As huge health insurance hikes loom, Louisiana’s Bill Cassidy proposes a big change

WASHINGTON – U.S. Sen. Bill Cassidy's proposal for covering the health care costs of millions of low-income workers and small businesses is gaining traction among the various alternatives trotted out to address the Affordable Care Act health insurance – the key dispute in the historically long federal government shutdown.

Rather than simply extending enhanced tax credits that Democrats want and most Republicans oppose, the Baton Rouge Republican who chairs the Senate's health committee would redirect the money into tax-free accounts. This would allow individuals to choose how the money would be spent, he said.

Qualified beneficiaries could decide on their own whether to purchase a less expensive policy and use the money to pay higher deductibles, copays, and out-of-pocket expenses, Cassidy said in an interview.

"It's a sweet spot: lower premiums, help with the deductible, making the patient the informed consumer," Cassidy said. "If we're able to take the amount of money going into the enhanced premium tax credit, and put it into a Flexible Spending Account, the rate you're paying for your insurance does not have to change because what you're doing is applying the enhanced premium tax credit to your deductible and to your copay."

About 24 million working Americans – 293,000 in Louisiana – use the pandemic-era tax credits to cover the gap between cost of health care insurance policies on the Affordable Care Act marketplace and what they can afford.

Those subsidies are set to expire in six weeks, which would lead to an average doubling of policy prices and would force about 4 million people off health care insurance, according to the Congressional Budget Office, a nonpartisan arm of Congress that estimates financial costs of legislation.

Still, Republicans have balked at the cost of the program, which they argue was supposed to be a temporary COVID-era benefit. Extending the ACA subsidies would cost about $35 billion per year.

Cassidy said his plan could be put in place faster than proposals seeking to overhaul the ACA, also known as Obamacare, because the administrative apparatus is already in place.

"I think we can figure that out about as easily as we can figure out what we would do if we just did a straight-out extension," he said.

His plan isn't quite what Democrats demand: to simply extend the tax credits, which expire December 31. Nor is it what the Republicans want: no extension without significant changes to Obamacare, which the GOP has tried to strangle since inception in March 2010.

Other ideas are being floated, as many Republicans fear the political repercussions of so many voters experiencing such a dramatic hike in health care costs. The plans range from creating a reinsurance fund to cover beneficiaries with preexisting conditions to a complete overhaul of the Affordable Care Act.

Trump voices support

President Donald Trump agrees with parts of Cassidy's plan.

"The president and I are united," Cassidy said Sunday on CBS's "Face the Nation."

Trump on social media backed the idea of the billions of dollars "currently being sent to money-sucking insurance companies in order to save the bad health care provided by Obamacare, be sent directly to the people."

Trump did not mention Cassidy, who is running for reelection in 2026. He is opposed by at least four conservatives contending they are more MAGA than the senior senator from Louisiana.

Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, which oversees the ACA, told CNN's "State of the Union" Sunday that the administration is open to all options.

"But we have some major flaws with the way these COVID-era subsidies were added," he said.

Conservatives also have been pushing a similar-type plan being promoted by the conservative-leaning Paragon Health Institute that would redirect some of the ACA subsidies to individuals.

Complicated politics

An extension of the pandemic-era tax credits was the key point in the 43-day federal government shutdown. Democrats demanded an extension as a condition for reopening the federal government.

As part of the deal to reopen government last week, Senate Majority Leader John Thune, R-South Dakota, committed to a Senate vote on the extension by mid-December.

Most senators, including Cassidy, don't think Republicans will go for a simple extension. Louisiana's other senator, John Kennedy, R-Madisonville, recently told reporters "extending the status quo is just putting fresh paint on rotten wood."

Cassidy said he had hoped to hold a hearing before the end of the month, but the Thanksgiving break begins at the end of the week and Congress will be out of town until Dec. 1. He has pitched his plan on the Senate floor, before Senate committees and at party gatherings.

Cassidy would need Republican and Democratic support to reach the 60-vote threshold to forward his legislation. He would present a bill focused on the subsidies in December, then offer his broader idea in 2026.

In the House, though many Republican representatives advocate an extension, Speaker Mike Johnson, R-Benton, does not. Johnson says fraud, abuse and affordability need to be addressed along with the extension.

As the pandemic wound down, millions of people got their jobs back and no longer qualified for Medicaid even though their employment did not include adequate health insurance. The Biden administration expanded who could qualify for the tax credits that helped cover the cost of the expensive policies.

Reacting to criticism that they were being fiscally imprudent, Democrats established an expiration date, December 31, for the credits, which are paid directly to the insurance companies.

Rules also changed, allowing ACA marketplace access to working immigrants who are in the country legally but have not yet acquired citizenship. Other laws allowed states waive a five-year waiting period to cover immigrant children, regardless of their status. Louisiana is one 37 states and the District of Columbia that chose the waiver.

Who qualifies?

Qualifying for the tax credits and the amount of the subsidy is dependent on a complex formula that includes the policy chosen over six income ranges and the size of an individual household in comparison to the federal poverty level.

Eligibility is for workers without access to affordable insurance policies that range on the lower end with more credits from 100% of poverty: $15,560 for one person, $32,150 for a family of four, to $54,150 for a household of eight.

The upper level of eligibility with less subsidies is 400% of poverty, which amounts to $62,600 for one person, $128,600 for a family of four and $216,600 for a household of eight.

Republicans want to see caps on those levels. Democrats want to extend the enhanced credits for at least three years.

If left unresolved, the government could shut down again at the beginning of February.