Lawmakers from both parties in both the House and the Senate and the Administration have begun work on a health package for Congress to consider now that the federal government has reopened. At the heart of these efforts are negotiations on whether and if so, how to extend expiring Affordable Care Act (ACA) enhanced premium tax credits (PTCs).

The effort is dominating end-of-year Congressional attention. There are sharply-opposing positions among lawmakers as well as intense efforts to find a compromise that can be enacted into law prior to the December 31 expiration of current law’s enhancements to the PTCs.

What to do about the expiring enhanced PTCs is among Congress’ current top priorities. There are, in general, three specific competing positions: extend the enhanced PTCs “as is,” let the enhancements to the PTCs expire as scheduled, and reform both the PTC enhancements and health care/insurance rules generally. Some of the specifics under discussion are:

• Enhanced HSAs: Many in the GOP are touting bigger tax-deductible contributions to health savings accounts (HSAs) along with lower out of pocket cost limits on the high deductible health plans (HDHPs) that must accompany HSAs. A key Republican Senator, Sen. Bill Cassidy (R-LA), chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, has suggested a similar approach, but using flexible spending arrangements (FSAs) rather than the HSA-HDHP program. Also in play is a rule that would allow combining the less expensive (but with higher deductibles and co-pays) exchange-based bronze and catastrophic health insurance plans (as the required HDHP) with more generous subsidies for HSAs.

• Subsidies for low and moderate income health insurance buyers: Bipartisan discussions among centrist lawmakers in both the Senate and the House are focused on an enhanced ACA PTC compromise proposal. The goal is to identify a modified extension of the expiring PTCs that can win the 60 votes in the Senate and 218 votes in the House needed to pass the legislation. The modifications under discussion include a time-limited extension, a mandatory minimum premium payment, an income cap on eligibility for the PTC enhancements, and a ban on abortion coverage. Each of these elements has a significant number of Senators and House members either totally opposed, or insisting on inclusion. A compromise will depend on threading the needle to find enough votes in both chambers for a package that contains more elements that lawmakers can support with fewer provisions they do not like but can live with.

• A compromise plan offered by the House’s Problem Solvers Caucus chair, Rep. Brian Fitzpatrick (R-PA), would extend the enhanced PTCs with income limits, required minimum premium payments, more flexibility for HSAs, and possibly new rules applicable to pharmacy benefit managers (PBMs).

• A bipartisan proposal offered by Reps. Don Bacon (R-NE), Tom Suozzi (D-NY), Jeff Hurd (R-CO), and Josh Gottheimer (D-NJ) would extend for two years current law PTCs with modifications. The modifications include income caps, anti-fraud measures, and a lengthened open enrollment window.
• A Senate GOP proposal, which failed on a 91 to 48 vote on December 11, offered by Sens. Bill Cassidy (R-LA) and Mike Crapo (R-ID)—favored by Majority Leader Sen. John Thune (R-SD)—that would not extend the enhanced PTCs, but instead would authorize deposits by the federal government into individuals’ HSAs where the individuals have chosen ACA bronze or catastrophic (copper) coverage. The deposits would be $1,000 for each eligible individual between the ages of 18 and 49 and $1,500 for each individual between the ages of 50 and 64. The proposal contains a ban on use of funds for abortion or gender transition services and for Medicaid-covered services. It would also exclude abortion and gender transition services from exchange-based insurance minimum essential benefits. In addition, the Cassidy-Crapo plan would require verification of citizenship for Medicaid eligibility and would reduce federal Medicaid payments to states that provide coverage to illegal immigrants.
• A House GOP proposal, released on December 12, would let ACA enhanced PTCs expire. Also excluded from the proposal is language allowing diversion of subsidies from insurers to individuals’ HSAs. Instead it would set up what House Republicans call premium-reducing measures.

These premium-reducing proposals would:

(1) codify the association health plan (AHP) rules (offered by the first Trump Administration but rescinded by the Biden Administration) that would broaden eligibility for joining an AHP to obtain large employer type health insurance

(2) make stop loss health insurance available (without violation of ACA rules) to self-insured plans

(3) establish CHOICE accounts—plans under which employers can make tax-free contributions to employees’ health savings accounts that the employees can use to buy individual health insurance

(4) reform pharmacy benefit manager (PBM) rules

(5) fund cost-sharing reductions (CSRs)—which, proposal sponsors say, would guarantee reimbursement to insurance companies that could then reduce silver plan premiums to reflect these CSR payments. Silver plan premium amounts are the benchmark used to determine affordability, a key element for qualifying for the subsidies.

• A Senate proposal authored by Sens. Bernie Moreno (R-OH) and Susan Collins (R-ME) would extend enhanced PTCs for two years, subject to an income cap on eligibility of $200,000 and a $25/month mandatory minimum premium payment.

• More robust association health plan (AHP) rules: Another GOP proposal is to strengthen AHPs, plans under which small businesses and self-employed individuals can band together to purchase more affordable group health insurance coverage.

• More incentives for low-cost health insurance: Republican lawmakers are discussing expanded availability and/or incentives for short-term limited duration (STLD) health insurance.

It appears likely that House GOP leadership will allow a vote on one or more amendments that would extend enhanced PTCs, at least for a year or two, with modifications. Those modifications are likely to include anti-fraud guardrails like, for example, requiring a mandatory minimum premium payment. They may also include authority to divert the enhanced PTC premium subsidies to individuals’ HSAs rather than paying them to insurance companies.

The Democrats’ position is to seek a three-year extension of current law (without modifications) enhanced PTCs. That failed on a December 11 Senate vote of 51 to 48. It is also likely to fail in the House if House leadership permits a vote on it.

Also in play in these discussions are modifications to both Medicare (especially Medicare Advantage) and Medicaid.

Prospects: Most Washington insiders believe a solution to the enhanced PTC issue will not come before January 30, the deadline Congress faces for funding the government’s discretionary spending for fiscal year (FY) 2026. The pressure is intense, with both Republicans and Democrats concerned about the impact (huge health insurance premium spikes) of letting the enhanced PTCs expire. Few are willing to confidently predict the outcome—odds are just as good for a failure to agree on a compromise (and thus letting the enhanced PTCs expire) as they are for a solution that can win majority support in both chambers (and be signed into law by the President). It is worth noting that so far President Trump has not signaled support for any of the pending plans.

The House GOP health reform proposal is expected to fail to pass the Senate, even if it does pass the House (an outcome that is not by any means certain). A House vote on the GOP House health reform proposal is expected before December 19, when Congress is scheduled to recess for the holidays.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.