Republicans push for Obamacare tax credit alternative as deadline approaches

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

Their window to do so is rapidly closing, leaving middle-class Americans hanging in the balance.

Treasury Secretary Scott Bessent said the White House is expected to announce this week its efforts to update or replace the Affordable Care Act’s enhanced premium tax credit.

“I believe health care is going to collapse,” Bessent said in an interview on “Meet the Press” on Sunday. “There will be an announcement about that next week.”

For Shanna Verstegen and her husband, the news was long overdue. The couple buys their insurance through the ACA exchanges, but faces a 50% premium increase for their family plan in 2026 unless the enhanced tax credit is renewed by Congress.

“We’ve been looking at our spending, and everything is already so expensive and things are tough right now,” said Verstegen, a fitness instructor from Madison, Wisconsin.

Verstegen traveled to Washington during the government shutdown to advocate for expanded financial support for middle-class ACA enrollees like her family. Since the government reopened, she has been closely following the debate on Capitol Hill over the so-called Obamacare tax credit.

“I’m excited that lawmakers are finally coming to the table and talking about how to make health care more affordable. What’s frustrating to me is that we don’t have a month to do something,” she said.

Senate Minority Leader John Thune, R.S., promised Democrats that the chamber would vote on extending the tax credit expansion in mid-December as part of a deal to end a record-long government shutdown.

Dec. 15 is the deadline for most Americans to enroll in ACA coverage in 2026, but there was no consensus on what Obamacare credit funding or subsidies would look like as Congress heads home for the Thanksgiving recess.

Some House Republicans signed a bipartisan letter asking Senate leadership to engage in negotiations that include members of both chambers to find a way to extend the enhanced tax credits for another year.

The subsidy, enacted during the coronavirus pandemic, provides assistance to middle-class enrollees by capping their premium payments at 8.5% of income.

The tax credit extension would cost more than $30 billion a year, according to the nonpartisan Government Accountability Office.

President Donald Trump has opposed the extension of Obamacare tax credits, which he claims funds a “money-sucking” insurance industry, saying in a post on his platform Truth Social, “The only health care I support or approve of is sending money directly back to the people.”

Sen. Rick Scott (R-Florida) has introduced a bill that would give ACA members cash through a health savings account called the Trump Health Freedom Account, which they could use to pay both premiums and medical bills. According to the bill, the payments would go into effect on January 1.

Current ACA subsidies are based on mid-tier silver plans as the benchmark coverage option. The average deductible for these plans is just over $5,000, according to the health policy group KFF.

Sen. Bill Cassidy (R-Louisiana) proposed making lower-tier bronze plans the benchmark for subsidy enhancements, while providing cash to offset the deductibles of higher-tier bronze plans. According to KFF, deductibles for Bronze plans average more than $7,000.

Cassidy told CNBC’s “Squawk Box” on Monday that his proposal would provide subsidies to lower-tier plans and limit out-of-pocket premiums to levels similar to the Biden-era proposal.

“But we have a cheaper policy, so it’s easier,” he explained. “This gives you savings to put into a health savings account.”

Without the enhanced tax credits, enrollees won’t save much money by switching from a benchmark silver plan to a bronze plan.

For example, a 60-year-old married couple in Florida with an income of $86,000 would qualify for $0 premiums on a 2026 Bronze plan with enhanced tax credits, according to KFF’s premium calculator. Without the credits, the same plan would cost $2,169 per month, or more than $26,000 per year.

With Congress recessing for Thanksgiving, there is less than a month left in the legislative session.

Sabrina Corlett, co-director of Georgetown University’s Center on Health Insurance Reform, said it may not be possible to not only pass an HSA funding package but also implement it for coverage to begin next year.

“Conceptually, what they’re talking about is a fundamental restructuring of how the ACA markets and tax credits work, and we’re literally days away from when people have to pay their January premiums to activate their coverage,” Corlett said.

oscar health CEO Mark Bertolini said that while he supports a national plan in the long term for governments and employers to give consumers cash to buy their own insurance in the marketplace, extending the enhanced tax credit makes the most sense now.

“I think that’s the way they’re going to solve this problem, so they can get through the midterm elections and have time to put together a solid plan,” Bertolini said.

Regardless of whether the tax credit is extended, the 2026 deadline for coverage is set in stone for now. For those enrolled in the Healthcare.gov Exchange, there are only three weeks left. Some state-run exchanges, including California and Massachusetts, have a Jan. 31 deadline.

Obamacare premiums for 2026 are rising as insurers expect some enrollees to drop out of the market, due in part to uncertainty over the enhanced extension of premium tax credits.

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

“We believed we could sell to 85% of the people affected by enhanced subsidies, and what we’re seeing now probably says more than that,” Bertolini said.

Larry Levitt, executive vice president of health policy at KFF, said enrollees should consider enrolling before the Dec. 15 deadline, even if Congress fails to pass premium relief by the end of the year, as the Trump administration has tightened rules for off-the-job enrollment.

“Premiums are still monthly, so you’re committing to paying one month’s worth of premiums. If you can’t pay, you can always drop out, but if you don’t enroll, you can’t re-enroll,” Levitt said.