, they are very much on the rise. Medicaid spending has nearly doubled from around $550 billion in 2015, while Medicare outlays grew from $650 billion to $1,100 billion over the same period. Today, the average premium for employer-sponsored group insurance for families exceeds $26,000 annually, up from around $17,000 in 2015.

Moreover, all that money spent on health care is not buying superior health outcomes. Indeed, Americans are faring worse in terms of life expectancy, maternal mortality and management of chronic diseases than their counterparts in other affluent countries. But how could we expect anything different in a hopelessly fragmented system where the quality and availability of care depend heavily on geography, income and employment status?

Gilding this toxic lily, the bureaucracy (public and private) that has grown up to run countless insurance plans, to set fees for service and to manage prior authorization requirements is detested by almost everyone, save consultants and lawyers. Patients struggle to understand their coverage and navigate the system, while providers drown in paperwork. The best guesstimates suggest that at least one health care dollar in four – about $1 trillion per year – goes to administration.

Republican Alternatives

Confronting these gargantuan challenges requires a grand strategy on how to make things better. Yet Republicans, lacking a practical alternative to the existing hybrid, piecemeal system, long ago grew accustomed to operating purely in opposition. To be sure, there is talk about the need for market-based reforms, deregulation, increased competition and devolution of administration to the states. But a coherent program has been strikingly absent since Nixon’s Comprehensive Health Insurance Plan was derailed by Watergate.

Part of this failure to develop rational policy positions has been strategic. Throwing out buzzwords, asking tough questions of the opponent’s proposal and fanning fears of a slippery slope to socialism is much easier than coming up with practical solutions that don’t cost a ton of money or tread on ideological toes. And as the Clinton administration can attest, it works magic in blocking full-fledged health care reform.

But in part the failure has been policy-based. Personal responsibility and market-based solutions sound great until your opponent steals your plan and puts their name on it. Republicans have really found themselves in a bind ever since President Obama co-opted much of Massachusetts’ Romneycare, named after Republican then- Governor Mitt Romney’s state plan. The Affordable Care Act is many things, but it is definitely not the road to servitude predicted by hard-right opponents.

Republicans have done best politically when lambasting the ACA for the ACA’s unquestionable shortcomings. As for the rare policy proposal, one stands out. Health Savings Accounts were established by the same legislation that created the Medicare Part D prescription drug benefit under President Bush in 2003.

The idea of HSAs is simple. Let people stash funds for health care expenses in taxfavored accounts: no taxes on the money put in, no taxes on money taken out to pay medical bills, and no taxes on investment earnings while the funds are waiting to be spent. Naturally, there are a few qualifiers. Most importantly, people have to be enrolled in insurance plans with high deductibles. With some of their own skin in the game, people will make better decisions about their health care – or so the theory goes.

This is where recent Republican proposals come in. Why not cut out the middlemen – the insurance companies? That is, shelf the expensive enhanced subsidies for the ACA marketplaces and send $1,000 directly to Americans to buy coverage or medical care. t h e h e a lt h c a r e m e s s Second Quarter 2026 9 More freedom, more choice – and one step closer to getting rid of that pesky Obamacare.

For the record, HSAs work, but at a scale that renders them afterthoughts. Two in three HSAs contain less than $1,000, presumably because it’s hard to save money when the rent is due. In any event, $1,000 a year from the government would be peanuts in the American health care system.

Focusing on costs, some Republicans have also warmed up a perennial favorite: allowing insurance companies to sell policies across state lines. Insurers licensed in one state would be allowed to sell coverage to households anywhere in the country, creating a national marketplace of sorts. The hope and expectation is that carriers now operating only in low-regulation, low-premium states would bring down premiums by selling coverage in high-premium states.

There is less here than meets the eye, however. For one thing, most of the savings in low-premium policies come from stripping out benefits of less-than-universal attractiveness rather than from lower administrative costs or lower negotiated reimbursement to providers. In any event, many low-cost insurers don’t seem all that interested in expanding across state lines, making it questionable how much would really change. It’s also worth noting that the big carriers including United- Health, Elevance Health and CVS Health already compete across the country and have tens of millions of policyholders.

Interestingly enough, the ACA actually offered states the opportunity to form so-called health compacts to unify their insurance markets. So far, no takers! Consumer protection post-expansion of the private market would also be problematic. If you bought a plan in Alaska regulated in Maine with a carrier headquartered in Texas, who will look out for you when things go awry? Consider, too, the problem of adverse selection. What would happen if healthier individuals drifted into cheaper plans with fewer benefits while sicker ones stuck to plans with more comprehensive coverage? Anyone see a doom loop in the making?

