Republicans push Obamacare tax credit alternatives as deadline looms

While enhanced Obamacare tax credits are scheduled to expire at the end of the year, Republicans are proposing new alternatives aimed at lowering the cost of health care.

Their window to do so is quickly closing, leaving middle-class Americans in limbo on balance.

white house is expected to make an announcement Efforts to renew or replace the Affordable Care Act’s enhanced premium tax credits were discussed this week, according to Treasury Secretary Scott Bessent. But the announcement was delayed in part due to congressional backlash, MS Now reported, according to two White House officials.

The news couldn’t come soon enough for Shana Verstegen and her husband. The couple buys insurance through the ACA exchange and faces a 50% premium increase on their family plan in 2026 if increased tax credits are not renewed by Congress.

“We’ve been looking at our expenses, and it’s hard right now because everything is already so expensive, there’s little room to cut costs. We’re looking at a few activities that our kids do and things like that,” said Verstegen, a fitness instructor from Madison, Wisconsin.

Verstegen traveled to Washington during the government shutdown to advocate for increased financial support for middle-class ACA enrollees like her family. He has been warily watching discussions on Capitol Hill over so-called Obamacare tax credits since the government reopened.

“I’m excited to see lawmakers finally sit down and talk about ways to make health care more affordable. It frustrates me that we have less than a month to do something,” he said.

Senate Majority Leader John Thune, R.S.D. has promised Democrats that the chamber will vote in mid-December on extending enhanced tax credits as part of a deal to end the record-long government shutdown.

December 15 is the deadline for a majority of Americans to sign up for 2026 ACA coverage, and as Congress heads into Thanksgiving recess, there was no consensus on Obamacare loan financing or what those subsidies would look like.

Some Republicans in the House signed a bipartisan agreement letter We call on Senate leadership to engage in negotiations that include members from both chambers to find a way to extend the enhanced tax credits for one year.

The subsidies enacted during the Covid pandemic provide relief to middle-class enrollees by limiting the share of premium payments to 8.5% of their income.

Expanding tax credits would cost more than $30 billion a year, according to the nonpartisan Government Accountability Office.

President Donald Trump opposed the extension of Obamacare tax credits, which he said funded a “money sucking” insurance industry, stating in a post on the Truth Social platform: “The only healthcare I would support or approve of would be to send money directly back to the public.”

Sen. Rick Scott, R-Fla., introduced a bill This will give ACA enrollees cash through a Health Savings Account called the Trump Health Freedom Account, which they can use to pay for both premiums and healthcare expenses. According to the bill, payments will be valid as of January 1.

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 organization KFF.

Sen. Bill Cassidy, R-La., proposed making the lower-tiered Bronze plan the benchmark for enhanced subsidies while providing cash to offset the higher Bronze plan. The Bronze plan’s deductibles average more than $7,000, according to KFF.

Cassidy told CNBC’s “Squawk Box” on Monday that his proposal would provide subsidies for the lower-tier plan and cap out-of-pocket premium costs at levels similar to the Biden-era proposal.

“But we use a cheaper policy, so it’s easier to do,” he explained. “This gives us savings that we can put into a Health Savings Account.”

Switching from a comparative Silver plan to a Bronze plan without enhanced tax credits won’t save enrollees much money.

For example, a 60-year-old couple earning $86,000 in Florida would be eligible for a $0 premium in a 2026 Bronze plan with an increased tax credit. Premium calculator from KFF. Without the credit, the same plan would cost $2,169 per month or more than $26,000 per year.

With Congress on Thanksgiving recess, the legislative calendar is less than a month away.

According to Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, the HSA funding measure may not only be passed but also implemented to start coverage next year.

“Conceptually, they’re talking about a radical restructuring of how the ACA marketplaces and tax credits work, and we’re literally days away from when people have to pay January premiums to activate coverage,” Corlette said.

Oscar Health CEO Mark Bertolini said a national plan where the government or employers give consumers cash to buy their own insurance on the market is something he supports in the long term, but extending enhanced tax credits makes the most sense right now.