An ObamaCare deadline has collided with a fight over government funding, as Democrats are signaling they want Republicans to extend the law’s expiring premium subsidies before they support any bill to keep the government open.
Without action, enhanced tax credits passed during the COVID-19 pandemic to help people afford coverage will expire at the end of the year. Congress has extended the subsidies twice, but now Republicans control the entire government and many are content to let the subsidies expire.
Yet, some in the GOP are showing openness to some type of extension by year’s end. But government funding expires on Sept. 30, and Democratic leaders want to leverage the earlier deadline to extract concessions on health care and other issues.
“On this issue, we’re totally united. The Republicans have to come to meet with us in a true bipartisan negotiation to satisfy the American people’s needs on health care or they won’t get our votes, plain and simple,” Senate Democratic Leader Chuck Schumer (N.Y.) told reporters Thursday.
Here’s what to know about the fight so far.
Why is this happening now?
If Congress is going to pass any kind of subsidy extension, they don’t technically have to act until the end of the year. Lawmakers are notorious for waiting until the last possible minute to extend an expiring program.
But insurers are setting their rates now, and open enrollment for people with plans on the Affordable Care Act’s (ACA) exchanges begins Nov. 1. Some people are already receiving notices of substantial rate hikes. If Congress waits until the end of the year, most Healthcare.gov customers will have already selected plans.
According to a Congressional Budget Office (CBO) analysis, about 4 million people will drop out of ACA plans in the first year after the extra subsidies are discontinued. Those people are likely to be relatively young and healthy, leaving a pool of sicker, more expensive patients — leading to even higher premiums in subsequent years.
Even if the tax credit is extended later, some consumers may never return.
What is the benefit of the enhanced tax credits?
In short, they make health plans affordable for more Americans.
Tax credits to help people on ObamaCare plans afford their premiums have been available since the law passed, but they were capped at enrollees making four times the federal poverty level — $103,280 for a family of three in 2024.
During the pandemic, Democrats increased the amount of the credit and expanded eligibility to more middle-income people.
Eligible applicants can use the credit to lower insurance premium costs upfront or claim the tax break when filing their return.
As a result, enrollment in ObamaCare health plans doubled to more than 24 million, helping to reduce the number of Americans without health insurance.
What happens if the subsidies expire?
Almost everyone who is enrolled in a plan on the ACA exchange is receiving a subsidy.
If they expire, premiums are likely to spike. According to health research group KFF, premiums are expected to increase by more than 75 percent on average, with people in some states seeing their payments more than double.
More than 24 million Americans are enrolled in the insurance marketplace this year, and about 90 percent — more than 22 million people — are receiving enhanced subsidies.
Since 2020, enrollment in the ACA marketplace has grown faster in the states won by President Trump in 2024 — primarily rural, Southern states that haven’t expanded Medicaid.
According to a recent KFF survey, 45 percent of Americans who buy their own health insurance through the ACA exchanges identify as Republican or lean Republican. Three in 10 said they identify as “Make America Great Again” supporters.
What are the GOP politics?
Republicans opposed ObamaCare in 2010, and were also united against the two Biden-era laws that created, and then extended, the enhanced tax credits for patients during the pandemic.
But the tax credits have become an integral part of the law, and explaining to millions of Americans — and GOP voters — why their health insurance premiums are suddenly too expensive for them to afford could be politically unpopular.
GOP leaders are feeling some pressure.
Senate Majority Leader John Thune (R-S.D.) has said he is open to discussing legislation to extend the subsidies, but he said Democrats need to present them with a plan, and not as part of a government funding deal.
The CBO said permanently extending the subsidies would cost $358 billion over the next 10 years. Many Republicans have balked at the cost. They argue the credits hide the true cost of the health law and subsidize Americans who don’t need the help. They also argue the subsidies have been a driver of fraudulent enrollment by unscrupulous brokers seeking high commissions.
Republicans declined to include a subsidy extension as part of their tax and spending cut legislation over the summer. The absence was notable given the law’s deep cuts to Medicaid and other sweeping changes it makes to the health care system, and GOP leaders are likely looking to insulate their party against Democrats’ health care attacks.
Eleven GOP lawmakers have endorsed legislation extending the benefits for one year, punting the issue beyond the midterm elections. Most of them are vulnerable front-liners facing tough reelection contests.
