Health care subsidies were a central flashpoint during last fall’s 43-day government shutdown. Now, after months of negotiations between Democrats and Republicans, prospects for extending those Affordable Care Act tax credits appear to have collapsed.
The failure to reach a deal means millions of Americans could face sharply higher health insurance premiums after the enhanced subsidies expired on Dec. 31, 2025.
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Premiums to soar
Up to 20 million people are expected to see higher premiums as a result of the lapse, according to industry estimates.
The Wall Street Journal reports that a plan, authored by Republican Sens. Bernie Moreno of Ohio and Susan Collins of Maine, is now “effectively over,” Moreno said. Sen. Bill Cassidy. R-La., agreed, while Collins described the chances of reviving talks as “certainly difficult.”
Their proposal would have extended ACA tax credits for two years, restricted eligibility for higher-income earners, eliminated zero-dollar premium plans and allowed enrollees to continue to contribute to health savings accounts (HSAs) over time.
Negotiators from both parties now acknowledge a deal is unlikely.
Abortion funding emerges as main roadblock
Lawmakers on both sides say abortion funding — and the long-standing Hyde Amendment — ultimately derailed negotiations.
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The Centers for Medicare & Medicaid Services reports 23 million Americans signed up for 2026 coverage through the ACA marketplace during open enrollment.
Under current law, ACA subsidies can be used to purchase plans that include abortion coverage, but enrollees must pay separately for that portion to ensure federal funds are not used directly for the procedure.
Anti-abortion Republicans argue the subsidies still indirectly support abortion and say that position is non-negotiable.
“Republicans will never support anything that allows federal tax dollars to be used for subsidizing abortions, period,” Moreno said.
Democrats agreed that abortion was the central obstacle. Sen. Mark Kelly of Arizona said Republicans were “dug in,” while Sen. Tim Kaine of Virginia said bluntly, “Hyde language was an obstacle.”
Kaine said Democrats met Tuesday and discussed approaching Moreno about removing the abortion ban language while pairing the bill with provisions allowing health savings accounts. President Donald Trump has repeatedly expressed support for HSAs over subsidies, arguing funds should go directly to consumers rather than insurers.
Moreno said last week that his proposal was his final offer and the furthest Republicans were willing to go.
Political fallout ahead
Senate Minority Leader Chuck Schumer blamed Republicans for the impasse, saying Democrats have pushed to extend the tax credits since last summer without success.
The enhanced ACA subsidies were first expanded in 2021 during the Biden administration, increasing eligibility and allowing people earning more than 400% of the poverty line to qualify for assistance.
With no deal in place, rising health care costs are expected to become a major issue on the campaign trail this fall, when all House seats and 33 Senate seats are up for election.
