Republicans offer alternatives to Obamacare tax credit as deadline approaches

As Obamacare’s enhanced tax credits expire at the end of the year, Republicans are proposing new alternatives aimed at lowering the cost of health care.

Their window to achieve this is closing quickly — and leaving middle-class Americans uncertain about the scales.

The White House is expected to make an announcement this week regarding efforts to renew or replace the Affordable Care Act’s enhanced premium tax credits, according to Treasury Secretary Scott Bessent. However, MS Now belatedly reported that an announcement was delayed in part because of congressional backlash, according to two White House officials.

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

“We’ve looked at our expenses, and it’s hard now because everything is already very expensive,” with little room to cut costs,” said Verstegen, a fitness instructor from Madison, Wis. “We’re looking at some activities that our kids are doing and things like that.”

Verstegen traveled to Washington during the government shutdown to advocate for extending financial support to middle-class ACA enrollees like her family. Since the government reopened, she has been following discussions on Capitol Hill around the so-called Obamacare tax credits with suspicion.

“I’m excited that lawmakers are finally at the table and discussing ways to make health care more affordable. What frustrates me is that there’s less than a month left to do anything,” she said.

Senate Majority Leader John Thune, RS.D., promised Democrats that the House would vote on extending the enhanced tax credits in mid-December as part of a deal to end a record government shutdown.

Dec. 15 is the deadline for the majority of Americans to sign up for 2026 ACA coverage, and as Congress returned home for the Thanksgiving holiday, there was no consensus on funding the Obamacare credits or what those subsidies would look like.

Some House Republicans signed a bipartisan letter urging Senate leaders to lead negotiations that include members of both chambers to find a way to extend the enhanced tax credits for another year.

The subsidies, put in place during the Covid pandemic, provide assistance to middle-class enrollees by capping their share of premiums at 8.5% of income.

The cost of expanding tax credits is more than $30 billion a year, according to the nonpartisan Government Accountability Office.

President Donald Trump has opposed an expansion of Obamacare tax credits that he says fund the “money-sucking” insurance industry, saying in a post on his Truth Social platform: “The only health care system I will support or approve of is sending money directly back to the people.” »

Sen. Rick Scott, R-Fla., introduced a bill that would give money to ACA enrollees through a health savings account called the Trump Health Freedom Account, which they could use to pay for both premiums and health care expenses. According to the bill, the payments would be effective from 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 health policy organization KFF.

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

Cassidy told CNBC’s “Squawk Box” on Monday that his proposal would provide subsidies for the lower-tier plan, limiting premium costs to levels similar to a Biden-era proposal.

“But we use a less expensive policy, so it’s easier to implement,” he explained. “This gives us savings to put into a health savings account.”

Moving from a baseline Silver plan to a Bronze plan without the enhanced tax credits would not save enrollees much money.

A 60-year-old couple in Florida earning $86,000, for example, would qualify for a $0 premium on a Bronze 2026 plan with an enhanced tax credit, according to a KFF premium calculator. Without the credit, the same plan would cost $2,169 per month, or more than $26,000 per year.

With Congress away for the Thanksgiving holiday, there is less than a month left on the legislative calendar.

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

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

Oscar Health CEO Mark Bertolini said a national plan in which the government or employers would give consumers money to buy their own coverage on the marketplace was something he supported in the long term, but that expanding enhanced tax credits made the most sense now.

“I think this is how they’re going to solve this problem, so they get past the midterm elections and have time to come up with a comprehensive plan,” Bertolini said.

Whether or not the tax credits are extended, the deadline to sign up for 2026 coverage remains firm for now. For those signing up for the Healthcare.gov exchange, it’s only three weeks away. On some state-run exchanges, such as those in California and Massachusetts, the deadline is January 31.

Obamacare premiums for 2026 have climbed as insurers expect some enrollees to exit the market, in part because of uncertainty over whether enhanced premium tax credits will extend.

Oscar Health works with insurance brokers to offer its members more affordable plans.

“We thought that of the people affected by the increase in subsidies, we could sell to 85% of them. And right now, what we are seeing may say more,” Bertolini said.

KFF Executive Vice President for Health Policy Larry Levitt said enrollees should consider enrolling before the Dec. 15 deadline, even if Congress fails to pass a premium relief measure before the end of the year because the Trump administration has tightened enrollment rules outside of open enrollment.

“Premiums are always monthly, so you commit to a month’s premium. If it’s unaffordable, you can always drop out, but you can’t come back if you don’t sign up,” Levitt said.