ACA Subsidy Expiration Spurs Renewed Congressional Action Amid Rising Premiums

Enhanced Affordable Care Act (ACA) health insurance subsidies, which provided financial assistance to millions of Americans, expired at the close of last year. This expiration is projected to result in increased premium costs for many enrollees, with some individuals reporting significant rises. Following a period of legislative stalemate and failed attempts to extend the subsidies prior to their expiration, Congress is now undertaking renewed efforts, including a scheduled House vote on a three-year extension and ongoing bipartisan negotiations in the Senate for a compromise measure.

Background and Impact of Expiration

The enhanced ACA health insurance subsidies, initially enacted in 2021, were designed to make health insurance marketplace plans more affordable. Their expiration has led to concerns about healthcare accessibility, with some subscribers indicating they may forgo health insurance due to affordability challenges.

Senator Jeanne Shaheen (D-N.H.) has stated that current insurance rates are observed to be increasing, in some instances doubling or tripling for individuals, and that a lack of congressional action could lead to many losing coverage.

Initial Legislative Attempts and Stalemate

Leading up to the subsidies' expiration, congressional efforts to secure an extension faced significant division.

Partisan Proposals in the Senate

In the Senate, both a Democratic-preferred bill for a three-year extension and a Republican counter-proposal failed to garner sufficient votes. The Democratic bill, which aimed for a standalone three-year extension without additional reforms, received support from four Republican Senators: Susan Collins (Maine), Lisa Murkowski (Alaska), Dan Sullivan (Alaska), and Josh Hawley (Missouri).

Republican Counter-Proposal

Spearheaded by Senators Bill Cassidy (R-La.) and Mike Crapo (R-Idaho), the Republican Senate proposal included provisions for up to $1,500 annually in Health Savings Accounts (HSAs) for eligible Americans earning below 700% of the federal poverty level. These funds were intended for expenses other than premiums and were restricted from being used for abortion services or gender reassignment. This plan was rejected by Democrats, who cited concerns about its limited assistance for premium costs and the included restrictions.

House Proposals

House Speaker Mike Johnson (R-La.) introduced a health reform package containing conservative-favored ideas, such as association health plans, but it did not include an extension of the expiring ACA subsidies. House Democrats consistently advocated for a standalone three-year extension, similar to the Senate Democratic proposal.

Post-Expiration Congressional Actions

With the subsidies having expired, legislative efforts have intensified in the new year.

House Initiatives

The House of Representatives is scheduled to vote on a measure proposing a three-year extension of the enhanced health insurance subsidies. This vote was compelled by a discharge petition signed by four House Republicans from swing districts, alongside Democrats, bypassing House Speaker Mike Johnson's previous stance against scheduling such a vote. Supporters acknowledge that a standalone extension is unlikely to pass the Senate but aim for the House's success to stimulate bipartisan negotiations in the upper chamber.

Senate Negotiations

A bipartisan group of senators is reportedly nearing a compromise bill concerning the ACA subsidies. Senator Peter Welch (D-Vt.) and Senator Bernie Moreno (R-Ohio) have indicated progress in these discussions. Potential elements of a compromise include:

• A two-year extension of the subsidies.
• Implementation of reforms such as an income cap or co-payments.
• Penalties for insurers involved in fraud.
• An option for patients to deposit funds into a Health Savings Account during the second year, shifting from direct government subsidies to insurance companies.
• Extension of open enrollment to allow individuals who discontinued policies due to premium increases to re-enroll.

Areas of disagreement persist, particularly regarding specific language to prohibit the use of federal funding for abortion services.

Divergent Perspectives and Proposals

Support for Extension

Democrats have actively sought to extend the subsidies, citing the impact of rising healthcare costs on constituents and viewing it as a key campaign issue. Some Republicans, including Representatives Kevin Kiley (R-Calif.) and Marjorie Taylor Greene (R-Ga.), have also expressed concern regarding the impact on individuals, such as small business owners and early retirees, and have supported calls for an extension despite historical criticism of the ACA.

Opposition and Alternatives

Many Republicans, including Senator Bill Cassidy (R-La.), have characterized the ACA as the "Unaffordable Care Act" and argue that subsidies primarily benefit insurance companies rather than addressing underlying cost issues. Former President Trump has voiced a preference for direct financial assistance to individuals for healthcare costs over tax credits for ACA plans. Speaker Johnson has articulated a shift in Republican strategy from "Repeal and Replace" the ACA to "Reduce and Repair" it, acknowledging its integration into the healthcare system.

Public Opinion and Political Context

Surveys have indicated broad public support for extending the enhanced subsidies across the political spectrum. Data suggests that over half of ACA marketplace enrollees reside in Republican congressional districts, encompassing demographics such as rural residents and small business owners. Historically, the ACA's passage in 2010 without Republican votes initiated long-running legislative conflicts. The popularity of the ACA has increased over time, with recent polling indicating greater favorability than when it was first enacted. Democrats anticipate that congressional inaction on extending subsidies will be a significant campaign issue in upcoming elections.

Outlook and Concurrent Legislative Matters

The House vote on the three-year subsidy extension is anticipated to proceed, though its fate in the Senate remains uncertain as negotiations for a compromise continue. The Senate is scheduled to reconvene on January 5, and the House of Representatives on January 6.

Concurrently with these healthcare discussions, lawmakers are addressing other pressing legislative matters, including an anticipated Senate vote concerning U.S. foreign policy questions regarding Venezuela and the January 30 deadline to fund the government, failure of which could lead to a partial shutdown. The House is also expected to vote on overriding two presidential vetoes issued prior to the new year.