Senate Republicans are circulating competing health care proposals ahead of a key Thursday vote to extend Affordable Care Act (ACA) subsidies for three years. The Democratic-sponsored proposal to extend the subsidies is expected to fail, and it is not clear when, or if, senators will vote on the new Republican plans.
Sens. Mike Crapo, R-Idaho, and Bill Cassidy, R-La., drafted the Health Care Freedom for Patients Act. The proposal does not extend the current tax credit approach, in which the federal government offsets the price of health insurance by paying insurance companies directly.
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Instead, the bill calls for the Department of Health and Human Services to deposit money into health savings accounts, or HSAs. These are specific savings accounts that allow individuals to put in pre-tax dollars to use for qualified medical expenses. ACA enrollees who earn less than 700% of the federal poverty level — roughly $110,000 a year for a single person or $210,000 for a family of four — would receive $1,000 if they’re 18 to 49 years old or $1,500 if they are 50 to 64, according to a public summary of the plan.
Republicans have long argued that the ACA tax credits do not lower health costs or insurance premiums but rather direct billions of dollars to insurance companies, boosting their profits and covering their overheads. Democrats disagree, arguing that an HSA approach would simply create a more circuitous route to banks and health insurance companies.
Although details are sparse, the proposal is aligned with President Donald Trump’s previous statements about ACA subsidies.
“THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE, WITH NOTHING GOING TO THE BIG, FAT, RICH INSURANCE COMPANIES, WHO HAVE MADE $TRILLIONS, AND RIPPED OFF AMERICA LONG ENOUGH,” Trump posted on Truth Social on Nov. 18.
The legislation would also expand a prohibition on federal funds for abortion to gender transition services.
Two other Republican senators — Susan Collins of Maine and Bernie Moreno of Ohio— released an alternative health care bill Monday. The CARE Act proposes to extend the ACA subsidies for two years and introduce an income eligibility cap of $200,000 per household. Collins and Moreno also propose to eliminate zero-cost insurance plans, requiring all enrollees to pay $25 per month for coverage to reduce the risk of fraud.
Skyrocketing health costs
Health care costs and the ACA were flashpoints in the budget debate that led to October’s record-setting federal government shutdown. For more than a month, congressional Republicans and Democrats were deadlocked over extending the expiring subsidies currently offered to more than 20 million Americans who purchase health insurance through ACA marketplaces.
Health spending in the U.S. has skyrocketed in recent years, outpacing inflation. This open enrollment season, health insurance premiums increased by nearly 30%. That’s in addition to previous hikes: Between 2019 and 2020, health spending increased by 10.4%; it climbed by another 7.5% from 2022 to 2023.
Total health spending reached almost $5 trillion in 2022, accounting for nearly 20% of the country’s gross domestic product. That means that $1 out of every $5 spent in the U.S. goes toward health care.
