Senate Republicans want the enhanced premium subsidies to expire and be replaced with expanded HSAs while Democrats want a “clean” three-year extension of the subsidies borne out of COVID-era overspending.
As Congress barrels toward its year-end recess, the fight over the future of Obamacare has reached a familiar impasse: rising premiums, expiring subsidies, partisan stalemate, and competing visions for how—if at all—the Affordable Care Act should be fixed. With enhanced pandemic-era premium tax credits set to expire at the end of the month, lawmakers in both chambers are scrambling, but the odds of a clean resolution before the holidays remain slim.
The Senate rejected two competing health care bills, neither of which could clear the 60-vote threshold. Democrats pushed for a three-year extension of the enhanced ACA subsidies, while Republicans countered with a narrower reform proposal centered on expanding Health Savings Accounts (HSAs) and pairing them with lower cost “bronze” insurance plans. Republican Sen. Mike Crapo of Idaho authored the bill along with Sen. Bill Cassidy (R-LA), who is also a doctor. The failure of both bills underscores how deeply divided Congress remains over whether to preserve Obamacare through subsidies or restructure it around consumer-directed care.
Critics of the Democratic approach argue that extending subsidies only papers over the ACA’s structural weaknesses. As Senate Minority Leader Chuck Schumer put it, Democrats were offering a “clean three-year extension of ACA tax credits.” To opponents, that cleanliness is precisely the problem. They contend Obamacare relies on ever-expanding taxpayer subsidies to mask high premiums and limited coverage, with benefits increasingly flowing to higher-income households as costs rise. Those concerns are compounded by findings from the Government Accountability Office showing widespread fraud in the subsidy system, including fictitious enrollments and weak income and identity verification.
The Crapo-Cassidy proposal attempted a more incremental shift. Their plan would have allowed consumers to use existing tax credits to purchase lower-cost bronze plans paired with HSAs, with monthly contributions deposited directly into accounts controlled by patients. The idea was to redirect federal support away from insurers and toward individuals. While modest by reform standards, the bill still failed, leaving advocates of broader change arguing that Senate inaction may open the door to more sweeping alternatives.
That argument is central to proposals from Sen. Rand Paul, who has called for repealing Obamacare outright and replacing it with market-based reforms. Paul’s framework would eliminate income caps on HSAs, sharply raise contribution limits, broaden eligible uses, and expand Association Health Plans that allow coverage through professional, religious, or civic groups across state lines. Free-market health policy experts have long championed these ideas as a way to restore consumer choice, portability, and price discipline—goals they say subsidies alone cannot achieve.
In the House, Republican leaders are racing to pass their own health care package before adjournment. Speaker Mike Johnson has committed to holding a vote on legislation that would restore funding for cost-sharing reductions (CSRs), which reimburse insurers for offering lower copays and deductibles to certain enrollees. When CSR payments were halted in 2017, insurers responded with “silver loading,” raising premiums on mid-tier plans to compensate. Supporters argue restoring CSR funding would lower premiums and, according to the Congressional Budget Office, even reduce the federal deficit by shrinking premium tax credit outlays.
Notably, the House GOP bill does not extend the enhanced premium tax credits. That omission has put leadership at odds with moderate Republicans from swing districts, who fear voter backlash if premiums spike next year. Those moderates, led by Rep. Brian Fitzpatrick of Pennsylvania, are pushing an amendment to extend the subsidies for two years with tighter eligibility rules. Conservative leaders, however, insist any extension be offset with spending cuts—an estimated $35 billion per year—setting up a standoff that now threatens to derail the fragile agreement to allow a vote at all.
The procedural and political risks are substantial. If moderates fail in committee, they could oppose the broader GOP package or turn to discharge petitions to force floor votes on bipartisan subsidy-extension bills. Democrats are watching closely, weighing whether to support those efforts while criticizing the Republican plan as insufficient. House Minority Leader Hakeem Jeffries has labeled the GOP bill “toxic legislation,” arguing it fails to provide certainty for families who rely on the subsidies.
Meanwhile, the broader debate over Obamacare is increasingly shaped by concerns about fraud and improper paymentsd. GAO investigations have found that more than 95 percent of fictitious ACA applications it submitted were approved, with insurers and brokers collecting taxpayer dollars on fake enrollees. The agency also documented duplicate enrollments, payments tied to invalid Social Security numbers, and even coverage issued to individuals listed as deceased. Last year alone, the federal government identified $162 billion in improper payments across programs, reinforcing critics’ claims that expanding subsidies without stronger controls invites abuse.
Against this backdrop, a bipartisan group of senators is quietly exploring a compromise. Meeting behind closed doors, roughly two dozen lawmakers have discussed a two-year subsidy extension paired with an income cap, fraud prevention measures, renewed CSR funding, and greater HSA flexibility. While time constraints make passage this year unlikely, participants describe the talks as constructive, even as issues like abortion funding remain unresolved.
Adding another dimension to the debate, Sen. Rick Scott has unveiled the More Affordable Care Act, which would preserve the ACA’s exchanges and protections for pre-existing conditions while shifting federal support into HSA-style “Trump Health Freedom Accounts.” The proposal aims to send taxpayer dollars directly to families rather than insurers, allow shopping across state lines, enhance price transparency, and expand options for small businesses. Scott’s bill has the support of the Foundation of Government Accountability.
For now, Congress appears stuck between extending subsidies that critics say prop up a broken system and embracing reforms that shift power to consumers. With premiums rising, fraud concerns mounting, and elections looming, the unresolved question is whether lawmakers will once again opt for a temporary fix—or finally confront the deep policy flaws that embody Obamacare.
