The ACA Subsidies Fight Hits the House Floor

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. It's a new year, but lawmakers are having the same old fight over Affordable Care Act subsidies. The House of Representatives is expected to vote today on a three-year extension of pandemic-era subsidies that lowered the cost of insurance for millions of Americans, a proposal that already failed in the U.S. Senate. Those subsidies expired at the end of December, and now a new deadline looms. Americans looking to purchase an ACA plan only have until January 15th in most states to choose their insurance for the year ahead. Without the subsidies, those plans are a lot less affordable.

1:44The rates are now currently up. On average, they're expected to about double. That varies greatly depending on your age and where you live, how much health care is available in your area. that sort of thing. Bloomberg's Caitlin Riley covers Congress, and she's been tracking the policy debate and the impact it could have on Americans. About 24 million people are enrolled in the ACA. Upwards of 90 percent of those people got these enhanced premium subsidies that went into place during the pandemic. Now, many Americans are trying to figure out what insurance they can afford. The rising costs are expected to result in nearly 4 million people losing health care over the next decade, according to the Congressional Budget Office.

2:29What I've gotten from people I've spoken to is just a tremendous amount of anxiety and anguish. People seem to be really putting off making a decision because they have only very bad options. One person Caitlin spoke with is Carrie Van Meveren. Carrie owns a management consulting business in Missouri. She's done a lot of work for state and local governments, and small business owners like Carrie are disproportionately reliant on the Obamacare subsidies. I'm 54. I have a history of blood clots. And the last time that I was in the ER, if I hadn't had insurance, it would have been$30 ,000. And that was just an ER visit.

3:07Carrie has decided to re-enroll in ACA coverage for 2026. But without the guarantee of those subsidies, she's had to choose a new plan with higher monthly premiums. I ended up picking a very high deductible plan that has much higher co-pays. It has much higher out-of-pocket max. So it becomes a risk policy, not a health care policy, because you can't afford to use it. Even as lawmakers face the end of open enrollment next week, my colleague Caitlin Riley says it remains uncertain whether Democrats and Republicans can reach a compromise. All of this is still very much a long shot, but we are expecting to see more activity in the coming weeks.

3:51And even if all of that fails because it's a midterm election year, we don't expect this issue to go away.

4:03I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, how an intractable battle over how to lower health care costs could wind up keeping them high.

4:21When the calendar flipped to 2026, the cost of health insurance jumped for millions of Americans. The average premium is expected to increase 114 % this year, according to KFF. That's a nonpartisan health research organization. It's a lot of people who are affected by this. It's about 7 % of the total population, though that's not evenly distributed. Enrollment's really high in red states, typically in the South, that didn't expand Medicaid under the Affordable Care Act. So that's kind of the mix of people we're seeing affected. And I think it's important to distinguish there are two sets of subsidies.

5:01The first set of subsidies, which helps people on the lower income side of the scale, went into place when the law was established. Those will remain in place. The subsidies that we're typically talking about when we talk about this are a set of tax credits that were enacted during the pandemic by Democrats. And those are allocated to the insurance companies in these exchanges to keep premiums lower for people making less than four times the poverty level. This lowered costs further for them. That subset of people were already getting subsidies. We'll continue to get some subsidy. It's just a less generous subsidy.

5:39it made a huge difference for anyone making more than four times the poverty level, which in 2025 was, I think, around$63 ,000 a year if you're a single individual. For that group of people, these subsidies are entirely going away. And it creates that cliff. And those are the people who are going to see the most drastic increase in their premium costs. Caitlin, when you're on Capitol Hill talking to Republican lawmakers, What is the argument that they have been making for why they're targeting these subsidies, why they've been in favor of their expiration? The big sort of ideological principled argument they make is that by creating the subsidy that it's actually driven health care costs up, you remove kind of the competitive pressure that might have exercised some moderating force on what these premiums cost.

6:31So that's kind of the big ideological argument. I think there's another piece of this that when Obamacare was created, very few of them supported it. It's not become that much more popular with them since. These subsidies were created fully along party lines with only Democratic votes. And I think there's a feeling that this was a temporary program put in place during the pandemic or out of the pandemic. And I think another piece of this is that they don't like the cost. There are a lot of reasons that come up, but I think it's like really just this deep sort of ideological divide between the parties on health care and how to keep costs down.

7:14Republicans argue the subsidies are too expensive. Since 2021, they've driven up Obamacare's costs and extending them for a decade would cost more than$300 billion, according to the Committee for a Responsible Federal Budget, a nonpartisan fiscal policy organization. President Trump supports an alternative that doesn't involve ACA subsidies. Back in November, there was sort of a trial balloon that got put out, seemingly from the White House, that would have involved a partial extension, like at least a short-term extension of the credits, and then a shift to federally funded HSAs that would go directly to people enrolled in the exchanges.

