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On Thursday, the Senate dismissed a Republican-supported initiative that sought to replace soon-to-expire Affordable Care Act tax credits with direct deposits into health savings accounts for select participants. The plan faced opposition from Democrats and several experts, who argued that it wouldn’t effectively counteract increasing insurance premiums.
The proposal was defeated in a 51-48 vote, with unanimous Democratic opposition and a single Republican dissent from Sen. Rand Paul of Kentucky.
Sens. Bill Cassidy of Louisiana and Mike Crapo of Idaho proposed offering individuals enrolled in “bronze” or “catastrophic” plans earning below 700% of the federal poverty level a deposit of $1,000 into their HSAs for those aged 18 to 49, and $1,500 for those aged 50 to 64.
This plan was in line with President Donald Trump’s preference to channel payments directly to individuals instead of insurance companies. On Tuesday, Trump expressed his approval of the HSA concept, stating, “I like the concept. I don’t want to give insurance companies any money. They’ve been ripping off the public for years.”
The proposal aimed to overturn the current funding structure, where subsidies are sent directly to insurers to cover premiums, leaving enrollees to handle deductibles. Instead, it suggested depositing funds into HSAs for deductible payments, which notably could not be used to pay premiums.
Critics contend that this shift would disadvantage enrollees, as most would receive less financial aid under the HSA plan compared to the existing ACA tax credits. This is particularly true for those with high-deductible plans; according to the Kaiser Family Foundation, the average deductible for a bronze plan this year reached $7,200.
Critics argue this is a net loss for enrollees, as most would receive less support under the HSA proposal than the existing ACA tax credits, since it would only apply to high-deductible plans (the average deductible for individuals with a bronze plan was $7,200 this year, according to the Kaiser Family Foundation nonprofit).
The proposal would have also expanded eligibility for the catastrophic plans to everyone, likely leading insurers to raise premiums for people with more health issues who are concentrated in the more comprehensive plans, the left-leaning Center for American Progress notes.
The plan also didn’t apply to children and “there’s no adjustment of income, meaning this proposal wildly favors weather—and healthier—enrollees,” Sabrina Corlette, a Georgetown professor who specializes in health care policy, told NBC News.
Tangent
The Senate also rejected a bill backed by Democrats on Thursday that would have extended ACA premium tax credits for three years, increasing the likelihood the credits will lapse and premiums will spike. Trump has consistently said he wants a health care plan that sends money directly to people—not insurance companies—suggesting Americans could refer to the new plan as “Trumpcare.”
