White House Draft to Extend ACA Subsidies Exposes Deep GOP Rift Ahead of Jan. 1 Deadline

A White House draft proposal to extend pandemic-era Affordable Care Act (ACA) premium tax credits for two years has collided with entrenched divisions within the Republican conference, complicating efforts to avoid sharp premium increases for millions of Americans when the credits expire on Jan. 1.

The tentative plan would continue the enhanced credits for two years while tightening eligibility rules: sources familiar with the draft say it would cap eligibility at 700 percent of the federal poverty level and require all marketplace enrollees to pay some portion of their premiums. That change would largely eliminate zero-premium plans for lower-income consumers — a point Republicans say would reduce fraud but Democrats say risks raising out-of-pocket costs.

Bitter divisions on Capitol Hill

Republicans remain split over whether to tinker with the ACA, mount a full-scale overhaul, or allow the enhanced subsidies to lapse. Some moderate GOP senators and representatives have signaled they would support a short-term extension with guardrails, while others continue to push for major changes or elimination of the subsidies altogether.

Senate Majority Leader John Thune told moderates he would arrange a vote on the credits by mid-December as part of shutdown-end negotiations, but it remains uncertain whether that promise will yield a bipartisan solution. House Speaker Mike Johnson has not committed to permitting a vote on a health care measure.

Bipartisan compromise remains difficult but possible

Health care is politically fraught, making a broad bipartisan deal unlikely. Still, the looming premium spikes have driven some lawmakers to explore compromise. Several bipartisan House proposals would extend the enhanced credits for two years while adding new income limits. Moderates such as Rep. Brian Fitzpatrick have argued that a two-year extension is a practical middle ground.

Democrats generally demand a clean extension without substantive changes, though some have expressed conditional openness to elements of the White House draft as part of a broader negotiation.

Alternatives from Republicans

Some GOP senators have proposed alternatives emphasizing savings accounts. Sen. Rick Scott’s plan would create "Trump Health Freedom Accounts," let consumers shop across state lines and make other changes, while Sen. Bill Cassidy’s proposal would use health savings accounts to replace the enhanced subsidies. The White House draft similarly contemplates allowing people in bronze or catastrophic plans to deposit funds into savings accounts.

Democrats are skeptical of the savings-account approach; Senate Democratic leader Chuck Schumer said such ideas are unlikely to pass the Senate. Other Republicans have discussed using budget reconciliation or similar procedural tools to pass legislation with only GOP votes — a politically risky and time-consuming path.

Consequences if Congress does not act

If Congress fails to extend the enhanced tax credits, many enrollees could face significant premium increases. A recent analysis by the health research group KFF found that premiums for subsidized consumers could more than double if the enhanced credits expire. Open enrollment for next year’s coverage already began on Nov. 1, meaning many Americans are preparing for potential higher costs.

Trump’s role and messaging

Some Republican lawmakers appear to be waiting for clearer direction from former President Donald Trump, whose public statements on the issue have been mixed. In recent social media posts he endorsed sending funds “directly back to the people” and appeared to favor approaches that would give consumers more control over health dollars.

The next steps will hinge on whether Republican leaders can rally a unified position or whether lawmakers pursue a short-term bipartisan extension, a GOP-only package, or no action — in which case many enrollees would face immediate premium shocks in the months ahead.

Contributors: Seung Min Kim, Joey Cappelletti, Kevin Freking, Ali Swenson.