The House voted Thursday to advance a three-year extension of enhanced Affordable Care Act (ACA) subsidies. Seventeen Republicans joined Democrats to pass the legislation.
The bill is unlikely to pass in the Senate. However, lawmakers there may be nearing a separate bipartisan agreement that would also revive the tax credits — a significant move after months of gridlock.
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The developing Senate plan
The developing Senate plan would extend the enhanced ACA tax subsidies for two years, but would add several Republican-backed restrictions including a minimum monthly premium of about $5 and an income cap of roughly $110,000 a year for a single person or $220,000 for a family of four.
The proposal would also introduce new cost-sharing reduction measures and steep anti-fraud penalties for insurers that add “phantom enrollees” — people who appear in a health insurer’s enrollment records as having active coverage but who did not knowingly sign up for a plan.
Republican politicians have long pushed for subsidies to be paid directly to Americans via health savings accounts rather than to insurance companies. The proposed Senate plan would allow ACA recipients to begin receiving such deposits in their accounts in 2027.
Sen. Bernie Moreno, R-Ohio, one of the lead negotiators, said Wednesday that the group is close to finalizing legislative language. Sen. Susan Collins, R-Maine, and Dick Durbin, D-Ill., who are also involved in ongoing discussions, said progress has been made, though several issues remain unresolved.
What are enhanced ACA subsidies?
The enhanced tax credits — introduced during the pandemic and extended through 2025 — expanded ACA subsidies by removing the income cap and significantly lowering premiums, often to $0, for many lower-income enrollees. Last October, a political deadlock over further extending these subsidies led to the longest-ever shutdown of the federal government. In November, Democrats agreed to reopen the government in exchange for a promised vote on the issue.
Several policymakers introduced alternative proposals to address rising health care costs and the ACA subsidies. In December, the Senate blocked votes on two of those bills: the Republican-backed Health Care Freedom for Patients Act, which did not extend the subsidies, and a Democratic plan that did.
Rising health costs
Some 20 million Americans faced skyrocketing health insurance premiums as the enhanced subsidies expired at the end of 2025. Across all ACA recipients, premium payments more than doubled, from an average premium payment of $888 in 2025 to $1,905 in 2026. For a household earning $85,000, the annual cost for health insurance premiums alone increased by $22,000 from 2025 to 2026.
That is on top of already increasing health care costs.
Between 2019 and 2020, health spending increased by 10.4%, followed by another 7.5% between 2022 and 2023, when total spending reached almost $5 trillion. Today, 20% of the country’s gross domestic product is spent on health care. That means that $1 out of every $5 spent in the U.S. goes toward health care.
Neither the House nor the pending Senate plan addresses the root causes of high health costs in the U.S.
Editor’s Note: A previous version of this story incorrectly reported that health spending increased 10.4% between 2019 and 2020 and then 7.5% between 2021 and 2022. The correct timeframe for the 7.5% increase is 2022–2023. Straight Arrow News regrets the error, and the article has been updated to reflect the correct information.
