No consensus in Congress on healthcare subsidies

In the leadup to the holiday recess, Republicans in Congress find themselves between a rock and a hard place. Should they extend much-debated Obamacare subsidies or take the hit for higher premiums in an election year?

Of the six floated proposals in the House and the Senate, none look likely to garner enough bipartisan support to pass.

“The Republican caucus is sometimes a herd of cats and a room full of rocking chairs,” Sen. Bill Cassidy, R-La., told reporters on Tuesday of his own proposed reform bill. “I can’t entirely promise, but I think that we’re going to have very strong Republican support.”

But the bill includes measures that cross the line for Democrats, who have their own bill up for consideration that crosses the line for Republicans. Amid the stalemate, President Donald Trump has been largely silent about his preferences. Meanwhile, more Americans are signing up for Obamacare this year than in previous years.

With Senate Democrats united behind their plan and Republicans divided between several proposals—all of which disagree with House versions—no bill appears likely to get the 60 votes required in the Senate by Dec. 31, when the enhanced subsidies expire.

“It takes two to tango. Would anybody want to dance with me? I’m by myself,” said Cassidy, who chairs the Senate Committee on Health, Education, Labor and Pensions. “There’s some dances you can do by yourself. Passing a healthcare bill is not one of them.”

Health insurers are raising premiums by an average of 26% for next year, according to healthcare research organization KFF. The vast majority of enrollees receive a tax credit, in part due to enhanced subsidies added to the initial ones during the COVID-19 pandemic. After a short-term extension, those subsidies are set to expire on Dec. 31. While lawmakers agree that the pandemic is over, enrollees who have the enhanced subsidies could see their monthly premiums more than double once those subsidies expire.

But according to research from the Paragon Health Institute, Affordable Care Act costs have been steadily rising for more than a decade, which prompted the subsidies in the first place.

“I remember President [Barack] Obama saying, ‘Oh, if you pass this, your premiums will go down by $2,500 a family a year.’ Instead, premiums doubled,” Sen. John Barrasso, R-Wyo., told reporters on Tuesday. Then Democrats passed reforms to the ACA to further subsidize premiums by paying insurance companies. “At this point, over 90% of premiums are subsidized by the federal government. Obamacare was always pricey. It was never affordable,” Barrasso said.

Instead of funding the subsidies, a bill from Cassidy and Senate Finance Committee chair Mike Crapo, R-Idaho, would put the federal money toward health savings accounts to the tune of $1,000 to $1,500 per eligible consumer. That includes people who are enrolled in a bronze or catastrophic ACA plan and earn up to seven times the federal poverty level. Cassidy said this would lower premiums by allowing more people to sign up for the less expensive bronze plan and supplement it with HSA funds, which cannot be used for premium payments but can be used for health expenses that the insurance doesn’t cover, such as doctor bills or prescription medication.

“If you listen to the president’s political opinion, in which he says that he wants the money to go to the patient, not to the insurance company, that is our proposal. We give the money to the patient directly,” Cassidy told reporters.

Republican leaders waited roughly a week after Cassidy proposed his plan to finally get behind it. Meanwhile, rank-and-file members offered their own proposals, most of which would temporarily extend the very subsidies that Democrats want. On the House side, a bipartisan group of lawmakers also proposed a two-year extension.

But after a caucus lunch on Tuesday, Senate Majority Leader John Thune, R-S.D., said any extension would not fly with the Republican Party. He urged the conference to unite behind Crapo and Cassidy’s version.

Meanwhile, Senate Democrats have again planted their flag in an effort to extend the subsidies. Republicans promised them a vote on enhanced subsidies in exchange for voting to end the government shutdown last month. The current proposal from the caucus would extend the subsidies for three years, a nonstarter for Republicans. It would also add roughly $300 billion to the federal deficit, according to the Committee for a Responsible Federal Budget.

“We’ve got a very broken system, and the subsidies do nothing to correct the underlying issue,” Sen. Steve Daines, R-Mont., told me. “We’ve got incentives in place that raise healthcare costs, not decrease them.”

A recent Gallup poll found that a record 57% of Americans approve of the ACA. Another KFF survey released last week found that 51% of enrollees find it difficult to afford their premiums each month. Nearly 84% of enrollees, including 7 in 10 Republicans, said Congress should extend the tax credits. That could equate to dissatisfied voters in next year’s midterm elections.

In October, 13 House Republican centrists, most of whom are considered vulnerable for reelection, wrote a letter to House Speaker Mike Johnson, R-La., urging him to bring ACA reform bills to the floor.

“While we did not create this crisis, we now have both the responsibility and the opportunity to

address it,” the lawmakers wrote. “Allowing these tax credits to lapse without a clear path forward would risk real harm to those we represent.”

The feeling is mutual among vulnerable Senate Republicans.

“In literally three weeks, people are going to be seeing these increases become real. We need to keep that from happening, and so a short-term extension is going to be required,” Sen. Lisa Murkowski, R-Alaska, said in a news conference in Anchorage last week.

But conservative analysts like John Shelton, policy director at Advancing American Freedom, say Republican lawmakers are not bound to do anything about the subsidies. He told me that even the Crapo-Cassidy bill would continue throwing federal money at a healthcare system that needs reform.

“Even these alternatives are going to cost a lot. There’s still going to be government subsidies. It’s just a question of who the subsidies are going to go to,” Shelton said. “I think there’s a good deal of heartburn in doing this. It’s clear that lawmakers don’t want to get caught having no plan for dealing with these premium increases that are coming.”

Democrats say the Crapo-Cassidy plan to fund HSAs is too big of a change too late in the year. While many are open to reforms Republicans want, such as introducing income caps and copays, their red line is extending the enhanced subsidies.

“It’s introducing a whole new profound policy debate that guarantees that nobody will have time to evaluate it,” Sen. Peter Welch, D-Vt., told me. “Families who depend on the tax credits for their healthcare need an answer right away. We can extend them as long as what we’re talking about is maybe an income cap or a modest copay. But if you’re introducing a whole new concept, transforming it to HSAs, that’s a fierce policy debate. And it’s a proposal that has no prospect of passage in the next two weeks.”

During the government shutdown, Trump said he was open to bipartisan talks on healthcare subsidies but only after Democrats voted to restore federal funding. But since then, there have been no meetings with congressional Democrats at the White House.

At a speech on the economy in Pennsylvania on Tuesday, Trump called Obamacare a scam and reiterated that he wants to bring down healthcare costs and send money directly to the enrollees rather than the insurance companies. But he did not say specifically how he wants Congress to accomplish that.

Asked by reporters on Air Force One whether he supported the Crapo-Cassidy bill, Trump was noncommittal: “I love the idea of money going directly to people, not to the insurance companies,” he said. “It can be in the health savings accounts, it can be in a couple of different ways.”