Health insurance price hike seems likely as both Republican and Democratic bills fail in Senate

WASHINGTON – Senators on Thursday blocked two bills, one supported entirely by Republicans and the other mainly by Democrats, intended to address health insurance prices that now seem all but certain to increase for millions of Americans when generous and costly subsidies expire at year’s end.

As part of the deal to end the nation’s longest ever government shutdown in November, leaders of the Senate’s GOP majority agreed to allow a vote on a Democratic proposal to extend the expiring tax credits, which Democrats created in 2021 and later prolonged through 2025. A Republican counterproposal led by Sen. Mike Crapo of Idaho, chair of the Senate Finance Committee, would let the subsidies expire and instead give adults between $1,000 and $1,500 in savings accounts that could be used for certain health care expenses.

Both proposals failed by identical 51-48 votes, falling short of the 60 votes required by the Senate filibuster rule. No Democrat voted for the GOP measure, while the Democratic proposal was supported by four Republicans: Sens. Lisa Murkowski and Dan Sullivan of Alaska, Susan Collins of Maine and Josh Hawley of Missouri. Sen. Steve Daines, R-Mont., didn’t vote on either bill, but his vote wouldn’t have changed the outcome.

“Today was a missed opportunity to lay the groundwork for real health care reforms,” Crapo said in a statement after his bill was blocked. “Republicans put forward a fiscally responsible proposal to reduce premiums, save taxpayers’ money and give Americans control over their health care. Meanwhile, Democrats insisted on extending the same policies that have led to rampant fraud and higher premiums. We cannot continue to throw good money after bad policy and paper over the cracks in our health care system.”

Sen. Patty Murray of Washington, the longest-tenured Democrat on the Senate Committee on Health, Education, Labor and Pensions, took to the Senate floor on Wednesday to call Crapo’s plan “a sick joke” and compare it to the deadly contests in the hit South Korean TV show “Squid Game.”

“You can’t afford quality health coverage? Here’s a coupon. Spin the wheel and see if you make it through the year,” Murray said. “If you lose – if you get cancer, if you get pregnant, or if you have any sort of medical emergency more expensive than a thousand bucks – you get buried in debt. And win or lose, you are going to have to play the same, twisted game again, year after year, for the rest of your life. And one year, you are going to lose, because we all get sick eventually. We all get older eventually.”

The Affordable Care Act of 2010 created marketplaces where Americans who do not get health insurance through their employers can buy coverage, subsidized by tax credits for those who earn less than 400% of the federal poverty line, equivalent to $84,600 for a couple or $128,600 for a family of four in 2025.

When Democrats controlled the House, Senate and White House again in 2021, they temporarily transformed those existing subsidies to ensure that no one – even higher-income Americans – would spend more than 8.5% of their income on health insurance premiums. Those who earn between 100% and 150% of the poverty level qualify for premium-free insurance paid entirely by the government, which sends taxpayer dollars directly to insurance companies.

Those more generous subsidies come at a cost to taxpayers: The nonpartisan Congressional Budget Office estimated Wednesday that extending the enhanced tax credits for three years, as the Senate Democrats proposed, would add $83 billion to federal deficits. Partly because of concerns over those costs, Democrats chose in 2022 to extend the beefed-up subsidies only until the end of 2025. The original subsidies, for those earning under 400% of the poverty line, won’t expire.

The Senate Republicans’ plan, which Crapo introduced with Sen. Bill Cassidy of Louisiana, would cost far less, although the Congressional Budget Office hasn’t officially estimated its total cost. Under their proposal, Americans aged 18-49 who earn less than 700% of the poverty level would receive $1,000 – those aged 50-64 would get $1,500 – to spend on health care, with prohibitions on using the money for abortion or certain care for transgender people.

Under the Republicans’ plan, only those who opt for a high-deductible “bronze” or “catastrophic coverage” plan would qualify for the one-time payment. According to the Washington Health Benefit Exchange, which runs the state’s insurance marketplace, letting the enhanced subsidies expire would raise insurance premiums for the more than 216,000 Washingtonians who qualify for them by an average of $1,330 per year.

In a statement after the failed Senate votes on Thursday, the Washington Health Benefit Exchange noted that Washington residents must sign up by Dec. 15 for health insurance that takes effect Jan. 1. Those who sign up by Jan. 15 will have insurance coverage on Feb. 1.

