GOP unity tested as lawmakers seek health plan to counter Democrats' Obamacare subsidy extension

Republicans never could unite around a health care plan to replace Obamacare, and now they're struggling to coalesce around short- and long-term fixes as Congress faces a year-end cliff.

Roughly 22 million Americans who purchase health insurance on the Obamacare exchanges are set to see their out-of-pocket premium costs more than double, on average, next year if enhanced Affordable Care Act subsidies expire as scheduled Dec. 31. 

Most Republicans do not support extending the enhanced subsidies. But the party is having trouble finding an alternative around which they can unite. 

“It's a $5 trillion a year industry, there's a lot at stake,” said Sen. Roger Marshall, Kansas Republican. “Obamacare is so thick from the regulatory side, it's really hard to unwind it.” 

Congressional Republicans are working on separate plans that they could roll out in the coming days, but lawmakers say it’s been difficult to get everyone on the same page.

“It’s just very complicated; it's very expensive,” said Florida GOP Rep. Vern Buchanan, who chairs the House Ways and Means subcommittee on Health. 

He said Republicans are looking at a “laundry list” of ideas on how to deliver more affordable health care but “got some more work to do” before they have a unified plan. 

House Speaker Mike Johnson, Louisiana Republican, said his conference has been working for months to “put together the component pieces” and is hoping to roll out a proposal midweek.  

“Republicans are going to deliver, and it's only our party that is going to bring down premiums, increase access to care and quality of care,” the speaker said Friday on Fox Business. “Democrats, all they do is break the systems and then subsidize the broken systems.”

Republicans have said they want to move away from Obamacare subsidies because sending advanced tax credits directly to insurance companies does not incentivize them to lower premiums. But some in the party are skeptical it will happen. 

“The insurance companies love Obamacare, and the insurance companies are one of the biggest donors to Republicans and Democrats,” said Rep. Thomas Massie, Kentucky Republican. “Most of the people up here have no interest in actually fixing it because they're making too much money on not fixing it campaign wise.”

In addition to “health care stakeholders who don't want their cheese to be moved,” Texas GOP Rep. Jodey Arrington cited “the political pressure of those who are in competitive districts.”

Vulnerable Republican incumbents “know that Democrats will not tell the truth in trying to tie health care affordability and the [enhanced premium tax credits] around their neck,” he said. 

It’s those vulnerable incumbents who are pushing Republicans to consider a short-term extension of the enhanced subsidies alongside any broader plan for fixing Obamacare.

“The challenge right now is to find an agreement that is supported by enough people on both sides,” said Rep. Kevin Kiley, California Republican. “I think that there is a strong majority that exists for doing something to stave off the worst outcomes here.” 

Anyone looking for Obamacare coverage that begins on Jan. 1 needs to enroll by Dec. 15. But there’s virtually zero chance Congress will act by then. 

The only guaranteed vote is on Senate Democrats’ plan to extend the enhanced subsidies for three years. Republicans agreed to give them a vote on a bill of their choosing in exchange for eight Democrats voting to end the 43-day government shutdown last month.

The base ACA subsidies do not expire. Democrats are proposing to renew their party’s COVID-era expansion that temporarily extended the benefits to families earning more than 400% of the federal poverty level and made them more generous across the board. 

The vote on Democrats’ plan is scheduled for Thursday. Senate Republicans may release a counterproposal to vote on alongside it but have yet to coalesce around one. 

“We have too many good ideas,” Texas GOP Sen. John Cornyn quipped. 

Here are some of the proposals congressional Republicans are discussing:

Health Savings Accounts 

One of the most popular GOP ideas is redirecting government aid to tax-exempt Health Savings Accounts that will give consumers more control over how the money is spent. 

HSA dollars cannot currently be spent on premiums. Some Republican proposals would change that, including ones from Sens. Rick Scott of Florida and Rand Paul of Kentucky. 

Other HSA proposals, like one floated by Louisiana GOP Sen. Bill Cassidy, would keep the current law limitations as an incentive for consumers to enroll in lower-premium, high-deductible Obamacare plans. The government subsidy would be pre-funded in the HSA to help consumers pay for the deductibles, as well as other out-of-pocket expenses. 

