Republicans are pushing back against Democrat demands on healthcare with proposals of their own that they say will shift control from insurers to individual consumers.
The standoff fueling the record-setting government shutdown centered on Democrats’ refusal to budge on extending enhanced Obamacare premium subsidies, which they passed in 2021 without GOP support and set to expire at the end of 2025. Republicans are developing an alternative that redirects those subsidies away from insurers — who they say have profited excessively since the inception of Obamacare — and straight to consumers buying health coverage.
The House of Representatives is on the verge of approving a Senate-passed spending package to reopen the government that omits an extension of the enhanced Obamacare premium subsidies. Senate Majority Leader John Thune has offered to hold a vote on a Democrat-authored Obamacare subsidy extension bill, but the measure is likely to fail given deep opposition among Republicans.
Critics of Obamacare, formally known as the Affordable Care Act (ACA), point to the fact that ACA premiums have increased nearly twice as fast since 2014 as employer-sponsored insurance plans as evidence that the status quo pushed by Democrats is not working. Extending the subsidy expansions would cost up to $350 billion over the next decade, according to the Congressional Budget Office (CBO).
“Obamacare, since its inception, has consistently seen premiums go up for the people in the individual marketplace by amounts that are just … not sustainable,” Thune told reporters Monday. “We need some fixes. We need some solutions.”
Among the Republicans leading the charge is Sen. Bill Cassidy of Louisiana, chairman of the Senate Committee on Health, Education, Labor and Pensions. Cassidy has pitched channeling federal funds into Flexible Spending Accounts (FSAs), which would allow individuals to set aside pre-tax dollars for medical expenses.
“What I’ve been advocating is that we redirect the subsidies into Flexible Spending Accounts, and it could be the same amount of money per person, but it would be in an FSA, not going to the insurance company,” Cassidy told reporters on Monday. “When you send it to the insurance company, they take 20% of that for overhead and profit — pretty high carrying cost. You send it to the patient, almost all of it’s going to go for direct health care.”
Republican Sen. Rick Scott of Florida also said he is crafting a bill that would allow federal dollars to be distributed to “HSA-style accounts,” saying it would “increase competition [and] drive down costs.”
The concept has the backing of President Donald Trump, who urged Republicans Sunday to give money currently going to insurance companies to individuals, warning that extending the boosted Obamacare subsidies would hand insurers “another huge payday at the expense of the American people.”
No official proposal has been endorsed by Republican leadership, but the Paragon Health Institute, an increasingly influential think tank in Washington, D.C., has been an advocate of subsidy reform for years. In 2022, it published a policy brief outlining a similar plan.
Paragon’s proposal calls for restoring federal funding that reimburses insurance companies for the mandatory discounts they must give qualifying enrollees on out-of-pocket costs like deductibles and copayments, also known as Cost-Sharing Reductions (CSR). The federal government originally covered those costs, but when it stopped making payments in 2017, insurers raised premiums to make up the difference, thereby increasing federal spending on premium subsidies.
Restoring CSR funding would reverse that effect, lowering premiums and reducing the government deficit by about $31 billion, according to the CBO.
Paragon’s plan would also give qualifying enrollees the option to receive their CSR subsidy as a deposit into a Health Savings Account (HSA) rather than as a payment to insurers.
“The whole policy combination would lower premiums, lower deficits and give lower-income Americans more control over their health insurance,” Paragon Health Institute President Brian Blase told the Daily Caller News Foundation. “It is the best thought-out immediate policy that can be put in place to align with the president’s vision.”
Republican Reps. Greg Steube and Kat Cammack of Florida introduced a measure in February that would allow qualifying individuals to receive direct contributions to an HSA. The House version of the GOP’s One Big Beautiful Bill would have directed funding for the CSR program, but it was ultimately rejected by the Senate parliamentarian.
Meanwhile, Democrats have accused Republicans of trying to overhaul Obamacare.
“The future is unpredictable, but we need to continue our fight unequivocally, unyieldingly for affordable health care insurance through extending the subsidies and other measures under the ACA,” Sen. Richard Blumenthal of Connecticut told reporters Monday. “Republicans have a reflexive obsession with repealing or destroying the ACA.”
However, Cassidy emphasized that his proposal has a “very narrow focus.”
“What we’re talking about — this is not rewriting big portions of the Affordable Care Act,” Cassidy said. “We’re looking very specifically at what we can do for Plan Year 2026.”
Blase added that broader ACA reforms represent an “aspirational vision for where we should move,” but developing policies to achieve it will take time and raise many complex questions.
“I’m looking at what can be done in the next few months,” he said.
In the meantime, some Republican lawmakers appear eager to debate Democrats on health care.
“If they don’t want to take this money away from insurance companies and flow it back to the consumer, that’d be a great fight to have,” South Carolina Sen. Lindsey Graham told reporters.
Adam Pack, Andi Shae Napier and Caden Olson contributed to this report.
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