Recent headlines are dominated by the government shutdown and the fractured Republican response. Democrats argue their actions aim to prevent chaos in the health insurance market. Blog posts from Econ4Voters (October 13 and 15) cite Kaiser Family Foundation data warning that millions could lose Medicaid or be priced out of the Affordable Care Marketplace if provisions of the so-called “One Big Beautiful Bill” (OBBB) are enacted in fiscal year 2026. Republicans counter that reopening the government would allow them to introduce market-based solutions.

It’s worth remembering that during Donald Trump’s first term (2017–2021), there were over 70 attempts to repeal and replace the Affordable Care Act (ACA)—none successful. These efforts failed for two key reasons: the ACA remains relatively popular, and opposition is split between those who reflexively reject government programs and those who advocate for more expansive reforms like Medicare for All.

At its core, the ACA is a regulatory framework that creates a competitive marketplace for private insurers. It mandates coverage for pre-existing conditions and prohibits discriminatory pricing based on health status.

Since 2010, Republicans have had ample time to propose viable market-based alternatives. Yet no workable plans have emerged. Economics offers a toolkit—principles like the theory of the firm—that help evaluate policy proposals. These principles show that universal coverage, pursued democratically, cannot be achieved through unregulated markets. The ACA acknowledges this by establishing a regulated one.

So what happens when we apply competitive market principles to health insurance? Insurance functions by pooling risk and pricing premiums according to each policyholder’s health status. Just as accident-prone drivers pay more for car insurance, free-market health insurance imposes higher costs on older and sicker individuals. The result: those most in need are priced out.

In a democracy committed to universal coverage, relying solely on free markets is untenable. While Republicans often champion market solutions—effective in many sectors—health insurance is an exception. Market analytics consistently show that unregulated insurance markets produce adverse outcomes, especially for vulnerable populations.

The problem compounds when healthy individuals opt out due to high premiums. This raises the average risk in the pool, driving premiums even higher—a vicious cycle known as the “death spiral.”

The nightmare scenario unfolds when uninsured individuals seek care in emergency rooms. By law—dating back to the Reagan administration—hospitals must treat patients until they’re stable. The cost of this care is shifted to insured individuals, who pay twice: once through higher premiums, and again through overcrowded ERs that delay care for everyone.

This mirrors auto insurance, where drivers pay extra to protect against uninsured motorists. Similarly, insured patients shoulder the cost of those who delay care until it becomes an emergency.

Data from the Kaiser Family Foundation, the Congressional Budget Office, the Urban Institute, and the Center for Economic Policy Research all point to outcomes a modern society should strive to avoid.

One of the great achievements of economics is its ability to explain how markets help societies thrive. But it also teaches us when markets fail—and what to do when they do. Republicans who claim to believe in market solutions often ignore the actual economics of how markets function. When ideology replaces analysis, the economic losses can be profound. That’s the essence of Project 2025.