The government shutdown has reopened the debate over what has been a central issue for both major political parties over the past fifteen years: the future of health care under the Affordable Care Act.
Tax credits for people who buy health insurance through the marketplaces created by the Affordable Care Act, also known as Obamacare, are set to expire at the end of this year.
Democrats say they will not vote to reopen the government until Republicans negotiate an extension of expanded subsidies. Republicans say they won’t negotiate until Democrats vote to reopen the government. Lawmakers from both parties have been working behind the scenes on possible solutions, hoping leaders will eventually start talking, but it is unclear whether the two sides can find a compromise.
As Congress circles the issue, a poll from the Associated Press-NORC Center for Public Affairs Research found that about six in 10 Americans are “extremely” or “very” concerned about their health care costs rising in the coming year. These concerns span age groups and include people with and without health insurance, the poll found.
A look at the subsidies that are expiring, the politics of the ACA, and what Congress could do:
Enhanced premium assistance during the pandemic
The ACA, which was passed in 2010, was intended to reduce the number of uninsured people in the country and make coverage more affordable for those without private insurance. The law created state-by-state exchanges, some of which are operated by the individual states, to try to increase the pool of enrollees and lower rates.
In 2021, as Democrats controlled Congress and the White House during the COVID-19 pandemic, they expanded the premium assistance already in law. The changes include eliminating premiums for some lower-income enrollees, ensuring that higher earners paid no more than 8.5% of their income and expanding eligibility to middle-class people.
The expanded subsidies pushed enrollment to new levels and brought the number of uninsured people to an all-time low. This year, a record 24 million people signed up for insurance coverage through the ACA, largely because billions of dollars in subsidies have made the plans more affordable for many people.
If the tax credits expire, annual out-of-pocket premiums are estimated to rise 114% — an average of $1,016 — next year, according to an analysis by KFF.
Democrats are pushing to expand subsidies
Democrats extended these tax credits for another three years in 2022, but failed to make them permanent. The appropriations expire on January 1, with Republicans now in full control.
Out of power and sensing a political opportunity, Democrats used some of their only leverage and forced a government shutdown over the issue when federal funding ran out on October 1. They say they won’t vote for a House-passed bill to reopen the government until Republicans give them some assurance that subsidies will be extended.
Democrats introduced legislation in September to permanently extend the premium tax credits, but they have suggested they would be open for a shorter period.
“We need serious negotiations,” Democratic Senate Majority Leader Chuck Schumer has said repeatedly.
Republicans are again trying to roll back the ACA
The Democratic demands on health care have revived long-standing Republican complaints about the ACA, which they campaigned against for years and tried and failed to repeal in 2017. Many in the party say that if Congress acts, they want to eliminate the expanded subsidies and overhaul the entire law.
The problem is not expiring subsidies, but “the cost of health care,” Republican Senator Rick Scott of Florida said on Tuesday.
In a virtual briefing Tuesday, the libertarian Cato Institute and the conservative Paragon Health Institute labeled the subsidies as President Joe Biden’s “COVID credits,” claiming they allowed fraudsters to sign people up for fully subsidized plans without their knowledge.
Others have introduced more modest proposals that could potentially win over some Democrats. Senate Majority Leader John Thune, R-S.D., has said he is open to expanding the subsidies with changes including lower income limits and a freeze on automatic enrollment that would allow people to sign up who don’t need the coverage.
The ACA is “desperately in need of reform,” Thune said.
Republicans in the House of Representatives are considering their own ideas for reforming the ACA, including proposals to phase out subsidies for new enrollees. And they have begun discussing whether to combine health care reforms with a new funding bill and send it to the Senate for consideration once they return to Washington.
“We will likely negotiate an off-ramp” to ease the transition back to pre-COVID-19 levels, said Maryland Rep. Andy Harris, the head of the conservative House Freedom Caucus, during a virtual town hall on Tuesday.
Is a compromise possible?
A number of Republicans want to extend the subsidies. Sen. Josh Hawley, R-Mo., said most people who use the exchanges created by the ACA “don’t really have another option, and it’s already very, very expensive. So I think there are things we can do to reform the program.”
Hawley said he has had conversations with other senators about what those changes might be, including proposals for income limits, which he said he considers “very reasonable.”
Bipartisan groups of lawmakers have discussed the income limits and other ideas, including making those with the lowest incomes pay very low premiums instead of nothing. Some Republicans have advocated for that change to ensure that all enrollees are aware they have and need coverage. Other proposals would extend the subsidies for a year or two or slowly phase them out.
It’s unclear whether any of these ideas could gain traction on either side — or any interest from the White House, where President Donald Trump has largely remained aloof. Despite the public impasse, however, lawmakers feel a greater urgency to find a solution as the Nov. 1 open enrollment date approaches.
Democratic Senator Jeanne Shaheen of New Hampshire has been speaking with lawmakers since the shutdown began, trying to find compromises. On Tuesday, she suggested that Congress could also look at extending enrollment dates for the ACA as Congress is stuck on subsidies.
“These costs will affect all of us, including our healthcare system,” she said.
Associated Press writers Lisa Mascaro and Joey Cappelletti in Washington and Ali Swenson in New York contributed to this report.
—Mary Clare Jalonick, Associated Press
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