With less than six weeks before enhanced Affordable Care Act (ACA) premium subsidies expire, Republicans in Congress are racing to figure out how to prevent health care costs from skyrocketing for 22 million Americans.
The caucus is divided:
- Some moderate Republicans want to temporarily extend the subsidies with minor changes.
- Others, including former President Donald Trump, push for sending federal funds directly to consumers rather than insurers.
Why it matters
Enhanced subsidies, launched in 2021, made ACA plans more affordable for millions, offering $0 or near-$0 monthly premiums to low-income Americans and helping the middle class qualify for assistance for the first time.
- This year, 24 million people signed up, double the number in 2020.
- Over 90% of enrollees receive premium assistance.
If subsidies lapse, premiums could jump 114% on average, according to KFF. For example, a 60-year-old couple earning $85,000 could pay $20,000 more per year. The Congressional Budget Office predicts 2 million fewer people will be insured next year. Extending the subsidies would cost about $350 billion over 10 years.
Trump’s direct-to-consumer idea
Trump has been vocal about sending subsidies directly to Americans, bypassing insurance companies.
“THE PEOPLE WILL BE ALLOWED TO NEGOTIATE AND BUY THEIR OWN, MUCH BETTER, INSURANCE. POWER TO THE PEOPLE.” — Donald Trump
Several GOP senators, including Rick Scott (FL) and Bill Cassidy (LA), are exploring ways to redirect federal funds to consumers, through HSA-style or flexible spending accounts, letting people shop for their own coverage.
- Scott proposes accounts where Americans could pay premiums or co-pays while keeping the ACA intact.
- Cassidy suggests keeping the original ACA subsidies while using extra funds to encourage competition and price-shopping.
Potential risks
Experts warn that moving funds directly to consumers could destabilize the ACA market:
- Healthier Americans might leave ACA plans, leaving sicker, costlier enrollees behind.
- Insurers could raise premiums, potentially creating a “death spiral” in ACA marketplaces.
- Consumers may struggle to shop effectively, as U.S. healthcare pricing is complex and opaque.
Efforts to extend subsidies
Meanwhile, bipartisan groups in the House are pushing to extend enhanced subsidies:
- One proposal extends them for a year, giving Congress time to develop an alternative.
- Another suggests a two-year extension with an income cap for high earners ($200K–$400K).
Rep. Don Bacon (NE) emphasized the need for a bipartisan solution:
“It can’t just be a Republican plan if we want to pass something. We’ve got to sit down with Democrats and figure out what we can do.”
