Sky-high premiums

Obamacare customers with sky-high premiums will get no help through Cassidy’s plan, Democrats and policy experts say.

With the enhanced subsidies set to expire at the end of the year, Democrats say they see no choice but to extend them

By Robert King

It’s too little, too late for Sen. Bill Cassidy’s (R-La.) Obamacare subsidy compromise.

That’s the message from health policy experts and Democrats on Cassidy’s proposed middle ground over Congress’ stalemate on expiring enhanced Obamacare subsidies.

Democrats are rallying around an extension of the subsidies that go away after this year. They maintain, along with some policy experts, that Cassidy’s approach would do very little to help consumers with skyrocketing premiums — assuming it could even be implemented in time.

“We insist that the ACA tax credits have to be renewed and extended, period,” said Senate Minority Leader Chuck Schumer (D-N.Y.). “Cassidy’s proposal, as I understand it, replaces them. Looks like it’s privatizing health insurance, and it looks like it’s really problematic.”

The fierce pushback to Cassidy’s proposal, the most publicly detailed so far from a Republican, highlights the difficulty in finding consensus on the issue in a divided Congress by the end of the year.

Cassidy’s plan, which has not yet been written up as a bill, involves taking money for an enhanced tax credit used to pay down premiums and giving it to consumers via a health savings account. The base tax credit passed as part of the original Affordable Care Act will remain in place.

An HSA can be used to pay for various out-of-pocket costs like a deductible or a co-pay. However, it cannot go toward premiums, which are set to more than double on average in 2026 for Obamacare customers due in part to the loss of the enhanced subsidies. Other factors include surging health costs.

There are some major caveats to Cassidy’s plan, experts say.

There are four tiers for ACA plans: platinum, gold, silver and bronze. Each plan must cover the same benefits, but the cost-sharing amounts are wildly different.

For instance, a bronze plan has low premiums but higher co-pays and deductibles, whereas a gold or platinum plan has the opposite.

To get an HSA, an Obamacare customer must buy a bronze tier plan. It is the only tier allowed to have an HSA, and customers of the other three plans would no longer receive any additional help with the loss of the enhanced subsidies. They would, however, continue to get the original base level ACA tax credit.

The dollar amount a person will get in their HSA is based on their income level. Lower income individuals who buy a bronze plan will get a higher HSA amount.

The average deductible for a bronze plan for next year is projected to be $7,476, much more than the weighted average of $2,912 across all metal plan tiers, according to an analysis from the health policy research firm KFF.

Under a bronze plan, the insurer picks up 60 percent of health costs and the consumer pays the remaining 40 percent. In comparison, a gold plan picks up 80 percent of the costs, but has a higher premium.

It’s unclear how much would go into the accounts, but experts say the HSA will not do much to offset the large premium spikes that will result from the loss of the enhanced subsidies. KFF estimates out-of-pocket premiums Obamacare customers pay will go up by 114 percent on average in 2026 compared to this year. Open enrollment began Nov. 1 and customers in some states are seeing even higher spikes.

“It’s not going to make people whole in terms of offsetting the premium hikes,” said Gideon Lukens, senior fellow and director of research and data analysis for the think tank Center for Budget and Policy Priorities.

Sen. Jeanne Shaheen (D-N.H.) added that the HSA “doesn’t address the immediate need that people have, because HSAs expressly prohibit using the funding to pay for premiums, and it’s the premium increase that people are concerned about.”

Shaheen was one of eight Democratic Caucus members who broke with their party and voted to reopen the government earlier this month. She and other Democrats would be pivotal to any bipartisan deal on the Obamacare subsidies.

Other members of the bloc of eight demurred when asked whether they support Cassidy’s proposal, saying that it is too late to work on such a major reform now.

“That’s not the discussion for the next few weeks, because the idea that the American public — I know what Virginians think. They’re really used to the tax credits. They like them,” said Sen. Tim Kaine (D-Va.).

Conservative experts defended Cassidy’s proposal during a hearing Wednesday in the Senate Finance Committee, arguing an HSA gives consumers more control over their health spending.

Brian Blasé, a former Trump administration official who leads the think tank Paragon Health Institute, said during the hearing an HSA could lead to a 15 to 20 percent reduction in “the overall health care spending for [a] family. It turns out when they have that control, Americans can be wise consumers and make good decisions.”

The White House has not explicitly endorsed Cassidy’s plan, but President Donald Trump has said he wants a direct payment to consumers rather than a subsidy extension.

Short deadline

Time is a pressing concern among lawmakers on both sides of the aisle.

Senate Majority Leader John Thune agreed to hold a vote on the subsidies in the second week of December. Even if enough senators agree to a deal, it must still pass the House.

Several moderate House Republicans are skeptical lawmakers can come to agreement in roughly a month on any deal.

“I think it is a longer-term plan you can do,” said retiring Rep. Don Bacon (R-Neb.). “I don’t think we can get this done in the next month. I do think we need a deeper discussion.”

Experts also caution throwing such a big change into an already chaotic 2026 open enrollment.

With open enrollment set to end in January, people are picking plans without the enhanced subsidy, but some states said they could quickly move to update their systems to reflect new rates if a subsidy extension is passed.

However, it may take longer to implement an HSA provision, experts say.

“Insurers had not priced their plans in [that] way,” said Cynthia Cox, vice president and director of the ACA program at KFF. “They assume however many people who got a bronze plan this year will get a bronze plan next year.”

Cassidy pushed back, telling reporters Tuesday that the legal framework for a bronze plan HSA was already created under the One Big Beautiful Bill Act.

“That makes it much easier,” he said.

Cassidy added that the rates, which were approved by states and are already being viewed by consumers, will stay the same under his proposal.

“It is just an issue of now you have some money to help pay your deductible and co-pay.”