Florida Governor Ron DeSantis has weighed into the national debate over American health coverage, arguing that most Americans under the age of 50 should abandon costly comprehensive insurance and instead utilize affordable catastrophic health plans paired with tax-advantaged Health Savings Accounts (HSAs).
Speaking at the Hoover Institution recently, DeSantis argued that outside of paying insurance premiums, the majority of people under 50 do not incur significant routine medical expenses. He insisted that what this demographic truly needs—and what he claims the federal government currently restricts—is an affordable catastrophic plan.
“I think that we want and what the federal government really won’t allow is most people, particularly under 50, what they really need is a catastrophic plan that’s affordable, where they can pay whatever they’re doing out of a health savings account. Most people outside of paying insurance premiums are not paying a lot for medical on a routine basis. I know in the Navy, they told me to take something, I would do it, but other than that, I never did,” he said.
This proposal reflects a common conservative critique that the current insurance market is dysfunctional, forcing Americans to pay high monthly premiums for coverage they often do not use. In 2024, data showed that 11.7 million people—more than one-third of those covered by Obamacare—had no medical claims despite paying substantial premiums.
The ACA marketplace limits the option for taking a minimal coverage, high-deductible, low-premium policy and instead encourages consumers to take out more comprehensive plans – of the kind DeSantis and other conservatives see as wasteful use of resources for healthy people.
Ge Bai, a professor of health policy and management at Johns Hopkins Bloomberg School of Public Health, Maryland, said the DeSantis approach would be a liberating one.
“This approach would remove regulatory protections that have steered business to insurers, forcing them to compete directly for consumers by offering insurance plans with lower price and higher quality,” he told Newsweek.
“The same would apply to downstream providers, who would have to win patients through superior service with competitive pricing. Ultimately, patients would be the winners,” he added.
Such supporters of a wider use of catastrophic coverage argue that the fundamental purpose of insurance should be to protect families from major, unforeseen expenses – similar to having fire insurance to guard against the total loss of property—rather than covering minor checkups or routine costs. Catastrophic plans, which maintain low premiums while covering major medical costs, are, they are, a sensible and less costly alternative for both patients and taxpayers.
Catastrophic health insurance plans charge premiums that are roughly half the amount of other Obamacare plans. Analysis shows the average premium for a 50-year-old on a catastrophic plan is $5,316 per year, significantly lower than the average standard Obamacare plan premium of almost $10,000. This difference means a plan member could save around $4,600 in premiums annually. That money could then be used to pay toward the plan’s high deductible, which can reach $9,450 per person, or be invested productively.
In addition, recent changes to tax law now allow members of catastrophic health insurance plans to contribute to tax-free Health Savings Accounts (HSAs). These accounts permit families to pay routine medical expenses with pre-tax dollars and roll over unspent funds into retirement savings. That change can allow people to ‘put aside’ money to help with any unforeseen health costs.
Despite these benefits, a provision within the ACA, 42 U.S. Code 18022(e)(2), makes these plans illegal for most consumers, generally only allowing enrollment for those under 30 or those who qualify through a “hardship” exemption.
But Jonathan Gruber, a professor of economics at Massachusetts Institute of Technology, told Newsweek that the real world costs of such plans can soon add up.
“A common conservative criticism of public provision of health insurance is that we should just give folks ‘skinny’ or ‘catastrophic’ plans. But what these critics never grapple with is what would be included in these plans. By the time you include anything that would be considered decent insurance – hospital, doctor, drugs, maternity care, mental health care – you are already at 90 percent of the cost of a generous insurance plan. The only way to really make a plan ‘skinny’ is to charge high deductibles, which many plans on the exchange already do,” he said.
Ultimately, the issue comes down to the trade-off between affordability and risk.
Catastrophic coverage provides essential financial protection against unexpected high-cost events, such as breaking a leg but critics argue that young people would be less likely to make use of preventative healthcare measures, check-ups and blood tests, which can help reduce risk later in life.
Such plans are also unsuitable for young people who may be suffering with problems such as diabetes or other conditions which need more than just ‘emergency’ coverage.
Even among those under-30 who have been eligible to use the cheaper coverage, few have opted to go the route of catastrophic coverage.
“Uptake has always been quite low,” Katie Keith, director of the O’Neill Institute’s Center for Health Policy and the Law at Georgetown University told KFF. “It’s not a bad option if it is the only option you have. I question whether consumers are looking for this kind of coverage.”
Another option for those in generally good health looking to reduce premiums and have the kind of coverage they need, is to consider healthshare programs, which while not regulated as insurance can offer lower costs.