“Association health plans” are a related concept built on similar premises. Start with an affinity group of some sort – say, members of Costco or the Knights of Columbus. Then allow them to buy insurance as a group. In essence, the groups would mimic large employers purchasing coverage at a discount because of administrative efficiencies, purchasing power and risk spreading. What’s not to love?

For one, the legal environment surrounding association health plans is quite murky. The Trump administration found this out the hard way the first time around when it sought to dramatically expand the AHP market. It is also not clear whether and how AHP plans would be covered by ACA minimum requirements – and whether those signing up would realize the limits of their coverage.

Legal questions aside, there are other reasons to be skeptical. There’s no magic here: much of the potential savings would have to come from paring benefits – as in, your premium went down $200 month, but no longer covers maternity care, prescription drugs or mental health care.

Here, too, there’s an issue of selection. AHPs sound workable for healthy people, but creating insurance ghettos for the healthy raises the cost of coverage for everyone else. It’s worth noting, too, that fraud and insolvency have been a big challenge for AHPs in the past. It is not surprising that very few Americans have opted for AHP coverage when generous subsidies were available from the exchanges.

Republicans have been a little more timid about proposals to reshape Medicaid. The Big Beautiful Bill will kick millions from the program, but as quietly as possible by adding administrative hurdles for eligibility rather than formally narrowing access.

In the first Trump term, Republicans were much more aggressive in seeking to reshape the program. One proposal was to eliminate cost-sharing with the states and simply send a fixed sum to each state, giving them a lot of leeway to decide who’s covered and how. But even analysts who are sanguine about how the states would allocate block grants worry the approach would burden states in ways they cannot manage.

How, for example, would Medicaid adapt to another pandemic? Or a recession? Or an expensive medical innovation that yielded undeniable benefits? (We’re looking at you, Ozempic.)

A related proposal offers a bit more nuance and alleviates some of the concerns with block grants. Here, instead of delivering a lump sum linked to the state’s population of low-income households, federal payments Second Quarter 2026 11 would be tied to the numbers signed up for Medicaid. This approach would provide flexibility when Medicaid rolls swell – and also reduce the states’ financial incentives to tighten eligibility.

Both approaches have proved a hard sell in a narrowly divided Congress. In the past, Republicans have deliberately set the proposed per capita payments low and paired the proposals with formulas meant to shrink the program over time. Estimates put coverage losses at 15 million beneficiaries back in 2017 during the height of the fight over Obamacare. It is hard to imagine a much different reception this time around. Moreover, with changes to health care finance without the political cover of OBBBA, bipartisan opposition would be easy to organize.

What Else Is Out There

Republicans are in a bind. Just saying no to socialism was a viable opposition strategy as long as most middle-income households had adequate insurance from their employers at little cost. But Americans’ experience with subsidized private insurance through the exchanges and easier access to Medicaid have made it far more difficult to convince them that the sky would fall without changes that threaten their existing coverage.

In January 2026, the White House unveiled The Great Healthcare Plan, which it labeled “a comprehensive plan to lower drug prices, lower insurance premiums, hold big insurance companies accountable and maximize price transparency.” The plan is short on specifics, however, and it doesn’t begin to tackle the fundamental difficulties of deciding who gets what care at what price.

Even if one could set aside the politics and the financial interests at play, a big dose of free-market ideology isn’t likely to provide much help. Market-based solutions work best when buyers understand what they are buying, when no one but the buyer and seller are affected by the market outcome and when price competition is not blocked by market concentration or monopolistic control of technology. None of these conditions describes the market for health care.

That doesn’t necessarily mean that government intervention with regulation, subsidies or Trump-style pressure on pharma to lower prices will always make things better. But it definitely means that simply unleashing the market as a fix is a nonstarter.

Democrats, for their part, aren’t burdened with the fantasy that Milton Friedman had all the answers. But neither are they free of ideology or interest-group politics in figuring out what ought to happen to health care – or to the point, what’s possible.

For the most progressive parts of the party, Obamacare is but a stepping stone. Universal, state-financed (and perhaps state-delivered) care is the goal. In a socialized system like the National Health Service in the UK, nearly all medical providers are directly employed by the government. Socialized medicine, by the way, is hardly an alien concept in the U.S.: the Veterans Health Administration provides free care to some 9 million veterans in 1,380 facilities that employ 370,000 professionals.

Canada, for its part, uses a hybrid system leaning toward the socialist model. Coverage is universal and the government is the sole payer/insurer. There are some nuances here. But generally, tax dollars – and not private premiums – fund the system, while government establishes the rules of the game and the fees for service paid to private providers.

There are lots of things to like about single- payer systems or full-blown government delivery of care. For one, everybody is covered. For another, the costs of administration aren’t burdened by gaming about the 12 The Milken Institute Review conditions of coverage and the compensation provided. But socialized medicine has its own major drawbacks.

