With just a few weeks left to reach a deal to avoid expiring Affordable Care Act premium subsidies, Republicans are now signaling they won’t vote to extend enhanced ACA (aka Obamacare) subsidies. In so doing, they’re rebuffing part of President Trump’s working proposal to continue the subsidies while reforming the program. Republicans are also risking voter backlash over substantial premium increases that affect a record number of 24.3 million people who signed up for ACA coverage last year.
Politico reported yesterday that House Minority Leader Hakeem Jeffries, D-N.Y., is accusing Speaker Mike Johnson, R-La., of undermining a White House proposal to extend expiring ACA premium subsidies (also commonly referred to as premium tax credits) for two years. Johnson has denied this.
Nonetheless, President Trump did appear last week poised to introduce a new proposal aimed at both temporarily prolonging premium tax credits and reforming the ACA. Karoline Leavitt, the White House press secretary, said on Nov. 24 that President Trump was working on a plan to address a spike in Obamacare health insurance premiums and that extension of subsidies may be necessary. However, under apparent pressure from fellow Republicans, he seemed to recant the day after Thanksgiving, saying he does not want to prolong the subsidies.
On 60 Minutes, Trump had said in early Nov. that Obamacare is “bad healthcare at far too high a price.” He then summarized his idea as redirecting money intended for insurance companies operating on the ACA exchanges to being “sent directly to people.” This change, he argued, would empower individuals to purchase their own health coverage with fewer regulatory constraints, potentially lowering premiums, particularly for healthier Americans.
Data from 30 states that rely on the federal government to manage ACA exchanges show that premiums are spiking on average by 30%. The New York Times reported this increase a month ago, based on a preview released by the Trump administration of the prices of available plans sold through ACA marketplaces in these 30 states.
In states that run their own ACA marketplaces, the rise in premiums will be 17% on average, according to an analysis by KFF. Across all 50 states, KFF estimates that the mean increase in premiums will be 26%. What could make this much more financially burdensome is if ACA subsidies expire, as they’re due to at year’s end.
Subsidized ACA enrollees have been mostly insulated from recent premium increases. During the COVID-19 pandemic, the federal government created more generous subsidies for the ACA exchanges, which reached individuals earning up to around $60,000 a year. Without these enhanced subsidies, the Congressional Budget Office expects costs to rise by 75% for some people and as high as 90% for folks in rural areas.
Building on Trump’s pledge to redirect subsidies, his plan — dubbed the “Healthcare Price Cuts Act” — would coincide with an extension of premium subsidies for two years that would prevent considerable premium hikes. The proposal also includes provisions for expanded contributions to health savings accounts, encouraging individuals to choose lower-premium health plans.
Frequently touted in conservative circles as a “consumer-driven” alternative to traditional health insurance, health savings accounts emerged in the 1990s — first called medical savings accounts — in which individuals with high-deductible health plans could set aside money tax-free for medical expenses. Contributions to the accounts are tax-deductible. And earnings from savings are tax-free, in addition to withdrawals for qualified medical expenses being tax-exempt. These include a wide range of out-of-pocket costs, such as for prescription drugs and dental care.
The accounts have formally been known as health savings accounts since passage of the Medicare Prescription Drug, Improvement, and Modernization Act in 2003. By the end of 2022, there were over 35 million HSAs.
Conspicuously, in a bid to end this fall’s historically long federal government shutdown, a number of leading Republicans had pitched proposals to send enhanced subsidies that would be appropriated by Congress directly to households rather than to insurance companies, apparently taking their cue from the president. From comments made by Senators Cassidy, Johnson, R-Wis., and Scott, R-Fla., it appears they’re favoring expansion of an already-existing system of health savings accounts.
It’s unclear at this point if and when Congress will take up these GOP-led plans. First, lawmakers will vote this month on extension of the subsidies. It’s anyone’s guess what happens after that. The only thing that appears probable is that political discussions will continue in 2026 on how to contain healthcare costs in the ACA program. The ACA has not brought down cost growth the way Democratic legislators had envisioned. Similar to the commercial and employer-sponsored markets, ACA premiums have risen substantially over the years.
But a blinkered analysis of the ACA strictly from a cost perspective ignores benefits that extend beyond the subsidies under discussion in Congress. Signed into law in 2010, the ACA expanded insurance access to the Medicaid program, barred insurers from denying coverage or hiking premiums for people with pre-existing conditions, mandated inclusion of a wide range of essential services, eliminated annual and lifetime maximums, required that all health plans offering dependent coverage allow young adults to stay on their parent’s plan until they reach the age of 26 and created federal and state exchanges for health insurers to offer coverage to people not enrolled in Medicare or Medicaid and without employer-based insurance. It’s very unlikely the majority of Republicans will want to roll back these ACA provisions.
