Dive Brief:
- Two influential Republican senators released legislation Monday that aims to replace the more generous financial assistance for Affordable Care Act health plans that’s set to expire at the end of the year.
- The bill from Sens. Mike Crapo, R-Idaho, and Bill Cassidy, R-La., would send funds directly to health savings accounts paired with bronze or catastrophic plans offered on the exchanges in 2026 and 2027.
- The Health Care Freedom for Patients Act would improve affordability while giving enrollees more control over the funds, the lawmakers said. Senate Majority Leader John Thune, R-S.D., said the proposal would be up for a vote Thursday.
Dive Insight:
Under the proposal, eligible beneficiaries between the ages of 18 and 49 earning less than 700% of the federal poverty level would receive $1,000 in HSAs. Enrollees ages 50 to 64 would receive $1,500.
The HSA funds couldn’t be used for abortion or gender-affirming care under the legislation, according to a fact sheet on the bill.
The accounts are tied to bronze or catastrophic plans on the exchanges. Bronze plans typically offer lower premiums, but come with higher out-of-pocket costs and deductibles. The average deductible for a bronze plan was more than $7,000 this year, according to health policy researcher KFF.
Meanwhile, catastrophic plans, which are largely limited to enrollees under the age of 30, cover essential benefits with low premiums and much higher deductibles. For example, the annual deductible for an individual under a catastrophic plan will be $10,600 next year, according to KFF.
Republicans want to expand access to catastrophic plans. The bill would expand eligibility to all individuals starting in 2027.
Additionally, the legislation would fund cost-sharing reduction payments that aim to lower premiums, as well as policies that would cut Medicaid funding to states that offer coverage to undocumented immigrants.
The bill comes as the debate over the enhanced ACA subsidies is down to the wire. The more generous financial assistance, first enacted during the COVID-19 pandemic, allowed many low-income ACA beneficiaries to pay little or nothing for health plans while improving affordability for middle-income enrollees.
However, the enhanced subsidies are set to expire at the end of the year, likely causing premiums on the exchanges to more than double and pushing millions of enrollees to drop their coverage.
The issue was at the center of a historic government shutdown this fall, though the impasse between Democrats and Republicans ended last month without a deal. Democrats are pushing to extend the subsidies, but many Republicans are wary, concerned about high costs to the government and fraud on the exchanges.
Some Republicans have offered other alternatives. Sens. Susan Collins, R-Maine, and Bernie Moreno, R-Ohio, released a plan that would extend the enhanced subsidies for two years, but add an income cap and cut out zero-premium plans.
Sen. Rick Scott, R-Fla., introduced a bill last month that would create accounts where funds could be used to cover medical expenses or insurance premiums.
The Senate is also expected to vote Thursday on legislation supported by Democrats to extend the enhanced subsidies for three years.
