With the enhanced Obamacare tax credits set to expire at the end of the year, Republicans are putting forward new alternatives aimed at reducing the cost of healthcare.
However, their window for action is rapidly closing, leaving many middle-class Americans uncertain about their future healthcare costs.
The White House is expected to make an announcement this week regarding efforts to either renew or replace the Affordable Care Act (ACA) enhanced premium tax credits, according to Treasury Secretary Scott Bessent. However, MS Now reported on Monday that the announcement has been delayed, partly due to congressional backlash, according to two White House officials.
The news could not come soon enough for Shana Verstegen and her husband. The couple, who purchases insurance through the ACA exchange, faces a 50% increase in premiums for their family plan in 2026 if Congress does not renew the enhanced tax credits.
“We’ve been reviewing our expenses, and it’s tough because everything’s already so expensive,” said Verstegen, a fitness instructor from Madison, Wisconsin. “We’re looking at cutting back on some activities for our kids and other things like that.”
Verstegen travelled to Washington during the government shutdown to advocate for extending financial support for middle-class ACA enrollees like her family. Since the government reopened, she’s been closely monitoring discussions on Capitol Hill about the future of Obamacare tax credits.
“I’m thrilled that lawmakers are finally at the table and talking about ways to make healthcare more affordable. What frustrates me is that there’s less than a month left to do something about it,” she said.
Senate Majority Leader John Thune, R-S.D., promised Democrats that the chamber would vote on extending the enhanced tax credits in mid-December as part of a deal to end the government shutdown.
December 15th is the deadline for the majority of Americans to sign up for 2026 ACA coverage. However, as Congress went into recess for Thanksgiving, there was no consensus on the funding of Obamacare credits or what the subsidies would look like.
GOP Proposes Cash Payments:
Some Republicans in the House have signed a bipartisan letter urging Senate leadership to initiate negotiations that involve members from both chambers to find a way to extend the enhanced tax credits for one year.
The subsidies, which were enacted during the COVID-19 pandemic, help middle-class enrollees by capping their premium payments at 8.5% of their income.
The cost of extending these tax credits is more than $30 billion per year, according to the nonpartisan Government Accountability Office.
Former President Donald Trump has opposed extending the Obamacare tax credits, claiming that they fund the “money-sucking” insurance industry. He stated on his Truth Social platform, “The only healthcare I will support or approve is sending the money directly back to the people.”
Senator Rick Scott, R-Fla., has introduced a bill that would give ACA enrollees cash through a Health Savings Account (HSA) called the Trump Health Freedom Account. The funds could be used to pay both premiums and health expenses. According to the bill, the payments would begin on January 1st.
The current ACA subsidies are based on mid-tier Silver plans as the benchmark coverage option. These plans have an average deductible of just over $5,000, according to the health policy organisation KFF.
Senator Bill Cassidy, R-La., has proposed making the lower-tier Bronze plan the benchmark for enhanced subsidies, while also providing cash to offset the higher Bronze plan deductible. According to KFF, the deductible for Bronze plans averages more than $7,000.
Cassidy explained in an interview with CNBC’s Squawk Box on Monday that his proposal would provide subsidies for the lower-tier plan, keeping out-of-pocket premium costs at levels similar to those in the Biden-era proposals.
“But we’re using a cheaper policy, so it’s easier to implement,” he said. “That gives us savings to put into a Health Savings Account.”
Switching from a Silver plan to a Bronze plan without the enhanced tax credits would not save enrollees much money. For instance, a 60-year-old couple in Florida earning $86,000 would qualify for a $0 premium on a 2026 Bronze plan with the enhanced tax credit. However, without the credit, the same plan would cost $2,169 per month, or more than $26,000 per year.
Racing the Clock:
With Congress now on Thanksgiving recess, there is less than a month left in the legislative calendar.
Getting a Health Savings Account funding measure passed and implemented by the start of coverage in the next year may not be feasible, according to Sabrina Corlette, co-director of the Centre on Health Insurance Reforms at Georgetown University.
“Conceptually, what they’re discussing is a radical restructuring of how the ACA marketplaces and tax credits work, and we’re literally days away from when people need to pay their January premiums in order to activate their coverage,” Corlette said.
Oscar Health CEO Mark Bertolini suggested that while a long-term plan where the government or employers provide consumers with cash to buy their own coverage in the marketplace is a good idea, extending the enhanced tax credits is the most practical solution for now.
“I think that’s how they’ll solve this problem, so they can get past the midterms and have time to put together a more comprehensive plan,” Bertolini said.
Enrollees Face December 15 Deadline:
Regardless of whether the tax credits are extended, the deadline to sign up for 2026 coverage remains firm. For those enrolling via healthcare.gov, the deadline is just three weeks away. In some state-run exchanges, such as those for California and Massachusetts, the deadline is January 31st.
Obamacare premiums for 2026 have spiked as insurers anticipate that some enrollees will drop out of the market, partly due to uncertainty over the extension of the enhanced premium tax credits.
Oscar Health has been working with insurance brokers to contact its members about more affordable plans.
“We believed that we could sell to 85% of those affected by the enhanced subsidies. And right now, what we’re seeing suggests it might be even more,” said Bertolini.
Larry Levitt, Executive Vice President for Health Policy at KFF, said enrollees should consider signing up by the December 15 deadline, even if Congress does not pass a premium relief measure before the end of the year. This is because the Trump administration has tightened rules around signing up outside of open enrolment.
“The premiums are still on a month-to-month basis, so you’re committing to one month’s premium. If it’s unaffordable, you can always drop out, but you can’t re-enter if you don’t sign up,” Levitt said.