President Donald Trump is expected to announce a new proposal to address health care costs as early as Monday, targeting the expiration of Affordable Care Act subsidies that could double premiums for millions of Americans. This move comes as the administration seeks to avert a potential crisis in insurance affordability and coverage.
The enhanced ACA subsidies, originally enacted in 2021 as part of Covid-19 relief, are set to lapse at the end of the year, threatening to more than double premiums for many enrollees and potentially leave an additional 2 million people uninsured, according to analyses by KFF and the Congressional Budget Office. These subsidies have been crucial in making health insurance accessible to nearly 22 million individuals, and their expiration would disproportionately impact middle-class families who benefited from the removal of income caps. The Trump administration’s proposal aims to provide a conservative alternative to the current system, though specific details remain fluid and subject to change.
In response to political pressures, the framework under discussion includes temporarily extending the subsidies but with new restrictions designed to address Republican concerns. These may involve reinstating an income cap at 400% of the federal poverty level and requiring all enrollees to pay at least a minimal monthly premium, which would mark a shift from the current zero-premium options available to some. This approach seeks to balance affordability with fiscal responsibility, while also curbing fraudulent activities that have arisen from the existing subsidy structure.
The proposal emerges against a backdrop of intense partisan conflict, as Democrats recently ended a government shutdown by securing a Senate Republican commitment to hold a mid-December vote on extending the subsidies in exchange for continued government funding through January. This compromise has accelerated the administration’s efforts to draft a competing plan, highlighting the deep ideological divisions over health care policy and the ongoing debate about the role of government in ensuring access to insurance.
A key component of the plan is its focus on reducing fraud, particularly incidents where brokers enrolled individuals in zero-premium plans without their knowledge to earn commissions. By mandating that even lower-income enrollees contribute something toward their premiums, the proposal aims to diminish incentives for such practices and promote more transparent and ethical enrollment processes. This adjustment is intended to protect consumers while maintaining the subsidies’ core benefits.
Additionally, the proposal may incorporate options for enrollees to redirect part of their federal subsidies into health savings accounts (HSAs), aligning with Trump’s recent calls to give individuals direct control over health care funds rather than channeling money through insurance companies. GOP Senators Rick Scott and Bill Cassidy have championed similar ideas, with Scott’s plan allowing the full subsidy to be used for a wider range of insurance options and Cassidy’s focusing on enhanced subsidies for HSA use to cover out-of-pocket expenses like doctor visits and prescriptions.
The framework could also include provisions to expand the availability of non-ACA health plans, reflecting long-standing conservative priorities for increasing market competition and choice. Beyond subsidies, Trump is expected to urge Congress to codify his ‘Most Favored Nation’ drug policy, which involves voluntary agreements with pharmaceutical companies to lower U.S. prescription drug prices by tying them to those in other countries. If the subsidies expire, Democrats plan to highlight the negative consequences in the upcoming midterm elections, recalling how health care issues swayed voters in the 2018 races. This proposal represents a significant step in the evolving landscape of U.S. health care, with implications for affordability, access, and the future of the Affordable Care Act.