In most cases, single payers use their monopoly powers to rein in costs. The only buyer of pharmaceuticals in the UK that really counts is the National Health Service, and the only price is the one set by the government. The catch here is that, to contain costs, access to expensive drugs (as well as services) must be rationed or in some cases denied to everyone.

The subtler problem is political. Singlepayer systems centralize purchase decisions, maximizing the prospects that choices will be driven by political considerations rather than a comparison between costs and benefits. Even the U.S. system, which depends on multiple payers, has been affected by this sort of political calculus. For example, in 1972 Congress decided to provide kidney dialysis to virtually all (today, roughly 555,000) Americans who can’t survive without it. That isn’t necessarily a bad thing, but it does leave one to wonder why kidney disease, and not other serious illnesses, is treated this generously.

OK, if not a single-payer system, how about a hybrid in which something like the government insurance now provided to federal employees is offered as an alternative to private insurance on the ACA exchanges? The idea of a “public option” gained prominence during the debate over the ACA in 2008 and 2009. But it died in 11th-hour negotiations among Democrats thanks primarily to the opposition of Senator Joseph Lieberman, who made no secret of his wish to defend the private insurance industry from public competition.

The failure to include the public option has since been blamed by some liberals for all that ails Obamacare. But that is debatable. Managing a public option would be almost as problematic as running a single-payer system. What services would it include? How aggressively would it be allowed to compete? What if it went insolvent?

It’s easy to ignore the proverbial forest when assaying what has been done and what should be done about the humongous American health care system. Two things, it seems to me, stand out.

First, we should not forget that Obamacare created a new reality for what health care in the United States could look like. Some 40 to 45 million Americans got health insurance, moving the country a long way toward universal coverage. They won’t give it up easily. Indeed, the ACA has never been more popular since President Trump put a target on its back – roughly two in three Americans approve. And it is hard to imagine a stable political equilibrium in which Republicans manage to roll back much of the gain in access.

Second, neither political party seems to have a clue on how to defuse the supply-side time bomb threatening the long-term stability of the American health care system. Thanks to rapid population aging and the clampdown on immigration, the demand for care is rising faster than the economy is growing. Meanwhile the cost of medical services is rising faster than overall inflation because labor productivity growth in the industry is slow, the supply of highly trained personnel is constricted by regulation and medical innovation seems to add more to costs than it saves.

To date the system has lived with cost pressures in part by making them less visible to the public. The rising cost of premiums paid by employers only indirectly reduces living standards by slowing the growth of wages; Medicare and Medicaid costs are shoveled into federal deficits. But one way or another – actually, in many ways simultaneously – costs will eventually have to be contained by some combination of rationing services and limiting the compensation of providers. We just don’t know when the proverbial straw will break the camel’s back.

Room For The Deal

Both Democrats and Republicans, then, face daunting challenges in delivering sustainable health care that Americans are willing to pay for. But in my view, there is a pragmatic solution that could be palatable for both parties. And the model has been around for decades in the form of the Medicare Advantage option that currently allows seniors to trade their Medicare fee-for-service benefits for a broad package of privately supplied managed health services.

The idea would be to combine Medicare Advantage with all other publicly funded programs like Medicaid and the Children’s Health Insurance Program and let beneficiaries pick their own coverage from privately run managed care organizations. Then, add everyone who is getting their insurance from their employer for good measure. To be sure, managed care sold under the Medicare Advantage rubric hasn’t saved Medicare any money, which was how it was initially sold to Congress. But Medicare Advantage seems to be a big hit with seniors, and there are a bunch of upsides here that could make it technically feasible and politically palatable to use the Medicare Advantage model in public- private hybrid managed care.

For one, the insurance pools would become much bigger, offering the prospect of economies of scale in both administration and service, as well as increased market power in bargaining with hospitals and other providers. Second, integrating the patchwork of programs and policies that barely hold things together now offers the potential for massive administrative savings. This approach would also rid the health care market of the anachronism that state lines should serve as boundaries for insurance markets.

Equally important, the system wouldn’t look or feel very different from what Americans are currently used to. Households would be served by private entities, many of the same insurers who currently manage group policies. One major difference – which would presumably be popular – would be the ability to switch from one insurer to another in search of lower prices or better service.

A Medicare Advantage-like system would be no panacea. While the managed care providers would have incentives to increase the productivity of care delivery, one way or another we’d have to find ways to resolve the issues of who is subsidized and how much, and who gets access to expensive new technology. Moreover, some problems plaguing the current system, like the maldistribution of doctors that undermines the quality of care in low-income rural areas, may not be solvable at all. But getting everyone into the same insurance market, generating some financial savings, expanding the numbers covered and preserving the private-public nature of the system seem like a good start to me – one that both Democrats and Republicans could get on board with.