With about three weeks remaining in the current fiscal year, senators are scrambling to find a way to fund the federal government for fiscal year 2026.
A short-term continuing resolution (CR) continues to be the most realistic option for Republicans — who have the majority in both the House and Senate — to avoid a government shutdown. No matter how they decide to move forward, Senate Republicans will need some Democratic votes to fund the government.
Aware of the dynamics, Democrats are pushing for a deal to extend the Affordable Care Act’s (ACA) enhanced premium tax credits, which are set to expire at the end of 2025, in exchange for their support for a short-term CR. Despite some signals from Democrats in August that they might use this negotiation to push back on the Trump administration’s lawless disregard for Congress’ power of the purse, it is unclear if an Obamacare deal would address that.
“They will be a major part of the negotiation for the bipartisan deal that we need to strike,” Sen. Tim Kaine (D-VA), a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, told TPM on Tuesday, referring to the ACA subsidies.
Republicans “were willing to extend tax cuts for the wealthiest,” Kaine continued, alluding to the so-called “Big Beautiful” reconciliation bill congressional Republicans passed earlier this year. “Why not extend support for everyday people who need to afford health insurance?”
Indeed, many Republicans appear to be finding themselves in support of at least a one-year extension of the Obamacare subsidies, which raises a new question that hangs over the negotiations: why are Democrats only publicly leveraging this single issue in exchange for helping Republicans fund the government? Especially considering the White House’s ongoing undermining of Congress’ power of the purse. It’s a question that has prompted strenuous pushback from some in the Democrats’ base and from influential journalists (including some at this publication).
“We passed a CR in March and the President didn’t pay any attention to it. The budget, whether it’s a CR or not, isn’t worth the paper it’s written on if the President is going to act illegally and refuse to spend the money that’s in it,” Sen. Chris Murphy (D-CT) told reporters on Tuesday, giving voice to the concern that he raised repeatedly over the summer.
It’s a dynamic that will hang over Capitol Hill for the next few weeks.
The Obamacare subsidies
The ACA enhanced subsidies were first put into effect as a part of the American Rescue Plan, the COVID-19 relief package signed into law in March 2021 by President Joe Biden. The enhancements worked in two major ways. It increased the amount of financial help available to those who were already eligible for assistance under Obamacare by lowering the amount individuals pay for their health insurance. And it expanded the eligibility of the subsidies to middle income families, eliminating the ACA’s “subsidy cliff.” Later, the Inflation Reduction Act, signed into law under President Biden in August 2022, extended the enhanced subsidies and the expanded eligibility through the end of the 2025.
Experts warn if Congress fails to act before the subsidies are set to expire almost everyone who gets individual health insurance through the marketplace is going to see dramatic increases in their premiums.
“If Congress does not take action, everyone in the marketplace will see their premiums increase dramatically — that’s both people who receive the premium tax credit and people who don’t,” Claire Heyison, senior policy analyst on the Center on Budget and Policy Priorities’ health insurance and marketplace policy team, told TPM.
The Congressional Budget Office estimates that if enhanced premium tax credits are left to expire, 4.2 million people will drop their ACA marketplace coverage, largely due to the increased cost, and become uninsured.
Congressional Republicans already added a significant amount of red tape to the process for those trying to access the subsidies as a part of their recent reconciliation bill. The so-called “Big Beautiful” bill made it so that people who enroll in marketplace coverage cannot get the premium tax credit until they verify certain personal information. This change won’t come into effect until 2028 but Heyison told TPM “it’s expected that many people will not jump through those hoops” and in turn “not get the health insurance that they’re eligible for.”
Many congressional Republicans seem to be on board
Several Republicans, from Sens. Lisa Murkowski (R-AK) to Josh Hawley (R-MO), have already indicated they would get behind efforts to protect or extend the Obamacare subsidies.
“We’re gonna have to do something on that front, because if we don’t, premiums are gonna absolutely skyrocket,” Hawley said on Monday, according to The Hill. “I’m open to suggestions, but one option that will absolutely not fly is do nothing. We just can’t. People won’t be able to live, they won’t be able to see a doctor.”
Senate Appropriations Committee Chair Susan Collins (R-ME) told reporters Monday she also wants to see the subsidies extended.
Meanwhile, eleven GOP House members co-sponsored a bill, led by Rep. Jen Kiggans (R-VA), last week that would extend the subsidies for another year — effectively punting the expiration to after the 2026 midterms.
Even House Speaker Mike Johnson (R-LA) recently showed some interest around the issue.
“I don’t love the policy, OK? But I understand the political realities and the realities of people on the ground. And this is real to folks,” Johnson told Punchbowl last week. “I don’t think we should be subsidizing high-income earners. It was a Covid-era issue, and so that’d be a big thing for the Republican Party to continue or advance that. At the same time, we don’t want anyone to be adversely affected by that.”
What about Congress’ power of the purse?
Looming over the negotiation, of course, is the White House’s ongoing undermining of Congress’ power of the purse.
The Trump White House and Russ Vought’s Office of Management and Budget have already been lawlessly impounding funds, according to several decisions from the Government Accountability Office. And in late August, they sent an illegal “pocket rescissions” request over to Congress, triggering staunch criticism from many lawmakers.
Some Democrats did acknowledge to TPM this week that even if they can come to a deal to fund the government in exchange for extending the Obamacare subsidies, the Trump administration’s lawlessness may continue.
“We don’t like doing a deal and then have him saying, ‘Yeah, I’ll sign that now. I’m taking all the money away tomorrow,’” Kaine told reporters as he walked up to the Senate floor on Tuesday.
The Virginia Democrat added that he suspects the ACA subsidies would be part of a separate, full year funding deal.
“I wouldn’t be surprised if it’s not in the initial short-term CR — if we’re extending for a month or 45 days to reach a deal,” Kaine said. “I think it would be part of the ultimate deal, rather than part of the short term CR, but we’ll see.”
But one important fact complicates the timeline and a possible deal.
“Open enrollment for marketplace coverage begins on November 1,” Heyison told TPM. “So if the enhancements were to be extended after November 1 — while it would still be much better for American families than if they weren’t — it would be confusing. The premiums people are seeing when they’re shopping for coverage would change. Marketplaces would probably need to do some kind of outreach campaigns to try to get people who had already seen the premium spikes to come back.”
Heyison added ideally it’s not enough for the enhancements to be extended before November 1 “but with sufficient time for marketplaces, insurers and states to be able to make the adjustments that are needed.”
Murphy also pointed to the timeline issue, saying people will see their premiums going up before the end of the year.
“You do a 30 or 40-day, 45-day CR, that doesn’t stop the fact that people are going to be getting nightmarish increases in their premiums,” Murphy told reporters. “So, we don’t have time to wait here. There’s going to be a meltdown in our health care system this fall and we have to act with some urgency.”
