Editor’s Note: This perspective was originally published on LinkedIn on Dec. 2, 2025.
The fissures in the Affordable Care Act’s patchwork approach to universal coverage are about to break wide open — starting with the health insurance exchanges. Absent congressional action, many of the 20 million Americans who rely on them will see their share of premiums more than double. Annual subsidies easily exceed $100 billion, and massive additional subsidies may be on their way. The Congressional Budget Office says an extension of the enhanced subsidies alone would cost $350 billion over a decade.
Meanwhile Medicaid has rapidly expanded under the ACA to over 80 million recipients. In 2026, Medicaid spending will exceed $1 trillion, accounting for nearly one out of every five dollars spent on personal health care. Adding up state and federal spending in the exchanges and Medicaid, the overall cost will be about $1.4 trillion in 2026 — while still leaving 30 million Americans uninsured.
There is a better way. The key is to recognize that health insurance does not need to offer everything to everyone, but it should be a backstop for everyone. Congress should get rid of Medicaid and the exchange plans, substituting a basic USA Plan for every citizen without Medicare.
The USA Plan would cover care free for families with incomes below $75,000, but become progressively less generous as incomes rise. (This resembles a plan Kip Hagopian and I proposed several years ago.)
Those with family incomes above $75,000 would face a deductible set at 10% of their income. So, for a family of four with income of $100,000, their deductible would be $2,500 per person — about on par with what they’d currently pay in a high-deductible workplace plan. The deductible would be capped at $7,500 per person ($30,000 total for a family of four with income of $300,000). That may seem like a lot, but it is unlikely that everyone needs a high level of care each year. Importantly, high deductibles only kick in at higher incomes.
The USA Plan has a lot for Democrats and Republicans to rally behind. It would offer universal coverage while reducing total health care spending by encouraging consumers to shop for the highest quality care at the lowest possible prices. On average, Americans would face individual deductibles of about $1,300. According to an independent RAND Corporation analysis of our prior proposal, people below 300% of the Federal Poverty Level would pay less out-of-pocket under this plan than the ACA.
The USA Plan is also more generous than the mid-level silver plans in the exchanges. Next year, the average silver-plan deductible without cost-sharing reductions — which are separate from premium subsidies — is $5,304, per KFF. When weighted by enrollment, the average deductible for all plans is $2,912. Meanwhile, the average deductible in individual employer plans is $1,886.
Several provisions in the USA Plan could limit out-of-pocket burden even further. Preventive care and high-value services, such as medications for chronic illness, would be exempt from the deductible if an independent authority deems they reduce long-term medical spending.
And nothing would stop employers (or families) from purchasing insurance to supplement the USA Plan. The only difference is that it wouldn’t be tax advantaged for employers, as it is today. In effect, this plan pays for itself by removing the tax advantage and all the overhead that comes with private plans using layers of reviews to limit services for those who are experiencing high-cost episodes.
How much would the USA Plan cost relative to the current system? Basically, nothing. First, we save all the Medicaid spending of about $1 trillion. Then we add all the income tax collected due to the elimination of employer subsidy ($230+ billion) and the ACA subsidies ($100 billion), and the deduction for excess medical expenses ($22 billion; no longer needed). All told, the USA Plan would cost around $1.1 trillion — leaving about $300 billion to pay for health care services exempt from deductibles.
Compared to the current tangle of health coverage, the USA Plan is simple. Consumers will no longer have to wrestle with insurance exchanges, pre-existing conditions (100% would be covered), policy cancellations, and a host of other mind-numbing terms. They would be insured from birth until Medicare and could take their coverage to any provider.
The plan is not Medicare for All, nor does it privatize health care. But it would make sure that all Americans can get the critical health care they need without bankrupting themselves — or the government.