“We know these tax credits have made a tremendous difference to Washingtonians,” the exchange said. “They have helped to make health insurance more affordable, and without them more people will be forced to go without coverage and increase the uninsured rate. We also know that many of our customers will be forced to make tough decisions to afford the increased costs.”

Even if someone with a bronze-level plan used $1,000 or $1,500 in savings to help pay for those higher premiums, they would still need to pay an average deductible of nearly $7,500 in 2026 before the insurance kicks in, according to data from the nonpartisan health research organization KFF.

Members of both parties acknowledge that the U.S. health care system is broken, recognizing that Americans spend twice as much as residents of other wealthy countries, on average, while U.S. health outcomes are worse than most of those countries. Some Democrats, even while they defend the Affordable Care Act, recognize that the enhanced subsidies have opened the door to fraudsters.

A Dec. 3 report from the Government Accountability Office revealed that investigators in the nonpartisan watchdog agency had covertly submitted 24 applications for people who did not exist. Of those 24 applications, 23 were approved and 18 were still covered as of September. The GAO also found that nearly 68,000 Social Security numbers were used to receive more than one year of coverage in a given year, suggesting fraud or at least wasteful mistakes.

For premium-free insurance plans under the Affordable Care Act, often called “Obamacare,” the government sends money directly to insurance companies, which often pay a commission to brokers who sign people up for the plan. That creates an incentive for brokers to apply for fraudulent insurance plans, either for nonexistent people or for unwitting victims, while insurance companies benefit from the payments.

According to data from the Center for Medicare and Medicaid Services, the number of Obamacare plans with no claims – that is, insurance that wasn’t used all year – rose from below 4 million in the years before 2021, when the enhanced subsidies were created, to more than 11 million in 2024. The share of those unused insurance plans increased from 19% in 2021 to 35% in 2024, a boon for health insurance companies even if fraud does not account for the entire increase.

With just one week remaining before Congress is scheduled to leave town until January, any remaining hope for a bipartisan solution lies in the House, where moderate members of both parties have put forward several proposals that would extend the expiring tax credits while setting income limits to receive the benefits and crack down on fraud.

On Wednesday, as the competing Senate plans seemed sure to fail, two bipartisan groups of House lawmakers launched last-ditch efforts using a procedural tool called a discharge petition to force votes on their plans by Dec. 18, when Congress is set to recess for the holidays.

Both of the bipartisan plans – one led by Rep. Brian Fitzpatrick, R-Pa., and the other by Reps. Josh Gottheimer, D-N.J., and Jen Kiggans, R-Va. – would extend the expiring subsidies for two years, with income limits for eligibility and changes aimed at stopping fraud.

Rep. Marie Gluesenkamp Perez, a moderate Democrat who represents southwest Washington, has backed both bills, but as of Thursday night neither plan had enough support to force a vote. At least 218 of the House’s 435 members would need to sign a discharge petition.

Rep. Michael Baumgartner, R-Spokane, told reporters in a video call on Monday that he was open to supporting a bipartisan solution, but he declined to throw his support behind any specific proposal.

“There’s a lot of problems with Obamacare,” Baumgartner said, blaming the law for hospitals closing across the country since 2010. “Premiums have skyrocketed and health care has just gotten much more expensive. I’m not interested in just propping up Obamacare and shifting costs to taxpayers and increasing subsidization of Obamacare. What I want to do is enact measures that bring down the cost of health care and expand access.”

Both of the bipartisan House proposals include measures designed to reduce costs. Republican leaders in the House have not presented a specific health care plan of their own, releasing only a vague list of 10 ideas – one simply said “innovation” – in a closed-door meeting on Tuesday, Politico reported.

Baumgartner noted on Monday the “not-so-secret fact” that Democrats could benefit politically from the subsidies expiring, as many of the roughly 24 million Americans who rely on health insurance purchased through Affordable Care Act marketplaces may vote based on rising health care costs.

“There’s a lot of political games going on,” he said Monday. “But presuming that there is sincerity from the Democrats on the issue and there was something – a measure that would include significant reductions, and bending cost curves and making health care more affordable and more sustainable – I would certainly be open to looking at one of those measures. So, not saying it’s off the table, but it would have to be under certain conditions.”