Now that the longest government shutdown in U.S. history has ended, Washington is staring down a new crisis: the expiration of enhanced Affordable Care Act subsidies at the end of the year. Senate Republicans are sharply divided over whether to extend the temporary supports that have helped drive record marketplace enrollment since 2021. The debate is intensifying as premium hikes for 2026 come into focus and the White House explores new approaches to rising health care costs.
Some Republicans, including Sens. Josh Hawley of Missouri, Katie Britt and Tommy Tuberville of Alabama, and Ashley Moody of Florida, warn their constituents face double-digit premium increases if Congress fails to act. Hawley has emphasized that nearly 500,000 Missourians could see premiums double without intervention. A bipartisan group led by Sen. Jeanne Shaheen and Sen. Tammy Baldwin is pushing to make the enhanced subsidies permanent, and Senate aides say GOP interest in negotiations has grown as voters raise concerns. Democrats would need at least 13 Republican votes to overcome a filibuster.
But a sizable bloc of Republicans argues that extending subsidies simply props up a system they believe is fundamentally broken. Sen. John Kennedy likened an extension to putting fresh paint on rotten wood, while Sen. Lindsey Graham pointed to soaring insurer stock prices and premium growth as evidence the ACA model has failed. Sen. Ron Johnson dismissed the subsidies as a massive fraud and said most Republicans oppose continuing them under any reform scenario. House Speaker Mike Johnson has also cast doubt on whether the House would take up any extension, warning that subsidies mask deeper cost drivers.
At the same time, congressional Republicans and the White House are exploring alternatives that would redirect ACA subsidy dollars into consumer-controlled accounts such as health savings accounts or flexible spending accounts. Advocates, including Sen. Bill Cassidy and several right-leaning think tanks, argue that giving money directly to Americans would offer more choice and reduce insurer power. President Donald Trump has signaled support for the general concept, saying funds should go “to the people.”
Economists and policy experts warn these proposals could destabilize the marketplaces by siphoning younger, healthier consumers into cheaper, less comprehensive plans with medical underwriting. Such a shift could leave sicker patients in the ACA risk pool, raising premiums further and potentially driving insurers out of the market, creating what KFF’s Larry Levitt described as a possible death spiral. Inside the administration, senior White House and HHS officials, including CMS Administrator Dr. Mehmet Oz, have been meeting frequently as the subsidy deadline approaches. Options being discussed include direct payments to consumers, federal support to reduce cost sharing, and further action on prescription drug prices. While Trump has not committed to extending the subsidies, aides say he has not ruled it out. Political risks are rising as well, with memories of the 2018 backlash over ACA repeal attempts looming large.
Whether Congress can craft a bipartisan solution before open enrollment and state systems lock in 2026 rates remains uncertain. Republicans must also reconcile competing proposals for HSAs, FSAs, and other mechanisms before engaging Democrats substantively. Senate Majority Leader John Thune has promised a vote in December, but the path forward is unclear.
Key Takeaways for Hospital and Health System Leaders
- Expect sustained policy and market volatility in the individual market through early 2026 as subsidy negotiations unfold.
- Monitor potential federal moves toward consumer-directed accounts, which could reshape coverage patterns and risk pools in ways that affect uncompensated care and payer mix.
- Prepare for the possibility of major premium spikes that could increase the number of uninsured or underinsured patients.
- Engage with congressional delegations now to underscore the operational and financial risks to hospitals if coverage declines or marketplace instability worsens.
- Track White House deliberations closely; executive-branch proposals could emerge quickly and influence insurer behavior and state exchange planning.