Catalina Jaramillo is beginning to envision what her life in South Florida will look like without the financial help that allows her to afford health insurance, medication, and treatment for a series of ailments. Jaramillo has been insured through the Affordable Care Act since being diagnosed with acute kidney disease in 2022, when she was 39. Expanded subsidies help her afford the coverage—and they will expire at the end of the year unless Congress extends them. Jaramillo told me she has little doubt that her life would begin to unravel without them. Her monthly health-insurance premium would more than double, and the treatment she depends on to manage her vulnerable kidneys and other health issues would become prohibitively expensive. “I’m terrified. I’m kind of like a deer in the headlights,” she said.
The problem for Jaramillo—and for the 22 million other Americans who receive the ACA subsidies in question—is that policy makers in Congress and at the White House also can’t figure out what to do. They’ve been immobilized on the issue for months, consumed by indecision and infighting that led to a record-long government shutdown. There’s a growing feeling that not much of anything will happen before the year runs out, which would lead to massive premium hikes for most people on ACA plans.
A Senate committee convened on Wednesday to find solutions; Bill Cassidy, a Louisiana Republican, opened the hearing by asking his colleagues “not to yell at each other” and emphasized the importance of remaining focused on the fast-approaching deadline. “Now, we can push for big ideas, grandiose ideas, on the right or the left,” Cassidy, a doctor, said. “But we’ve got to have a solution for three weeks from now.”
His words had little effect. Senators traded accusations and insults just as freely as proposals with little to no chance of becoming law. Republicans spent two hours cycling through a list of gripes with the ACA, highlighting familiar critiques of its rising cost, alleged fraud, and burdensome regulations. Several GOP senators came prepared with loose ideas for overhauling or replacing the current health-care system, including expanding the tax deduction for health expenses, steering funds directly to consumers’ health-savings accounts, and eliminating plans for low-income Americans who don’t pay premiums. The hearing came to a close with no consensus. Democrats continued to call for subsidies to be extended, and Republicans maintained that doing so would be wasting money on a flawed system.
Senator Josh Hawley, a Republican from Missouri, was one of the few lawmakers to break from his party, arguing for a sense of urgency as the deadline nears. “If Congress does not take action on this issue in the next few weeks, this will be a crisis for 24 million Americans,” he said, citing the total number of people on ACA plans. “We are looking at a massive crisis unless Congress acts, and acts soon.”
Democrats in the House and Senate have coalesced around a three-year extension of the subsidies that would put off massive premium hikes until after the 2028 presidential election. The proposal has little Republican support. A planned vote in the Senate—which some Democrats secured in exchange for their votes to end the shutdown last month—is widely expected to fail next week. Lawmakers are already preparing for the battles that will follow.
“Republicans have one week to pick a side—join us and prevent premiums from skyrocketing, or block our bill and condemn the American people to financial disaster,” Senate Minority Leader Chuck Schumer said yesterday.
But prospects of creating a bipartisan proposal that could clear a 60-vote majority in the Senate and win widespread support among House Republicans seem further away today than when the government shut down for 43 days. The shutdown was not successful in Democrats’ aim of getting Republicans to agree to extend the subsidies, but it served to publicize the implications of letting them expire. Some Democrats who voted to reopen the government said at the time that the political pressure Republicans were feeling on health care would force them to find a solution ahead of the deadline. But with Congress still deadlocked on the issue as lawmakers prepare to leave town before Christmas, such predictions now seem misguided.
[Read: The shutdown is over, but its damage is not]
The stakes are significant: Premiums for the 22 million affected Americans would increase by 114 percent on average, according to KFF, a nonprofit health-policy-research organization. As a result, the Congressional Budget Office projects, the population of uninsured people would rise by more than 2 million next year, and the number would increase to 3.7 million the following year. The fallout could extend beyond the people who lose insurance; costs may also increase for those who remain on ACA plans. (The thinking is that healthy Americans would be the most likely to drop coverage, leaving a riskier—and more expensive—pool of insured people.)
Some lawmakers are continuing to privately negotiate a bipartisan fix. President Donald Trump initially seemed open to a short-term extension of the subsidies, coupled with some eligibility limits long sought by Republicans. But a planned rollout of a White House plan was scuttled last month after backlash from GOP lawmakers. Trump, who earlier this week described Democrats’ focus on affordability as a “con job,” appears prepared to allow the subsidies to expire at the end of the year.
