Two Republican senators have introduced a plan that would send $1,000 to $1,500 directly into health care accounts for eligible Americans, reshaping how some Affordable Care Act (ACA) assistance is delivered.
Why It Matters
Roughly 23 million Americans are expected to see their health insurance costs climb starting in January, as Congress remains at a standstill over whether to renew enhanced ACA tax credits set to expire on December 31.
Democrats are pushing to extend those larger subsidies for another two or three years, while Republicans are putting forward rival ideas that change how federal support is structured.
Democrats are expected to get a Senate vote this week on their proposal to maintain the boosted ACA subsidies. The measure is widely anticipated to fail because it lacks sufficient Republican backing. However, GOP senators agreed to allow the vote after Democrats made it a condition for reopening the government following the record-breaking federal shutdown that ended last month.
What To Know
Louisiana Senator Bill Cassidy, who chairs the Senate health committee, and Idaho Senator Mike Crapo, the top Republican on the finance committee, rolled out their proposal on Monday.
According to a summary reviewed by Newsweek, “Americans cannot afford health care. They need a serious solution that provides real relief to a broken system. In line with President [Donald] Trump’s call, Republicans propose redirecting money going to insurance companies back to patients.”
Under the framework, ACA marketplace enrollees with incomes below 700 percent of the federal poverty level would receive money in a Health Savings Account (HSA):
- $1,000 for adults ages 18 to 49
- $1,500 for adults ages 50 to 64
An HSA is a tax-advantaged account that can be used to pay for qualified medical expenses. It is typically paired with a high-deductible health plan. Contributions are not taxed, investment growth is tax-free, and withdrawals for eligible health costs are also untaxed. Any unused funds roll over from year to year, allowing the balance to accumulate over time.
The proposal specifies that these federal HSA dollars could not be used for abortion or gender transition services.
The plan would also fund ACA cost-sharing reduction payments, which are designed to lower overall premiums. However, that shift would also cut back some subsidies for certain enrollees. Other elements of the proposal would expand access to low-cost “catastrophic” insurance plans and reduce Medicaid funding for states that provide coverage to undocumented immigrants.
How It Aligns with Trump’s Health Care Push
Cassidy and Crapo’s approach closely mirrors former President Donald Trump’s call to turn ACA subsidies into direct support for consumers instead of insurers. He has urged that the enhanced ACA subsidy money be routed into health savings accounts that people can tap for out-of-pocket medical expenses.
“I want to give the people better health insurance for less money,” he told Politico this week. “The people will get the money and they’re going to buy the health insurance that they want.”
Republicans have offered multiple competing blueprints. Ohio Senator Bernie Moreno has co-sponsored the Consumer Affordability and Responsibility Enhancement (CARE) Act, which would temporarily extend the ACA Premium Tax Credit and create a two-year glide path away from the pandemic-era subsidy boosts.
“Some of our folks who are working on this issue are trying to come up with something that unites Senate Republicans,” Senate leader John Thune said last week, noting that there are “consultations going on all the time with the White House.”
What Happens Next
It is still uncertain whether the Cassidy–Crapo proposal will win enough support within the 53-member Senate Republican conference. GOP senators are expected to review this plan alongside other health care ideas on Tuesday during a closed-door lunch, as the party tries to settle on a unified approach before the current ACA subsidies run out.
