A Senate vote to extend the pandemic-era subsidized insurance payments is expected in December before the tax credits expire at the end of the year. But President Donald Trump said he won’t support an extension and will only approve legislation that sends money directly to American consumers. A Senate Finance Committee hearing on rising health care costs debated possible options.
Congress faces a looming deadline as enhanced Affordable Care Act (ACA) tax credits are set to expire at year’s end. Without an extension, millions of Americans could see steep premium increases. But opponents believe the funding is unsustainable and want to address the root causes of increasing health care costs.
The expiring subsidies were at the center of the Republican-Democratic standoff over a spending bill that led to the longest government shutdown in history. The government finally reopened earlier this month when a group of Democratic Senators broke rank and agreed to the spending bill with a promise of a later vote on the expiring credits. But on Tuesday, Trump announced on Truth Social that he won’t support any legislation to extend the subsidies.
Senate holds hearing on health care costs
Some of the possible short-term and long-term alternatives were discussed on Wednesday during a Senate Finance Committee hearing on the rising cost of health care and meaningful solutions. The 2 ½ hour hearing included witness testimony from Paragon Institute President Brian Blasé, Ph.D.; American Action Forum President Douglas Holtz-Eakin, Ph.D.; and Jason Levitis, senior fellow for the health policy division at Urban Institute.
The impact of health care costs on every day Americans was amplified by witness Bartley Armitage from Eugene, Ore.. who expects he and his wife will see their health care premiums skyrocket from $443 to $2,224 a month next year for a bronze tier plan with a high deductible unless Congress agrees to extend the subsidies.
Armitage said he and his wife are worried they will have to deplete their retirement savings to pay for health care. “Making health care affordable for everyone is the type of thing we expect our tax dollars to go toward,” he told the committee. "On behalf of millions of other American families who are facing the same shock that we are, I urge you to take action that keeps our health costs affordable before we're hit with a massive bill like this January, literally overnight.”
Although there is bipartisan agreement that there is a need to bring health care costs under control, Republican Senators are reluctant to extend the subsidies and instead are considering other approaches, such as depositing funds into tax-preferred health savings account (HSA). But that option may not help Americans like the Armitages because in general, HSA funds can’t be spent on premiums.
Levitis urged the committee to extend the subsidies while they consider longer-term options. There isn’t enough time before the end of year to create a system that would allow the marketplaces to work with the Treasury Department to transfer money to the fiscal intermediatory that runs these accounts for 2026, he said.
“Beyond that,” Levitis said, “Mr. Armitage needs health insurance and giving him a few thousand dollars in an account is not going to make a difference. He can’t buy a short-term plan right now because he has a pre-existing condition. He won’t even get the HAS because he can’t afford a bronze plan.”
In addition to depositing money into HSAs, committee members discussed other long-term options to help control health care costs, including:
- Potential bipartisan legislation for pharmacy benefit manager reform to realign incenters in the drug supply chain to lower patient costs at the pharmacy
- Leveraging provisions in the tax code to increase medical expense deductions to help patients defray high out-of-pocket prices.
- Funding cost-sharing reduction subsidies to mitigate out-of-pocket costs for low-income enrollees and reduce premiums for all ACA plans by more than 10 percent