How healthcare plans compare ahead of key Obamacare vote

As a deadline approaches for renewing enhanced Affordable Care Act tax credits, the Senate is preparing to vote on two competing proposals—one from Democrats and one from Republicans—that will shape health care costs for millions next year.

Senate Majority Leader John Thune said both plans will be put to a vote on Thursday, following a historic government shutdown sparked by a stalemate over health care costs.

The two proposals take very different approaches: Democrats want to extend the enhanced premium tax credits for three years, while Republicans want to replace much of that support with one-time Health Savings Account deposits and other changes to insurance options.

Democrats

Democrats want to preserve the enhanced subsidies first introduced during the pandemic. These larger premium tax credits lowered the cost of insurance for millions by expanding eligibility and increasing the size of the financial assistance.

Before 2021, people earning more than 400 percent of the federal poverty level were cut off from help entirely. The enhanced rules removed that cap and instead based assistance on how much of a person’s income would be consumed by premiums. Anyone whose benchmark Silver plan costs more than 8.5 percent of their income qualifies for help, regardless of how much they earn.

The result has been especially significant for people with lower or moderate incomes. Many households between 100 and 150 percent of the poverty level now have access to $0 premium Silver plans, and even middle-income families have seen substantial savings.

If Congress lets the enhancements expire, the system snaps back to the old rules overnight. The 400 percent cutoff returns, which would cause many middle-class families to lose all subsidies, even if premiums in their area remain high. Lower-income households would also lose the reduced payment caps that today keep their premiums low or free.

Republicans

The Republican proposal, introduced by Senators Bill Cassidy and Mike Crapo, takes a different approach. It would give eligible enrollees a deposit in a Health Savings Account (HSA) — $1,000 for adults aged 18 to 49 and $1,500 for those aged 50 to 64.

A HSA is a tax-advantaged account used to pay for qualified medical expenses, typically paired with a high-deductible health plan. Contributions aren’t taxed, earnings grow tax-free, and withdrawals for eligible costs are also untaxed. Funds can roll over from year to year.

The bill would also keep cost-sharing reduction payments (which lower some out-of-pocket costs), widen access to low-cost catastrophic plans, and reduce Medicaid funding to states that cover undocumented immigrants.

“Americans cannot afford health care. They need a serious solution that provides real relief to a broken system,” a summary of the bill reads. “Republicans propose redirecting money going to insurance companies back to patients.”

Health policy experts note that the one-time HSA contributions would likely be considerably smaller than the financial protection enhanced premium credits currently provide—especially for older or middle-income adults.

Dylan Roby, chair and professor of health, society, and behavior at UC Irvine Joe C. Wen School of Population & Public Health, told Newsweek that a 60-year-old earning 600 percent of the poverty level could see their premiums rise by about $500 a month if subsidies end.

While the Republican plan would give them $1,500 in an HSA, Roby pointed out that it wouldn’t help them pay premiums and would only offset a fraction of what they would spend in a high-deductible bronze or catastrophic plan.

Will the Bills Pass the Senate?

Both bills are expected to fall short of the 60 votes needed to move forward. The votes are likely to serve more as political statements than as genuine paths toward resolving the subsidy issue.

What Happens If ACA Enhanced Subsidies Expire?

Without the enhanced credits, premiums will rise for many, particularly people who fall just above the old 400 percent cutoff. Some could see increases of several hundred dollars per month. Low-income enrollees who now qualify for $0 premium plans would lose them, and the share of their income required for coverage would increase.

The Bipartisan Policy Center estimates that a family of four earning $45,000—who currently has access to a $0 premium plan—would face premiums of about $1,600 a year if the credits expire. A 60-year-old couple earning a little over 400 percent of poverty could see their annual premium climb to roughly $22,600, about a quarter of their income.

The Congressional Budget Office estimates that permanently extending the 2021 premium tax credits would raise the deficit by $350 billion over 2026—2035 and increase insured Americans by 3.8 million by 2035.

Health care affordability in the U.S. remains a ripe concern. Virgil Bretz, CEO of MacroHealth, told Newsweek that both parties are offering “temporary stopgap measures” that do not tackle the underlying drivers of rising health care prices.

“We are all forced to make this expensive decision between two bad choices because we are experiencing a health care affordability crisis,” he said.

“Unless the underlying causes of accelerating health care costs are addressed,” he said, efforts to lower what patients pay “will be just that, temporary.”