7:55HSAs, health savings accounts. President Trump promoted the idea again in a speech to Republican House members this week. Let the money go directly to the people. It goes in a health care account. It does. There are numerous things you can do. But you have to let no money for the insurance companies. Republicans in the Senate have put that plan forward, held a vote on the floor. It needed 60. Obviously, it didn't get there. That is not going to go anywhere with Democrats if it's proposed as like instead of the tax credits. They like the tax credits. Caitlin says big picture, the two sides are just very, very far apart.

8:35I do think that like the politics here are probably the bigger challenge to overcome in terms of reaching a compromise versus like any single provision we're seeing in some of the bipartisan proposals that have been put out. Coming up, the sticking points making a deal so difficult, and why extending or changing the subsidies at this point could create a new set of challenges.

9:11Bloomberg's Caitlin Reilly says the ideological divide we were just talking about, the vastly different approaches to health care by Republicans and Democrats, is making it hard for politicians to compromise. Within the center of both parties, I think you could get to a place that's like a three-year extension, maybe a straight extension in the first year, maybe some income caps, maybe some minimum premium payment that would get rid of what Republicans see as like a gateway to a lot of fraud within the system, which is people signing, like not realizing they've been signed up for really poor care that costs nothing.

9:44And then having like brokers and insurance companies continue to collect the subsidy. But, Caitlin says, just like the majority of Republicans don't want to see these subsidies extended under any circumstance, many Democrats are also taking a firm line. I think there are a lot of Democrats who feel that they are winning the political debate on this. And it's resonating with voters and feel like we want a clean extension or we want nothing. Another key issue that could become a sticking point is abortion. Many Republicans want to ban insurance plans that cover abortion from receiving potential ACA subsidies.

10:20Most Democrats do not. And even President Trump encouraged Republicans to be flexible on abortion in a speech on Tuesday. You've got to be a little flexible. You've got to work something. You've got to use ingenuity. You've got to work. Four House Republicans did cross party lines to force a vote on the Democrats' proposed three-year extension. That vote is expected to take place today. A question of mechanics. If Congress were at this point to renew these subsidies, how would that impact existing 2026 plans and people who are maybe still trying to catch the end of the open enrollment period right now?

10:58I do think we're entering in a period of where it becomes a real logistical challenge. I believe that a lot of exchanges and insurance companies had plans in place in case there had been a clean extension. One criticism we've heard from Democrats of a bipartisan compromise that makes changes is that it would just create such a logistical nightmare if now you're adjusting to a subsidy that looks different than the one that just expired. And even from some moderate Republicans who seem interested in reaching a deal, you have seen some acknowledgement that like maybe for the first year you would just extend them as is and then phase in modifications later.

11:41What likely would have to happen if they reach a bipartisan compromise, certainly after January 15th, in a lot of the plans that have percolated include this, is you would see some extension of the open enrollment period to allow for people to get better coverage or sign up for coverage. Like you would probably have to see some change to open enrollment to accommodate this. We are at a moment where lawmakers are looking headlong at another budget fight just weeks away from the prospect of another government shutdown. Do you have any sense of whether or not these subsidies could become a sticking point in that next big spending fight?

12:21Or are lawmakers from both parties kind of content to leave that behind having done that just a few months ago? Everything could change very quickly. But the impression I was getting before the break was that neither party really wants another government shutdown. I get the sense that Democrats felt like they held out as long as they could to try to force action on this during the previous government shutdown. And that doing that again would kind of be fruitless. The deadline is also occurring after open enrollment has already closed. I don't expect this to play a huge role in the next, you know, set of negotiations to fund the government.

13:04Farther off, but not many months farther off, is the midterm election. Here we are in 2026, a midterm election year. How is that coloring this debate as we get closer to that? I think Democrats are very eager to run on this issue. I expect we will continue to hear a lot more about this. It really plays well into the affordability pitch they're making to voters and felt was very successful in off-year elections in November. So this is something that we expect to keep hearing about, even if they don't settle on a solution. Meanwhile, people like Carrie Van Mevren are preparing for the worst-case scenario.

13:41I already know dozens of other small business owners as well as families who some are just going to cross their fingers and hope that they can get through until there's better changes. Carrie is already thinking about the difficult choices she may have to make. If she notices signs of another blood clot, she says, she'd have to think carefully before going to the hospital with her new ACA plan. Next time I have the symptoms, do I take a chance and hope that it's not? Or do I go to the hospital and deal with the consequences financially and that, you know, I could lose my home?

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