Short-term exchange subsidies extension eyed as obstacles persist

Modern Healthcare – Wednesday, December 3, 2025
By Michael McAuliff

With a Senate vote looming, a growing number of congressional Republicans are coming around to a temporary extension of enhanced health insurance exchange subsidies.

As Congress reconvened this week after the Thanksgiving recess, lawmakers signaled that momentum is growing to take action that would mitigate the sticker shock exchange enrollees will face when their first 2026 premium payments are due. The open enrollment period began Nov. 1 and ends Jan. 15 in most states.

Yet the Republican majority remains deeply divided over whether to renew the subsidies at all and whether an extension should include other changes to the exchanges, including a ban on abortion coverage. Democrats uniformly support renewing the enhanced premium tax credits for Affordable Care Act of 2010 plans.

Senate Majority Leader John Thune (R-S.D.) promised Democrats a vote on extending the enhanced subsidies as part of the deal to end the government shutdown last month. Thune confirmed Tuesday that the vote would likely occur late next week.

Still, neither Thune, House Republican leaders nor Senate Democratic leaders have revealed what, exactly, will be up for a vote.

“Stay tuned,” Senate Minority Leader Chuck Schumer (D-N.Y.) said Tuesday. House Democrats have proposed a three-year extension.

Rep. Dr. Greg Murphy (R-N.C) said he, the White House and the GOP Doctors Caucus are working on alternatives, but conceded the appetite for a short-term renewal is growing.

“I’m going to have to hold my nose and say it needs to be extended,” said Murphy, echoing a sentiment common among House Republicans exiting a strategy meeting on Tuesday.

Senate Republicans also met Tuesday to discuss their healthcare plans, and several said afterward that the GOP would present its own proposal. But they stopped short of promising it would see the light of day before the vote, or even before the end of the year.

“We’ll see,” Thune said. “A lot of this depends a little bit on what the Democrats decide they want to do,” he said. Republicans believe they can attract Democratic support for a bill that would extend the subsidies but add income caps and other restrictions that members of the majority party favor, he said.

Senate Health, Education, Labor and Pensions Committee Chair Dr. Bill Cassidy (R-La.) is holding a hearing on healthcare costs on Wednesday that follows a Senate Finance Committee hearing two weeks ago.

If the enhanced subsidies lapse at the end of the year, financial assistance for exchange plans will revert to the level originally dictated by the ACA. President Joe Biden and the Democratic congressional majority enacted the more generous tax credits in 2021 as a COVID-19 relief measure and renewed them in 2022. In addition to offering more help, these enhanced subsidies are available to more people.

Health insurance premiums are soaring on the exchanges and throughout the market as insurers cite rising costs. In addition, insurers anticipated that President Donald Trump and the GOP Congress would allow the enhanced subsidies to expire, leading to a smaller and relatively sicker exchange risk pool, and hiked rates accordingly.

The subsidies operate on a sliding scale based on income. Low-income people who qualify for the most assistance will see little to no change in their insurance costs. But middle-income households will bear the brunt of the higher premiums and smaller subsidies because their tax credits will either diminish or disappear.

Yet many, and perhaps most, congressional Republicans remain steadfastly opposed to the ACA itself and to renewing the enhanced subsidies.

“The ACA is the problem, not the solution. Buoying up a failed program is not a solution,” said Rep. Dr. Rich McCormick (R-Ga.). “That subsidy will not solve the healthcare problem. It doesn’t do anything other than continue the false narrative that that’s the solution.”

House Speaker Mike Johnson (R-La.) would likely need Democratic votes if he goes along with a short-term extension. But first, he must come to terms with his own party. “What I’ve got to do is build consensus deliberately around the best ideas,” he said.

The abortion question casts a shadow over any negotiations between Republicans and Democrats, however. A vocal contingent of GOP lawmakers insists that exchange plans must not cover abortion.

“We’ve got to be able to provide a way that we are actually not having federal tax dollars paying for abortions,” said Sen. James Lankford (R-Okla.).

Democrats are adamantly opposed to new abortion restrictions, and have characterized the GOP effort as a backdoor attempt to ban abortion nationwide. They would be all but certain to oppose any GOP bill that included that provision.

Sen. Amy Klobuchar (D-Minn.) predicted Republicans will have to agree with them to extend the subsidies, or face the political consequences.

“We’re going to either get it done by forcing votes in the Senate, or we’re going to get it done by getting it on some piece of legislation, or we’re going to get it done by marching through into the midterms and winning,” Klobuchar said.

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