With the halls of Congress already echoing with holiday farewells, a crucial deadline looms over millions of Americans: the expiration of enhanced Affordable Care Act (ACA) tax credits on December 31, 2025. As lawmakers prepare for their Christmas recess, the fate of these subsidies—and the health insurance premiums of countless families—hangs in the balance, with no clear resolution in sight.
This final week before the break has been a flurry of legislative activity, but also of deepening partisan divides and internal party strife. According to CNN, the House of Representatives, led by Speaker Mike Johnson and the GOP leadership, is pushing forward with the "Lower Health Care Premiums for All Americans Act." This Republican-crafted bill is their answer to the looming expiration of the enhanced ACA premium tax credits, a benefit first expanded during the pandemic to help Americans weather rising health costs.
Yet, as Politico reports, the GOP proposal is notably narrow. It focuses on limited reforms to pharmacy benefit managers—essentially calling for greater transparency—codifies association health plans to let small businesses band together for insurance, and clarifies stop-loss insurance. However, it notably omits any expansion of health savings accounts (HSAs), a long-touted Republican priority. The bill also includes cost-sharing reductions, though these were previously struck down by the Senate parliamentarian during earlier legislative debates.
Perhaps most critically, the bill does not extend the enhanced ACA subsidies that are about to expire. This omission has caused a rift within Republican ranks, as moderates from swing districts—Reps. Brian Fitzpatrick (R-PA), Jen Kiggans (R-VA), Mike Lawler (R-NY), and David Valadao (R-CA)—push for an amendment to keep the enhanced subsidies alive for two more years, with income caps and anti-fraud measures. According to CNN, these moderates plan to force a vote on their amendment in the House Rules Committee on December 16, but expectations are low that their proposal will advance.
Meanwhile, Democrats have made their position clear: only a clean, multi-year extension of the enhanced subsidies will do. House Minority Leader Hakeem Jeffries has marshaled a discharge petition with 214 signatures—just a handful short of the majority needed—to force a vote on a three-year extension. Four Senate Republicans have already signaled support for this approach, providing some bipartisan cover. Rep. Josh Gottheimer (D-NJ) is also backing a one-year extension with similar bipartisan support, but top House Democrats like Rep. Richie Neal (D-MA) dismiss anything less than three years as a "waste of time."
The stakes are enormous. If Congress fails to act, the so-called "Obamacare cliff" will arrive with the new year. The Congressional Budget Office estimates that annual premiums for those on ACA exchanges will skyrocket by an average of 114%—about $1,000 more per year—while roughly 2 million additional Americans could lose coverage entirely. As KFF’s Larry Levitt put it to CNN, "This is kind of a greatest hits of Republican health care ideas of the last decade," but the package is unlikely to help those most at risk of losing affordable coverage.
The House GOP bill does contain measures long favored by Republicans, such as association health plans. These would allow small businesses and self-employed individuals to band together to purchase insurance, potentially lowering premiums for healthier groups. However, these plans offer less comprehensive coverage than ACA-compliant plans and can charge older enrollees higher rates, raising concerns among consumer advocates.
Another feature is the renewed funding for cost-sharing subsidies, which help lower-income enrollees reduce out-of-pocket expenses. Yet, as Loren Adler of the Brookings Institution told CNN, this measure could paradoxically raise monthly premiums for many, as it would reduce the amount of aid available for purchasing plans on the exchange. In addition, the bill would place new transparency requirements on pharmacy benefit managers—middlemen in the drug supply chain often blamed for high medication prices. Still, experts doubt this will meaningfully impact costs for most consumers.
President Donald Trump, who has remained vocal on health policy, prefers that federal aid be directed into individual health savings or insurance accounts rather than through broad subsidies to insurers. According to Straight Arrow News, Trump has left the door open to a limited extension of the subsidies, provided it comes with Republican-favored changes. Senator Bill Cassidy (R-LA), chair of a key health committee, echoed this sentiment in media interviews, saying, "There is a deal that could be made. Why don’t we do both?"—referring to a possible compromise that would address both premiums and out-of-pocket expenses. Cassidy added, "I would be willing to do a short-term extension of the premium tax credit for those people with higher premiums if they will concede that we’ve got to do something for the $6,000 out of pocket."
Yet, despite these overtures, the window for action is rapidly closing. The Senate failed last week to advance either a Democratic-backed three-year extension or a Republican bill focused on HSAs, with neither proposal clearing the 60-vote threshold. As lawmakers prepare to leave Washington by Friday, the odds of a last-minute deal are slim. Even if the House manages to pass a compromise, the Senate is unlikely to act before the recess, making at least a temporary lapse in subsidies all but certain.
The consequences could be felt immediately. Open enrollment for ACA plans closes on January 15, but those seeking coverage starting January 1 must sign up by December 16. Without the enhanced subsidies, premiums listed on the exchange will not reflect the extra assistance, potentially pricing out many families who have come to rely on the expanded support since it was introduced in 2021 as part of a Covid-19 relief package. Senator Jon Ossoff (D-GA) did not mince words, telling CNN, "The vote that members cast, whether to extend these tax credits means people will live or people will die."
Meanwhile, the broader legislative picture remains fraught. The Senate is set to pass the annual National Defense Authorization Act—an unbroken tradition for 64 years—and clear dozens of presidential nominees before the break. But with conservatives still blocking the next government funding package, many lawmakers are bracing for another potential shutdown at the end of January.
As the Capitol empties for the holidays, the question remains: will Congress return in 2026 to find millions of Americans facing higher health costs and lost coverage, or will a late compromise emerge to bridge the gap? For now, the answer is as uncertain as ever, and the stakes could hardly be higher for families across the country.
