Subsidies, Savings, and Stalemates: What Congress's Year-End Gridlock Means for Health Plans in 2026

The new year is fast approaching, and with it, the perennial talk of an end-of-year health package in Congress. These bills don’t always materialize, but they’re always debated. This year is no different. Following the longest US government shutdown in history, observers questioned whether legislators had the political will to negotiate another large legislative package right away. Undeterred, Congress began circulating proposals, and the administration teased a policy on health care tax credits that was quickly walked back. Here’s what to watch in the coming weeks:

Expiration of the enhanced premium tax credits (subsidies) for Affordable Care Act (ACA) Marketplace enrollees on December 31 is the most pressing issue. They originated as COVID-19 relief in 2021 and were the impetus for the shutdown: Republicans opposed extended subsidies into 2026, Democrats initially opposed to vote for any funding bill that didn’t include an extension. Eventually, Senate Democrats agreed to fund the government through January 30 in exchange for a promise from Senate Majority Leader John Thune (R-SD) for a vote on extending subsidies in December. This vote—on a bill of Democrats’ choosing—may successfully pass in the Senate but is almost certainly doomed to advance in the House.

Some analysts note that the situation is unusual given the polling that shows significant public support for extending the subsidies. Even Republican pollsters aligned with President Trump have been warning that failing to extend subsidies could be a major liability in the 2026 midterms by driving up health care costs and increasing rates of adverse selection.¹ In late November, reports emerged of a proposal from the Trump administration that would extend subsidies, more than a year after then-candidate Trump said he had “concepts of a plan” to fix the ACA during a debate with Vice President Harris.² The proposal would have extended subsidies for 2 years, capped eligibility at a household income of 700% of the federal poverty level, required all enrollees to pay premiums, and funded cost-sharing reductions, among other provisions. Could this be Trump’s long-awaited plan?

The proposal prompted bipartisan backlash and was subsequently withdrawn. Both parties are searching for a way forward, but time is limited. Some commentators believe it’s already too late and that extending now wouldn’t help anyone because rates are set and open enrollment has begun. Managed care organizations (MCOs) disagree; while earlier would have been better, an extension now can still help control nex t year’s costs. Open enrollment ends January 15, allowing time to determine whether Congress can find a formulation that can pass the House and get 60 votes in the Senate.

What’s the alternative to extending subsidies? Senate Republicans continue to rally around health savings accounts (HSAs). Republicans have frequently proposed HSAs as a tool to improve health care affordability, and dueling proposals from Senators Rick Scott (R-FL) and Bill Cassidy (R-LA) would replace some or all ACA subsidies—enhanced or not—with contributions to HSAs.

Senator Scott’s proposal (“Trump Health Freedom Accounts”) would allow states to submit a waiver proposal to the US Department of Health and Human Services (HHS) to substitute ACA subsidies for contributions to these new accounts. Funds could then be used for either out-of-pocket health costs or premiums, unlike existing HSAs. The proposal would also allow low-cost Marketplace plans that do not cover pre-existing conditions. This introduces a real risk to the Marketplace, as young healthy people may flock to cheap plans that don’t cover pre-existing conditions, threatening the plans that do with a so-called “death spiral” as premiums skyrocket.

Senator Cassidy’s more modest proposal would leave the original ACA subsidies in place but put the enhanced amount into traditional HSAs for high-deductible bronze plan enrollees, allowing the funds to pay out-of-pocket expenses but not premiums. One wrinkle here is that most Marketplace enrollees are in silver and gold plans. Further, reverting to original ACA subsidy eligibility could price middle-class enrollees out of even bronze plans because they no longer qualify for premium assistance. Senator Cassidy has talked frequently about this plan but has not yet released legislative language.

It’s also worth noting that many conservatives have raised concerns that, under this approach, enrollees could spend federal HSA contribution dollars on things they don’t believe should be federally funded—such as abortion services—leaving the proposals in a state of limbo as the subsidy clock runs out.

Last, but certainly not least, it wouldn’t be December in DC if we didn’t talk about pharmacy benefit manager (PBM) reform. To recap, a large PBM reform bill almost passed Congress in the final weeks of 2024. Unfortunately for supporters, provisions were removed from the final package after Elon Musk voiced concerns on social media.

In early December 2025, Senators Mike Crapo (R-ID) and Ron Wyden (D-OR) reintroduced a package for consideration in a possible year-end health vehicle.³ This package closely mirrors the 2024 version and includes any-willing provider requirements, the “delinking” of PBM compensation from the price of a drug, a ban on spread pricing arrangements between plans and PBMs, and increased transparency requirements. Other legislators have introduced similar bills throughout the year. I won’t belabor the point, but observers should watch between now and January 30. There is bipartisan interest in getting this done, but, given the circumstances of last year’s negotiations, it is unclear whether similar external opposition will arise again.

All 3 of these issues have big implications for health plans in 2026. So, what do we make of it? My 2 cents: Subsidies are not likely to get done before the end of the year, HSAs don’t have the political momentum to make it across the finish line, and PBM reform is in strong shape, though by no means certain. Things could change. Republicans could seek an easy, popular health care win after an unpopular reconciliation package and strong Democratic victories in state elections across the country. The only thing we know for sure is that MCOs have their work cut out for them in 2026, no matter what Congress does.

1. New McLaughlin Battleground District Poll: Health care tax credits a pivotal issue for retaining the GOP House majority, protecting the Trump agenda. PR Newswire. Published November 18, 2025. Accessed December 4, 2025. https://www.prnewswire.com/news-releases/new-mclaughlin-battleground-district-poll-health-care-tax-credits-a-pivotal-issue-for-retaining-the-gop-house-majority-protecting-the-trump-agenda-302619005.html
2. Traylor J. Trump set to propose framework to fix Obamacare subsidies. MS Now. Published November 23, 2025. Accessed December 4, 2025. https://www.ms.now/news/trump-health-care-plan-obamacare-aca-subsidies
3. Wyden, Crapo Introduce Bipartisan Pharmacy Benefit Manager Legislation. United States Senate Committee on Finance. Published December 4, 2025. Accessed December 5, 2025. https://www.finance.senate.gov/ranking-members-news/wyden-crapo-introduce-bipartisan-pharmacy-benefit-manager-legislation

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