“The current system is not working to deliver health care at reasonable prices for everyday Americans,” the White House spokesperson Kush Desai told me. “Democrats’ push to maintain these high prices by giving more money to insurance companies is not a real solution for President Trump.” Desai said that Trump has instead focused on lowering prescription-drug costs and addressing what he believes is rampant waste, fraud, and abuse in the health-care industry.
Democrats say the White House’s disengagement on this issue will only help their party sharpen what has become a potent message about the cost of living—an issue the party believes helped propel it to victories in last month’s elections. “We’re going to have the health-care debate in full view of the American public, and they’re going to see who’s standing up for them on affordability and who’s not,” Senator Tim Kaine of Virginia, a Democrat, told me.
Jaramillo, a Trump supporter who has spent most of her life voting Republican, said that her health-care predicament—and broader struggles with everyday expenses—has left her support for the party “wavering.” In a KFF poll released yesterday, 52 percent of ACA enrollees who are registered to vote said that if their health-care costs spike, it will have a “major impact” on which party they will support in next year’s midterm elections. Almost two-thirds of respondents enrolled under the ACA said they would blame Trump or Republicans in Congress for any large increases. About a quarter of enrollees said they will “very likely” drop their insurance coverage next year if costs double.
Florida, which Trump carried by 13 points in the 2024 election, is likely to be hit especially hard. No other state has more people participating in ACA exchanges, and enrollment there has more than doubled since 2020, to 4.7 million. The large majority of Floridians on the exchanges receive subsidies. Because of the state’s tourism-focused economy, many of the people who rely on the health-care exchanges are working full-time, Scott Darius, the executive director of the health-advocacy organization Florida Voices for Health, told me. He said that he began hearing from angry and fearful residents last month as they received notices of steep premium increases that are set to take hold in January. “It’s just the feeling of disbelief and knowing it’s just an extra thing to worry about, right?” he said, describing what they told him. “On top of all the things people are worrying about, it’s like, Hey, now I have to factor this in.”
[Read: The bubble-wrapped president]
The ACA’s premium subsidies were originally designed to limit out-of-pocket costs for low-income and middle-income families, but they were modest and capped at 400 percent of the poverty line (making individuals earning more than about $60,000 ineligible for the tax credits). The American Rescue Plan, which was signed by then-President Joe Biden in 2021, increased the size of the subsidies and eliminated the income cap. The more generous tax credit made the coverage more popular, and the population enrolled in ACA exchanges grew from about 11.4 million in 2020 to 24.3 million today.
It has also raised the taxpayer cost of the health-care law, causing some Republicans to balk at the price tag. Several conservatives have argued that the need for enhanced subsidies—which they call “bailouts”—more than 15 years after the ACA was passed is a sign that the law is fundamentally flawed. Others have said that they want to repeal or overhaul the law, but few have offered a comprehensive vision for how they would achieve that. Senator Thom Tillis of North Carolina, a Republican who supports a temporary extension of the assistance, said it would be “malpractice” to leave it in place beyond “two or three years.”
But Jonathan Gruber, an economist who helped create the Affordable Care Act, told me that the subsidies are well worth the cost. “This is what we should have done in the law. I’m sorry we didn’t do it,” he said, adding that part of the reason the original subsidies were so limited is that the White House at the time wanted the law to be deficit-neutral. He pointed to the tax law that Republicans passed earlier this year, which is projected to add more than $3 trillion to the deficit over the next decade. By contrast, extending the enhanced subsidies for 10 years would cost about $350 billion.
“For one-tenth of what Trump just spent on tax cuts to the rich, we can have 10 years of guaranteeing people affordable health insurance in America,” Gruber said. “Why shouldn’t we do that?” A disproportionate number of those people live in areas that voted heavily for Trump, and West Virginia, Texas, Louisiana, and Mississippi have had some of the fastest-growing populations of ACA enrollees over the past five years.
Even some fiscal conservatives who oppose the subsidies on principle have said that abruptly taking them away would be ill-advised. Michael Strain, the director of economic-policy studies at the American Enterprise Institute, told me that although he believes that the assistance is bad policy, people who rely on it should not have it suddenly taken from them.
“Congress really should avoid jerking people around with their finances,” he said. “I think that’s a very serious argument against simply letting them expire.”
But as the new year arrives, we may be about to find out what happens to America’s economy, politics, and psyche when millions of people suddenly lose a benefit they have come to rely on.
The post The Coming Obamacare Cliff appeared first on The Atlantic.
