Experts warn John James-backed bill could unravel Obamacare

Michigan Rep. John James, who is now a candidate for governor, praised a Republican plan to cut the Affordable Care Act (Obamacare) and replace it with health savings accounts (HSAs). Experts warn this could lead to higher premiums and less coverage.

James made the remark at a Nov. 10 event hosted by Americans for Prosperity, a group that has long opposed Obamacare. He specifically lauded a bill from Florida Sen. Rick Scott.

“I talked to my buddy Rick Scott who came to Macomb last week,” James said. “He’s actually working on a bill with President Trump saying that he’s going after the insurance companies that are stealing from you … The Republican plan is giving health savings accounts. Thousands of dollars going to you directly rather than going to insurance companies.”

Understanding the implications of Scott’s bill requires understanding how Obamacare and the health insurance industry currently work.

Private insurance companies spread the cost of medical care across a large group of people. This is called pooling risk. Most people in the pool are healthy and don’t need consistent care. The premiums healthy people pay into the insurance pool cover the costs of those who get sick or need expensive treatment.

Obamacare incentivizes people to buy private insurance by providing subsidies that lower the cost of premiums. This keeps risk pools broad and premiums stable. These insurance plans are purchased through government-run marketplaces known as exchanges.

Scott’s bill, named the More Affordable Care Act, would allow some people who are eligible for Obamacare to get a government-funded HSA instead. These would essentially function as bank accounts with money that can be spent on insurance plans or some out-of-pocket medical costs.

“This bill would use HSA-style Trump Health Freedom Accounts to put health care decisions in the hands of Americans,” Scott’s office said in a statement. “Under Senator Scott’s proposal, Obamacare will continue, Healthcare.gov and state exchanges will continue, protections for pre-existing conditions remain in place, and families who need a safety net have one that works for them.”

Tim Layton, an associate professor of public policy and economics at the University of Virginia, disputes Scott’s analysis. He told Politico that such a plan would likely lead to a sudden drop in Obamacare enrollments, with fewer insurance options for those still in the program.

“If there were this type of large wholesale shift from subsidies to cash payments, I would expect enrollment to drop significantly, and I would expect insurers to pull out of the markets,” he said.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology, said healthier people would be the most likely to drop Obamacare, which would shrink risk pools and trigger across-the-board premium hikes for everybody else.

“As we’ve seen with the ending of subsidies, what happens is a twofold effect on insurance affordability: When subsidies fall, it’s the healthiest to drop insurance—that raises premiums for everyone else,” said Gruber. “Second of all, among those who are paying those higher premiums, they are getting lower subsidies to pay them with.”

This is not the first time James has flirted with cutting Obamacare. In his failed 2020 bid for the U.S. Senate, he lamented the Republican “failure to repeal and replace Obamacare” and vowed to work his “tail off to remove this monstrosity.”

Scott’s bill is one of several proposals intended to address the looming expiration of enhanced Obamacare subsidies. The enhancements, which lowered premiums even more, were created under the 2021 American Rescue Plan signed by President Joe Biden. The enhancements will likely end on Dec. 31, spiking monthly premiums for 22 million Americans.

House and Senate Democrats introduced bills that would extend the subsidies for three more years. Republicans, including James and Scott, opposed these measures.

Nearly a half million Michiganders are expected to see their premiums rise in 2026. State Sen. Kevin Hartel said in an Oct. 22 hearing that the increased costs will put already cash-strapped families in an even more dire position.

“We’re seeing families that are understanding the impact of this, who are already struggling with increased costs from things like groceries, prescription medicines, and everything they need to pay for on a day-to-day basis,” Hartel said. “This will just compound those issues and make it harder for them to get by.”

James is one of several candidates seeking the Republican nomination for governor in 2026. Primary elections are scheduled for August 4.