Outlook for extending enhanced ACA subsidies uncertain

The outlook for extending enhanced Affordable Care Act subsidies is uncertain, since the bill that ended the 43-day government shutdown did not include an extension of those subsidies.

Geoff Manville, partner and government relations leader in Mercer’s law and policy group, provided an update on health policy in the post-shutdown weeks during a recent webinar.

The bill that ended the shutdown promised Democrats a Senate vote – but not a House vote – in December on legislation to extend the enhanced subsidies.

“We will have a high-stakes health care policy debate in the next few weeks.” Manville said.

He noted that current public proposals on the enhanced subsidies “seem to be trending in opposite directions.”

“One side is looking at modifying the current enhanced subsidies in some form while the other side wants to create an entirely new structure and put the subsidy amounts into individual flexible spending accounts or health savings accounts. What that bill might look like, when we might see it and whether it might be linked to this promised vote on subsidies remain to be seen.

“December will be an interesting month.”

Expired ACA subsidies could affect employer-based plans

Manville said employer-based health plans could potentially be affected if enhanced ACA subsidies expire. Higher ACA marketplace premiums could make employer plans look more affordable and valuable compared with ACA coverage, and some employers might see increased enrollment in their plans. Also, with hospitals and health care providers experiencing decreased revenues as a result of expiring enhanced subsidies, combined with an increase in providing uncompensated care, providers could charge employer plans more to make up for the increased costs.

The fate of the enhanced ACA subsidies clouds the outlook for bipartisan pharmacy benefit reform legislation, Manville said. A package of reforms nearly passed Congress in 2025, and Republicans want to revive that legislation. Potential Republican add-ons to the package could include expansion of HSAs and individual coverage health reimbursement arrangements, and codifying the most-favored nation prescription drug pricing executive order that was signed by President Donald Trump in May.

HSA and ICHRA reforms are still on the Republican agenda, he said. HSA reforms are opposed by many Democrats but could figure in talks on extending enhanced ACA subsidies.

Efforts to rein in prescription drug costs

Several developments aimed at lowering prescription drug costs have been advancing in Washington, but it’s still uncertain how much Americans will actually save from these proposals, said Katharine Marshall, principal at Mercer’s law and policy group.

In September, Trump announced the launch of TrumpRx, a consumer-facing website expected to redirect consumers to manufacturer website to purchase prescription drugs at the TrumpRx stated price. Participating companies include Pfizer, AstraZeneca, EMD Serono, Novo Nordisk and Eli Lilly. These pharmaceutical companies agreed to reduce the prices of certain drugs on TrumpRx as well as for Medicare and Medicaid and develop manufacturing in the U.S. in return for a three-year tariff holiday. Actual prices for consumers are not yet published, but Trump announced drugs could be purchased at discounts of up to 85%.

“We have yet to see how prices on TrumpRx will compare to other commercial sites and how it will work,” Marshall said. “Most people who are in employer-based plans pay less out of pocket than they would in direct-to-consumer programs. We also don’t know the role PBMs will play in this. Will the prices in these deals also apply in employer-based plans? We don’t know.”

The Center for Medicare and Medicaid Services’ GENEROUS Medicaid prescription drug pricing program will launch in January. This is a voluntary five-year pilot program through which Medicaid net pricing would align with most-favored nation pricing. GENEROUS leverages the existing Medicaid drug rebate program under which states receive rebates from manufacturers. Participating states will receive supplemental rebates from manufacturers to align Medicaid net prices with what certain other countries pay.

“It’s hard to say whether this will be impactful, but it is one of the many efforts to rein in prescription drug costs,” Marshall said.

The use of GLP-1 drugs for weight loss management continues to grow, and some recent developments out of Washington are aimed at making them more accessible.

The White House announced an agreement with Novo Nordisk and Eli Lilly to sell GLP-1s at a reduced price through TrumpRx. Meanwhile, CMS is considering a five-year experiment allowing Part D and state Medicaid programs to voluntarily cover GLP-1s for weight management.

Marshall said these proposals could have an impact on coverage of GLP-1s for weight loss management in commercial health plans.

“Many employers are struggling with the cost of GLP-1 drugs in their health plans,” she said. “These developments could potentially force prices down in the commercial market.”

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Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].