Senate appears polarized as health care subsidy cliff nears

WASHINGTON — GOP health panel leaders in the Senate on Wednesday seemed intent on quickly implementing a health savings account proposal to replace expiring health care tax credits that subsidize insurance plans used by millions of Americans, despite increased skepticism from Democrats and even some House Republicans.

During a Senate Finance Committee hearing on health care affordability, lawmakers largely stuck to party-line questioning over skyrocketing costs for Affordable Care Act health plans, suggesting no easy compromise is imminent.

The ACA’s enhanced subsidies, relied on by roughly one-third of enrollees to lower premiums, expire Dec. 31. Before that deadline, by mid-December, the Senate is expected to vote on a bill of Democrats’ choosing under a promise by Senate Majority Leader John Thune, R-S.D., to party moderates in exchange for their votes to reopen the government earlier this month.

As it stands, there likely will be votes on competing health care affordability bills, each of which is seen by the opposite side as highly partisan.

Finance Chairman Michael D. Crapo, R-Idaho, said a bipartisan solution was still possible. He referenced the need to work on telehealth flexibility, clinical payment reform and oversight of pharmacy benefit managers.

But his remarks and questioning focused on transitioning away from the enhanced health subsidies toward providing individuals with funds in health savings accounts that could be used to pay for some medical expenses. Health, Education, Labor and Pensions Chair Bill Cassidy, R-La., who also serves on Finance, has led efforts on shaping that proposal.

Bronze plans

Cassidy deflected Democrats’ concerns that shifting eligible ACA enrollees to HSA-style accounts would be unwieldy given changes to how bronze-level plans — the lowest-cost option on the exchanges — are classified under the 2025 GOP reconciliation law. That law designated bronze plans as high-deductible health plans that are eligible for use with HSAs starting next year.

Rather than adding a layer of complexity, Cassidy argued that reconciliation law change would make his plan easier to implement, as ACA enrollees could simply select bronze plans and top them off with the new, beefed-up HSAs.

Several House Republicans have said the idea has merit but isn’t ready to be implemented.

Ron Wyden, the Finance panel’s ranking member, maintained that the only solution for Democrats was a clean extension of the COVID-19-era subsidies — the “bare minimum” before delving into longer-term problem-solving.

“There is a health cost freight train, I would say to my colleagues, that is hurtling into view as we speak,” said Wyden, D-Ore. “There is no way for Congress to put together a proposal in the next couple of weeks that’s going to help people in January. It just can’t be done.”

The idea of heath savings accounts hasn’t been embraced by some members who are looking to work across the aisle.

Sen. Jeanne Shaheen, D-N.H., who’s among the Democrats working on a bipartisan path to extend the enhanced credits, said she’s not sold on Cassidy’s proposal.

“It doesn’t address the immediate need that people have because health savings accounts expressly prohibit using the funding to pay for premiums, and it’s the premium increase that people are concerned about,” Shaheen said in a brief interview Tuesday.

Abortion

Members also butted heads on whether any extension of the credits or other changes should include abortion-related language.

“It is imperative that any reforms explicitly restore the long-standing consensus that taxpayer dollars should not subsidize and facilitate health plans that cover elective abortions,” Sen. Steve Daines, R-Mont., said.

Sen. Tina Smith, D-Minn., blamed the focus on the abortion language on advocacy by the anti-abortion group SBA Pro-Life America.

“They are working to use this health care crisis as another way of getting basically a national ban on insurance paying for abortion care … even if people are paying for it with their own money,” Smith said.

Wyden said that adding Hyde amendment language, which bans federal funding of abortion, into the tax code was a nonstarter.

“I want to make the point now very clearly that on our watch, on this side of the dais, that’s not going to happen,” he said.

At least one senator was frustrated by the lack of progress.

“We’ve got to stop having this cross talk and talking past each other,” said Sen. Thom Tillis, R-N.C. “We are not going to get anything out of this hearing.”

“You can argue whether or not the subsidies should have been passed but they are what they are and people are reliant on them,” Tillis said. “It makes more sense to extend it and bend the curve in the out years.”

Timing

Witnesses at the Finance hearing emphasized the time-sensitive nature of the issue.

Douglas Holtz-Eakin, president of the American Action Forum, was skeptical that much could be done for plan year 2026.

“The plans have been designed, the premiums have been set,” Holtz-Eakin said. “There’s very little that this Congress can do to change the outlook.”

Brian Blase, president of the Paragon Health Institute, suggested that lawmakers take three actions in the short term.

“Congress should expand more affordable and flexible coverage options for families and small employers without new federal spending,” said Blase, who served in the first Trump administration.

He also called for appropriating funds for cost-sharing reductions for some silver-level plans, while letting lower-income individuals use Cassidy’s health savings model.

“At this point, the only feasible option is a clean extension of the existing enhancements,” said Jason Levitis, senior fellow in the health policy division at the Urban Institute. “Putting in place a new policy would require months or years of implementation, setting aside the need to negotiate and pass a bill.”

Levitis said that while it was important to consider longer-term options, new policies could also require building and deploying new information technology systems or establishing new rulemaking or state insurance regulations.

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