The debate over whether to extend a tax credit to offset taxpayers’ health care insurance premium costs could derail efforts to fund the government after September 30.
A COVID-era enhancement to Affordable Care Act premium tax credits is set to expire at year-end. Under current law, households with incomes at over 400% of the federal poverty level will no longer have access to the credits in 2026 – and other households will receive a less generous credit. That’s on top of other changes from the One Big Beautiful Bill (OBBB, P.L. 119-21) that impacted health care, including access to premium tax credits. (More here.)
Funding Bill Fails to Address Credit Expiration
Meanwhile, lawmakers are scrambling to fund the government for fiscal year 2026. On Tuesday afternoon, Republicans released a continuing resolution (CR) to fund the government through November 21, 2025 – but absent from the 91-page document was any mention of the expiring enhanced premium tax credit. This was despite many Democrats insisting on an extension as a prerequisite to signing onto the CR.
House Minority Leader Hakeem Jeffries (D-NY) and Senate Minority Leader Chuck Schumer (D-NY) came out quickly in opposition to the CR, saying it “does nothing to stop the looming healthcare crisis.”
Schumer, speaking at a September 16 press event hosted by Protect Our Care, said that 24 million Americans will be impacted by the enhanced credit expiration. That number comports with Centers for Medicare & Medicare Services’ announcement in early 2025 about ACA marketplace total enrollment. Schumer added that number includes “about 5 million people who lose their coverage entirely.”
State leaders are concerned too – with 18 governors writing congressional leadership September 15 urging them to extend the credits. If the credits expire, “premiums will rise by thousands of dollars for many families,” reads the letter. “Hard-working American families, older Americans not yet on Medicare, small business owners, and rural communities – where marketplace coverage is often the only option – will be hit the hardest.
And the timing is tight, Jeffries explained at a September 16 press conference. Notices about 2026 premiums will go out to Americans from their insurers “in a matter of weeks” and open enrollment for the ACA marketplace begins November 1.
Jeffries said Democrats had “drawn a line in the sand as it relates to defending the health care of the American people.” When asked whether Senate Democrats, including Schumer, would stand beside him in rejecting the CR this time around, he simply replied “yes.”
A Middle Ground?
Not all Republicans oppose extending the enhanced credit – at least in the short term. Representative Jennifer Kiggans (R-VA) is leading up a bipartisan bill (H.R. 5145) calling for a one-year extension. That bill has 11 Republican co-sponsors.
Meanwhile, Representative Nicole Malliotakis (R-NY) said in a September 16 post that she’s got a solution that is “somewhat in the middle” of a full extension and allowing the credits to expire. Malliotakis proposes “some type of phase out over a longer period of time, while also addressing the core problem of why our medical costs and insurance is so high.” As far as that “core problem,” she blames insurance companies, accusing them of being “predatory.”
After the OBBB was enacted, Democrats proposed a permanent extension of the enhanced credit in their Protecting Health Care and Lowering Costs Act (S. 2556/H.R. 4849). It was unclear at press time whether Democrats would be willing to accept a CR that keeps the government open while extending the enhanced credits for a shorter duration.
Breaking Down the Debate
Why can’t lawmakers agree on whether an enhanced premium tax credit extension is needed to keep Americans insured? Matt Muma, of the Joint Committee on Taxation, described the debate as a two-part problem. On one hand, allowing the enhanced credits to expire is “a reversion, potentially, back to the original premium tax credit structure,” said Muma at the American Health Law Association’s Tax Conference September 11. But then the OBBB made some changes to “eligibility and repayment rules,” that “further reduce the generosity” of the credit.
So whether you view expiration as a “major structural change” depends on what you take as the starting point, said Nick Bath, a partner at Manatt and former health policy director of the Senate Health, Education, Labor and Pensions Committee. Bath explained that while some are “looking at the Affordable Care Act from the perspective of what the structure was when it was enacted and its generosity,” others are “looking at it as the way it is the day before OBBB was enacted.”
As Congress comes up against a funding deadline, Bath noted that one issue many “feel like is resonating voters on the shutdown is health care.” And he’s seen “increased Republican interest” in the expiring credit, including bill introductions.
The question now is whether those bills are being introduced “sort of for show” or are “a real gesture on the part of Republicans,” said Bath.
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