Will lawmakers vote to extend Obamacare subsidies in December?
As lawmakers seek to reopen the government, Americans are the biggest losers in the longest government shutdown fight in U.S. history.
President Donald Trump and the Republican Party have proposed an alternative to the Affordable Care Act that would send money directly to consumers rather than to health insurance companies.
The proposals are wide-ranging and have few details, but Republicans support these options because Congress has yet to vote on the fate of cheaper health insurance for millions of Americans.
Democrats want to strengthen the Affordable Care Act, often referred to as “Obamacare,” by extending pandemic-era tax credits that are set to expire at the end of 2025. Without these tax credit enhancements, the average cost for the 22 million Americans with subsidized ACA insurance would more than double by January 1, 2026, according to the health policy nonprofit KFF.
Senate Majority Leader John Thune (R-South Dakota) has promised a vote on expanding the tax credits by mid-December, but he does not guarantee Republican support for extending these subsidies. House Speaker Mike Johnson (R-Louisiana) did not vote, calling the tax credit expansion “profiteering.”
President Trump said he wanted “funds to go directly to the people” as he signed the bill ending the 43-day government shutdown without extending aid.
Tax credits make Obamacare insurance more affordable for millions of enrollees, but do little to slow the rising health care costs faced by most Americans. Americans spend more on health care than any other nation, and rising health care costs will increase premiums paid by all Americans, whether they have workplace, Medicare, or Affordable Care Act insurance.
The more than 150 million Americans who have insurance through their employer will see their average costs rise to the highest level in a decade and a half in 2026. And older Americans on Medicare have been told that their Part B premiums, which cover outpatient care, preventive care, doctor visits, and medical equipment, will rise 9.7% in 2026, squeezing affordability for seniors who rely on Social Security to make ends meet.
How can I send money directly to a consumer?
Mr. Trump has not disclosed details of his proposal. In a Nov. 18 post on Truth Social, President Trump said, “The only health care that I support or approve of is sending money directly back to the people,” rather than insurance companies.
Lawmakers, former Trump administration officials, and some academic researchers have proposed using health savings accounts to fund health care.
Health savings accounts are commonly used by working-age Americans who have health insurance through their employer. By pairing these accounts with high-deductible health insurance plans, consumers can siphon off a portion of their pre-tax paychecks. This money can be used for eligible expenses such as doctor and hospital bills and prescription drugs.
Sen. Bill Cassidy (R-Louisiana) wants to pair health savings accounts with “bronze”-level Affordable Care Act plans. Families would have federal funds deposited into health savings accounts to purchase health insurance. “Patients can see lower costs,” Cassidy said during a Nov. 19 Senate hearing.
Brian Blades, a White House adviser during the first Trump administration, proposed moving some Obamacare funds into health savings accounts for low-income enrollees.
The Affordable Care Act currently gives low-income enrollees “cost-sharing reduction” payments to offset costs such as deductibles and co-pays. Under Blaze’s proposal, low-income consumers would have the option of directing these subsidies to health savings accounts instead of sending them directly to insurance companies.
Similar to Blais’ proposal, Sen. Rick Scott (R-Fla.) on Nov. 20 unveiled a bill that would convert ACA cost-sharing reduction payments into HSA-style “Trump Health Freedom Accounts.” Each state must submit a waiver application to the federal government to establish a “free account.”
Scott’s proposal would allow consumers to use the account to pay for health insurance. With limited exceptions, HSA accounts can no longer be used to pay for health insurance premiums.
“Americans will always make choices that are better for their families than their government,” Scott said in a statement. “We should give them that opportunity and take a big step toward fixing Obamacare.”
Democrats warn of health insurance ‘cliff’ for millions of Americans
Democrats are skeptical about the timing of these Republican proposals. They argue there is not enough time to reform the Affordable Care Act tax credits without jeopardizing insurance coverage for millions of Americans.
“Individuals will lose health care. This is a cliff,” said Sen. Catherine Cortez Masto.
The Nevada Democratic Party said Congress should extend the enhanced premium tax credit for one year to give both parties time to consider long-term reforms. “It should be a thoughtful process, not something that throws people off a cliff,” Cortez Masto said.
Sen. Ron Wyden (D-Ore.) agreed there is not enough time to craft a health reform bill before premium rates for millions of ACA members are reset in January. He said Congress should first extend the enhanced insurance premium tax credit.
“There is no way Congress can come up with a proposal in the next few weeks that will help Americans in January,” Wyden said during a Senate committee hearing on Nov. 19.
Health policy experts are also skeptical of proposals to divert existing Obamacare subsidies into health savings accounts. Such a move could disrupt the ACA markets, forcing healthier people to drop coverage and risk leaving the insurance pool with sicker people and higher monthly premiums.
“The original tax credits that have existed since the ACA was first passed are what keep that market functioning,” said Cynthia Cox, vice president and ACA program director at KFF. “Without these tax credits, the market would collapse and people with pre-existing conditions would have no option for health insurance.”
Robert Kastner, an economist and research professor at the University of Chicago’s Harris School of Public Policy, said the concept of sending money directly to consumers rather than health insurance companies is “an old, old idea.” “This is a 40-year-old conservative health care reform plan.”
Kaestner said health savings accounts can be effective for middle- and high-income people who can afford to put money into the account while paying their daily living expenses. But low-income families don’t have the same financial cushion, especially when faced with high medical costs such as cancer treatment, he said.
“An HSA cannot cover cancer treatment,” Kaestner says.
