Republicans still don’t know what to do with Obamacare

PICTURE A Republican voter. Perhaps they are in Texas or Florida, a farmer or someone running their own small company. These people are more likely to get their health insurance with supercharged subsidies for the Affordable Care Act (ACA) marketplaces. The boosted tax credits are set to expire at the end of December, probably causing 3.5m people to become uninsured by 2027, according to the Congressional Budget Office, a non-partisan scorekeeper. But despite the fact that many of their voters rely on them, Republicans, in Congress and in the White House, have yet to decide on a solution, or even if this is a problem.

The question over what to do about the enhanced subsidies was behind the latest government shutdown. Though the government reopened, Republicans are still stuck. The Senate is to vote as soon as next week on the future of the boosted subsidies, but what it is voting on is still unclear. Mike Johnson, the House speaker, is not guaranteeing a vote at all. Avoiding the debate might not be an option for much longer: as the deadline gets closer, the proposals are becoming even more radical. What to do about the enhanced subsidies has become a microcosm of divisions in the Republican coalition, reaching into debates on affordability, concerns about the deficit and even abortion.

Since the covid-era introduction of the enhanced tax credits, enrolment in the Obamacare marketplaces, where people can compare and buy health insurance, has doubled (see chart). Now, more than 24m people buy their insurance this way, three-quarters of them in states Mr Trump won in the last election. The enhanced subsidies are expensive. Extending them until 2035 would cost $350bn, according to the Congressional Budget Office. This is about as much as the Inflation Reduction Act spent on clean energy (and explains why the Democratic architects of the extra subsidies made them temporary).

“There are many Republicans who don’t view [expiry] as a problem,” says Douglas Holtz-Eakin, a longtime Republican adviser. “These were meant to be temporary…they can go away.” Some Republican health-care wonks do welcome their end. But others in the party are less sanguine. Some House Republicans have urged Mr Johnson to “chart a conservative path that protects working families”.

One idea, backed and then dropped by the White House, is to extend the subsidies for two years and introduce an income cap. An income limit of around $110,000 for an individual “would not be very disruptive”, says Ben Sommers, a Harvard health economist. “It would save a little bit of money and the optics of it might be favourable.” The Committee for a Responsible Federal Budget, a think-tank, estimates the White House’s maybe plan would still cost $50bn over two years, just $5bn less than extending the current subsidies.

Some Republican senators are proposing more radical ideas, inspired by Mr Trump’s recent call to “[SEND] THE MONEY DIRECTLY BACK TO THE PEOPLE.” Senator Rick Scott of Florida proposed giving the equivalent value of the boosted subsidy to Americans to pay for health expenses or premiums, including for low-quality insurance. States would have the choice whether to opt in. Perversely, that would almost certainly make the ACA marketplace collapse in those states, warns Cynthia Cox of KFF, a health-research outfit. Only the sickest would still seek out coverage, making insurance pools ever more expensive, creating what health economists ominously call a death spiral.

Bill Cassidy, the Louisiana senator and doctor, has proposed using the money from the enhanced subsidies to help people pay for hefty deductibles on a different type of marketplace plan. Given that this would not aim to save the federal government any money, “it is not clear what problem that’s trying to solve,” says Thomas Buchmueller of University of Michigan. Some policymakers hope that by giving people cash they “are going to be shoppers”, Mr Buchmueller says, comparing medicines’ costs now that they are paying more directly. Health-policy wonks scoff at trying to implement this in the month before the enhanced subsidies expire—or even before the midterms.

Hanging over all these dry policy debates about risk pools and premiums is a moral question. The ACA always blocked federal subsidies from paying for abortion. Meanwhile some states require plans to cover the procedure. This contradiction has led to complicated accounting, whereby abortion care is paid for by a fund kept separate from federal money. Anti-abortion activists are pushing for any extension of the tax credits to stop plans subsidised by the federal government from covering abortion, regardless of such book-keeping tricks. Continuing the status quo risks fracturing the Republican coalition, warns John Mize of Americans United for Life. “I can’t imagine either the administration or congressional leadership has any kind of appetite to do that,” he says.

Given the filibuster in the Senate and the narrow Republican majority in the House, any legislation on extending the supercharged subsidies will require Democratic votes to pass. Changing the rules over abortion would prove just as fractious to their coalition too. Planned Parenthood Action Fund has already lined up opposition to any discussion of the change. All this leaves Republicans at an impasse, making expiry the most likely option. The wavering is not popular. Three-quarters of Americans support extending the boosted subsidies, according to a KFF poll from November, including 44% of self-identified MAGA Republicans.

“I’m surprised that the Republicans don’t seem a little more nervous about this,” reflects Benedic Ippolito of the American Enterprise Institute, a think-tank. He points out that ending a policy is harder than starting one as “it becomes very, very easy to characterise who loses.” Mr Trump still seems to be deciding. Last week, he said he would “rather not extend [the enhanced subsidies] at all”, before swiftly acknowledging that in fact “some kind of extension may be necessary.”  ■