A menu of options is starting to emerge around what a compromise might look like for extending a suite of Affordable Care Act tax credits, which have become a focal point in the current government funding standoff.
With the shutdown about to enter its third week, Speaker Mike Johnson and Senate Majority Leader John Thune continue to insist that any negotiation over the future of the enhanced Obamacare subsidies will need to happen after the government reopens.
Behind the scenes, however, Republicans on Capitol Hill and inside the Trump administration are discussing potential pathways to prevent the tax credits from expiring at the end of the year.
According to two people granted anonymity to share details about private discussions, some members of the House GOP leadership circle are having early, informal conversations with officials from the White House Office of Legislative Affairs and the Domestic Policy Council to develop a framework for a deal.
As they await President Donald Trump’s buy-in, members of House Republican leadership have discussed imposing minimum out-of-pocket premium payments for ACA enrollees, according to one of the people familiar with the internal conversations.
Ultimately, whatever they come up with has to be something not only Democrats can accept but also Republicans, who are sharply divided over whether to extend the credits at all. Some GOP lawmakers say the subsidies are fueling waste, fraud and abuse; others see political peril in letting them lapse, causing premiums to skyrocket and millions to lose health insurance.
“About 90 percent of members of our conference, they feel strongly … that Obamacare itself and the subsidies have failed,” House Majority Leader Steve Scalise (R-La.) told reporters Friday. “It’s helped insurance companies pack their bottom line, but it’s crushed families who are paying higher premiums.”
But the increased back-channeling inside the GOP is a strong sign the administration is preparing for eventual negotiations on the tax credits and possible wider health policy changes.
“I think what we’re seeing is the dam breaking here,” said House Appropriations ranking member Rosa DeLauro (D-Conn.) on a call with reporters Friday.
Here are some of the policy options currently under consideration among Republican negotiators that could become the basis for an agreement — or, at the very least, an opening offer.
New income limits
Conservatives complain that the expansion of the tax credits under former President Joe Biden removed income caps on the credits, which had previously restricted the subsidies to individuals making below four times the poverty line.
Key GOP negotiators in the House indicate openness to imposing new income caps. They include Reps. Jen Kiggans of Virginia and Brian Fitzpatrick of Pennsylvania, who are touting bipartisan legislation to extend the subsidies for a year.
Influential Democrats — such as Senate Appropriations ranking member Patty Murray of Washington and House Ways and Means ranking member Richard Neal of Massachusetts, have not rejected this proposal out of hand. Murry, for instance, has noted that the vast majority of beneficiaries of the credit make below $200,000 already.
Several Republicans in the bipartisan House Problem Solvers Caucus have likewise privately floated a $200,000 income cap.
Minimum out-of-pocket premiums
Paragon Health Institute, an influential conservative health policy think tank, has been hammering Republicans with data indicating there are millions of “phantom enrollees” in the ACA — individuals who don’t know they’re enrolled in plans because the premiums are fully subsidized by taxpayers. This has sparked interest among conservatives in mandating a minimum out-of-pocket payment to unlock eligibility.
“It doesn’t have to be big, but if you get a notice for a five-buck premium, all of a sudden, you’re like, ‘Wait a minute, what?’” said Sen. Dan Sullivan in an interview. The Alaska Republican is part of a “working group” of GOP senators trying to come up with a conservative framework for extending the subsidies.
Cutting off enhanced tax credits for new enrollees
Allowing current enrollees continued access to the enhanced tax credits could emerge as a palatable compromise and blunt the impact of premium hikes set to take effect this fall. The “grandfathering” of the subsidies would likely be accompanied by other guardrails to root out waste and fraud in the health plans.
But Melanie Egorin, a professor at the University of Virginia and a former Health and Human Services official under the Biden administration, points out that policy would be particularly tough as the labor market softens and people lose their Medicaid coverage due to new work requirements enacted through the GOP megabill over the summer.
“Creating a grandfathering [mechanism] in a time where the economy is not looking so great for many Americans, feels really unfair,” she said in an interview.
New abortion restrictions
Democrats and Republicans disagree in the first place whether the tax credits truly subsidize plans that cover abortion. But influential anti-abortion groups, such as Susan B. Anthony Pro-Life America, have mounted fierce campaigns to convince lawmakers and the public the plans make the procedure more affordable.
Conservatives sympathize with the argument, but the anti-abortion messaging campaign has in many ways made the policy fight more intractable. Sen. Jeanne Shaheen of New Hampshire, the top Democratic negotiator on the issue, and Sen. Ron Wyden of Oregon, the senior Democrat on the tax-writing Finance Committee, have already indicated that abortion restrictions are a nonstarter for any deal on the larger issue.
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