With Obamacare Subsidies on the Line, Cassidy Eyes Compromise to Spend on Consumers, Not Insurers

Democrats caved on the government shutdown before securing a concession on Obamacare subsidies — but they did manage to elevate health care in the minds of voters ahead of the midterms.

Now, Republicans who have spent years grasping around in vain for health care fixes that might neutralize the growing Democratic advantage on the issue, are once again in brainstorming mode.

Senator Bill Cassidy (R., La.), a career physician and chairman of the Senate Committee Health, Education, Labor and Pensions Committee, is hoping to take advantage of this climate to push through a reform that aims to bypass insurance companies, which have become a punching bag for both political parties. The approach recently got a boost from President Trump.

Since its inception, Obamacare has been closely linked to insurance companies, which have received hundreds of billions of dollars in the form of subsidies that help individuals purchase insurance through government-run exchanges. Obamacare imposes regulations to make coverage more comprehensive and universal, but those same regulations also make it more expensive. The law’s initial subsidies couldn’t keep pace with the rising premiums, so during the Biden administration, Democrats used the Covid emergency as an opportunity to shore up the program by funneling extra subsidies to insurance companies.  Yet those enhanced subsidies expire at the end of the year.

In an effort to avoid being flat-footed in response to Democratic attacks that Republicans are increasing health care costs, Cassidy is working to shore up bipartisan support for a proposal that would approve new Obamacare funding, but instead of using it to subsidize insurance premiums, would redirect it to patients through Health Savings Accounts (HSAs). While these accounts could not be used toward premiums, they would allow individuals to pay out-of-pocket costs incurred before they meet their annual insurance deductibles.

“Who would not want to spend 100 percent of the dollars on the patient choosing the health care she wants, as opposed to 100 percent going to insurance companies and only 80 percent being spent on health care” that is based on “what the insurance company decides that you need?” Cassidy, who is up for reelection in 2026, said on a Monday afternoon call with reporters. He said that he “can imagine there’ll be some income cap” for this legislative proposal as talks progress, though negotiations are still in their early stages.

Most congressional Republicans are staunchly opposed to extending in any fashion the enhanced subsidies that formed the basis of Democrats’ shutdown strategy.

As part of a deal to reopen the government earlier this month, Senate Majority Leader John Thune (R., S.D.) promised to bring a Democrat-backed ACA subsidies bill to the floor by mid-December. But that promise notably did not include any pledge from Senate GOP leadership that there will be enough Republican support to get a subsidy extension across the finish line.

Widespread Republican opposition gives the Louisiana senator optimism that there’s room for a bipartisan deal, hopefully before the end of the year.

Republicans who are open to Cassidy’s plan may be hesitant to sign onto any proposal that would keep enhanced Obamacare subsidy funding at current levels, even if that money is redirected to Obamacare exchange enrollees through HSAs. And even if enough GOP senators warm to the plan, winning over enough Democrats to clear the filibuster’s 60-vote threshold for passing legislation will be tricky.

Trump threw his support earlier this month behind a proposal to take money from the “BIG, BAD Insurance Companies” and “give it to the people.” In a Tuesday morning social media post, Trump made clear that he will only support a health care plan that sends money “directly back to the people,” not insurance companies. “Congress, do not waste your time and energy on anything else,” he wrote in a dig at any plan to extend the enhanced ACA subsidies.

Cassidy acknowledged on Monday’s call that the president will be key to any such deal, and that any GOP-backed legislative package on health care will need to factor in Hyde Amendment concerns involving taxpayer-funded abortion.

Because open enrollment for the 2026 benefit year is already underway, insurance companies have already set rates. A last-minute deal to renew the subsidies would necessitate recalculating them.

“The nice thing about what we’re proposing is that you don’t have to redo your rates,” Cassidy said in response to a question on Monday’s call about prospective insurance premium increases. “You can take the rates that are already published because we’re not putting the money towards a premium. We’re putting the money towards a health savings account — a consumer-driven account — that somebody then uses for their deductible, so those rates can stay the same.”

Cassidy’s hope, he told reporters, “is that people take off their jerseys and figure out: how can we actually get something done for 2026 to benefit fellow Americans?”