Senate December vote sets stage for healthcare premium tax credit extension

The End of shutdown delivered something rare in Washington: a second chance at good health care. As part of the deal to reopen the government, Senate Majority Leader John Thune, R-S.D., committed to voting in December on expanding expanded premium tax credits in the individual market. This provides an opportunity to avoid steep premium increases and start building a system that works better for patients.

For the Democrats who voted to end the shutdown, the incentives are obvious. They want to show that their compromise will provide real relief for families faced with higher premiums. They will look for a deal that solves the problem in front of them, but they will back down if Republicans turn the bill into another fight over repeal of the Affordable Care Act (Obamacare). The task now is to correct the errors and not to revisit old conflicts.

This moment also gives Republicans a chance to show they can govern. Health care costs are a major factor in the affordability crisis facing families. They reduce take-home pay, increase prices for goods and services, and drive both households and governments deeper into debt. Employers, who bear the bulk of insurance costs for people under 65, are feeling the pressure directly, and employees are feeling it in their wages.

president Donald Trump has already laid out an important principle: Instead of funneling federal subsidies through insurance companies, channel that support to individuals so they can choose the care and insurance coverage that’s best for them. Florida Republican Senator Rick Scott has made a similar argument, urging Republicans to fix Obamacare. Combined with growing bipartisan support for price transparency, these ideas suggest a practical strategy that empowers patients and employers and promotes a more competitive marketplace.

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Today’s system moves in the other direction. Prices are hidden, levels of government continue to expand, and incentives are so misaligned that prices rise year after year. These problems are particularly serious in the individual market, which has fewer participants, a less healthy risk pool, and limited plan competition. Making this market functional again requires more registrations, more choices and more transparency.

The vote in December is the right time to initiate this change. A package that addresses the immediate subsidy issue and lays the foundation for long-term reform is both achievable and necessary. There are already practical solutions developed by center-right institutions such as the America First Policy Institute, the Paragon Institute, leaders in Congress, etc Trump’s policy proposals.

The first step is a responsible phase-out of the expanded premium tax credits by 2026. This will avoid an abrupt cut and give the remaining reforms time to take effect.

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Second, Congress should adopt a proposal from the Paragon Institute to restore and reform Cost Sharing Reduction (CSR) payments in Obamacare and allow eligible participants to receive their CSR subsidies directly into a Health Savings Account (HSA). This one change fixes several problems at once.

It lowers premiums and lowers federal costs. When CSR payments stopped in 2017, insurers responded by dramatically increasing premiums for silver plans, a practice known as “silver loading.” Because premium tax credits are tied to the price of silver plans, this resulted in increased federal spending. A 2018 Congressional Budget Office analysis found that restoring CSR funding would reduce the federal deficit by about $30 billion within a decade. Providing funding is more cost effective than continuing with the current workaround.

It also creates the fiscal space needed to responsibly phase out the expanded premium tax credits. The savings could be used to fund the phaseout or provide more generous HSA contributions from CSRs to bolster support for lower-income Americans.

Most importantly, it empowers patients. According to Paragon, the typical annual HSA contribution for someone receiving CSR support is about $2,000. This is meaningful support that families can control directly. If they stay healthy, unused dollars stay in the account and continue to grow. If they become ill, they can use the funds to cover their deductible. Because the money is theirs, they have a clear incentive to compare prices and choose high-quality care, leading to greater competition between providers.

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Next, Congress should strengthen the individual market’s risk pool by expanding affordable options. That means allowing any health plan approved by the state insurance commissioner to be included in the exchange, expanding access to copper plans, adjusting age rating rules so younger people pay less, and modernizing individual health insurance arrangements (ICHRAs) so more small businesses can offer coverage. Practical changes, such as Such as allowing employees to choose between an ICHRA and a traditional group plan, allowing employees to contribute pre-tax dollars to close premium gaps, and eliminating unnecessary COBRA requirements would make ICHRAs more attractive.

The first step is a responsible phase-out of the expanded premium tax credits by 2026. This will avoid an abrupt cut and give the remaining reforms time to take effect.

Finally, these reforms should be paired with the Bipartisan Patient Price Tags Actsponsored by Republican Senator Roger Marshall of Kansas and Democratic Senator John Hickenlooper of Colorado. The bill would strengthen enforcement of price transparency rules so that small businesses, self-funded employers, and new purchasing groups can contract directly with providers and transparent pharmacies. This would reduce costs, cut out middlemen and increase competition.

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This is a moment for practical governance. The The shutdown deal didn’t just reopen the government. A door opened. If Republicans seize this opportunity, they can solve a real problem for millions of Americans and begin a long-overdue transition to a health care system that puts patients, not bureaucracy, in charge.

Vote in December could be the beginning of this transition. It should be.

Disclaimer: Gingrich 360 has consulting clients in the healthcare industry who may be affected by changes in healthcare laws.

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