Price transparency 

Mr. Marshall is pushing for his bipartisan price transparency bill to be included.

The Patients Deserve Price Tags Act requires health care providers to publish the costs of their services, including cash prices for patients who want to pay out of pocket, in addition to rates providers have negotiated with insurers. 

“If you give patients price tags, we put some money in their Health Care Savings account, then we're going to drive down the cost of healthcare for everybody,” Mr. Marshall said. 

Association health plans 

President Trump posted on social media a screenshot of a text message Mr. Paul sent him suggesting they should partner on legislation to codify his first-term executive order on Association Health Plans that was overturned in court. 

The proposal would allow membership-based entities such as Amazon, Costco credit unions, churches and associations to provide new coverage options by negotiating with insurers for lower group rates. 

Mr. Paul told The Washington Times he spoke with the president and “he was very favorable and very open to the idea.”

Several House Republicans have also floated this as an option worth considering.

Cost-sharing reductions

Republicans tried to include a provision in their One Big Beautiful Bill Act last summer to provide funding for cost-sharing reductions that were authorized in the ACA to contribute aid for low-income enrollees, along with the premium tax credits.

That effort failed because of a ruling from the Senate parliamentarian that the provision did not comply with the rules for the budget reconciliation process that Republicans were using. They now want to include cost-sharing-reduction funding in their developing health plan.

The cost-sharing reductions, or CSRs, helped to lower deductibles for families between 100% and 250% of the poverty level that purchased silver-level Obamacare plans.

A federal judge ruled in 2016 that the government could not fund direct CSR payments without an explicit congressional appropriation. The ruling was stayed upon appeal, but the Trump administration chose to end the CSR payments in 2017 as Republicans worked to repeal and replace the ACA — an effort that ultimately failed.

To compensate for the loss of the CSR payments, insurers inflated premium prices for silver plans. Republicans believe funding CSRs will reverse the “silver loading” and drive down premium costs for those plans.

Temporary extension of subsidies

Despite all of the other ideas in the mix, a minority of Republicans still want to temporarily extend the enhanced Obamacare subsidies for a year or two to prevent an immediate affordability crisis.

“I hate the ACA, but we have to use it right now as a tool to make sure people are held harmless,” said Rep. Jefferson Van Drew, New Jersey Republican, noting he’s spoken to Mr. Trump and believes he would be “amenable to a common sense plan that created a bridge for now."

Mr. Van Drew was part of a group of 15 Republicans and 20 Democrats that announced a health care framework on Thursday, calling for a one-year extension of the enhanced subsidies with some changes to protect against fraud.

The plan, led by Reps. Josh Gottheimer, New Jersey Democrat, and Jen Kiggans, Virginia Republican, would also impose an income cap that phases out the subsidies between 600% and 1,000% of the federal poverty level. That means the full benefit would only go to individuals earning below $93,900 and families of four earning below $192,900.

If the enhanced subsidies expire, the income cap will revert to 400% of the poverty level, $62,600 for an individual or $128,600 for a family of four.

Rep. Brian Fitzpatrick, Pennsylvania Republican, is planning to release a bipartisan bill that would extend the enhanced subsidies for two years with an income cap at 700% of the poverty level, $109,550 for an individual and $225,050 for a family of four.

His bill would also impose a $5 minimum monthly premium, eliminating the $0 premium for the lowest-income households that has led to increased fraud and brokers enrolling people on plans without their knowledge. It would also include an HSA option.

Neither of these bipartisan House proposals includes Hyde Amendment language to prevent the government subsidies from being used to pay for health insurance plans that cover abortion. That’s been a key demand for most Republicans.

Crack down on Pharmacy Benefit Managers

Mr. Fitzpatrick is including a bipartisan bill to crack down on Pharmacy Benefit Managers, the intermediaries between drug companies and pharmacies that lawmakers blame for driving up prices, as an offset for his legislation to extend the enhanced subsidies.

That measure is also included in the Gottheimer-Kiggans group’s framework, and Mr. Johnson has spoken about “PBM reform” as a component that is likely to end up in the broader House GOP plan.