On Thursday, December 11th, a proposal drafted by the Republican Party that promised to bypass health insurance companies and directly allocate healthcare funding to the people was rejected in the U.S. Senate.
The proposal, co-drafted by Senate Health, Education, Labor, and Pensions Committee Chairman Bill Cassidy (Republican from Louisiana) and Senate Finance Committee Chairman Mike Crapo (Republican from Idaho), echoed President Trump’s call to redirect federal subsidies originally flowing to insurance companies directly to the public.
The bill was defeated by a vote of 51 to 48 on Thursday, falling short of the 60-vote threshold required for passage in the federal Senate.
All Democrats voted against the proposal. Senator Rand Paul (Republican from Kentucky) was the only Republican to vote against it.
This outcome was expected. This fall, the government experienced the longest government shutdown in U.S. history due to the parties’ inability to compromise on healthcare issues.
The deadline to extend the Affordable Care Act’s (ACA, also known as Obamacare) government subsidies is December 31, 2025. Without an extension of government subsidies, policyholders face the prospect of a significant increase in healthcare premiums in 2026.
Congress is set to adjourn on December 19th. Bloomberg predicted earlier this month that the two parties are unlikely to reach any healthcare agreements before the deadline.
President Trump also noted that the two parties are still at odds over healthcare issues. Democrats hope to solidify the tax deductions extended during the Biden era under the ACA permanently.
Republicans, on the other hand, aim to make improvements. Trump stated in an interview with Politico on Monday, “My view on healthcare is simple – Obamacare was set up to make insurance companies rich, receiving tens of billions of dollars in government subsidies.”
“You know, have you seen the stocks of these insurance companies go up 16, 17, even 18 times in a short period of time? They have gotten tens of billions, not billions, but tens of billions of dollars. And my attitude is very simple, I don’t want to give them any money,” the President said.
“Not a penny to the insurance companies,” Trump said, “I want the money to go directly to the people so that they can get healthcare for themselves.”
According to the Cassidy-Crapo proposal, individuals purchasing health insurance on the ACA marketplace would be eligible to establish Health Savings Accounts (HSAs), with funds previously used as tax deductions to offset premium increases now directed as payments to HSAs by the federal government to offset personal healthcare expenses.
The plan aims to encourage people to purchase high-deductible insurance plans with lower monthly premiums and rely on HSAs to reduce their out-of-pocket medical costs. Additionally, the proposal seeks to expand catastrophic health insurance plan availability.
Cassidy and Crapo argue that directing federal funds to patients rather than insurance companies will give Americans more control over their healthcare insurance.
Cassidy stated in the Senate that under his plan, “Everyone under 49 years old would receive a $1,000 medical savings account subsidy,” while a family of four would receive $5,000, enabling “more choices for patients, fostering competition, and lowering medical costs.”
Crapo emphasized, “Patients should decide where their healthcare expenses go, not insurance companies. This aligns with the President’s call to direct funds to patients rather than insurance companies and is based on the success of the Earned Income Tax Credit. This bill expands the applicability of HSAs and allows them to be bundled with more affordable insurance plans.”
Under the Cassidy-Crapo plan, Health Savings Accounts would be open to individuals purchasing insurance on the ACA marketplace.
Senate Democratic Leader Chuck Schumer condemned the Republican plan as “absurd” shortly before the vote.
He argued that the bill would not sufficiently curb substantial increases in health insurance costs because “there are no extended tax deductions even for a day, a month, or a year.”
Schumer stated in the Senate, “The Republican plan is junk insurance.”
The Senate will also vote on a Democratic proposal to extend ACA subsidies for three years.
The only Republican Senator who voted against this new Republican healthcare plan, Paul, stated that shifting ACA subsidies to Health Savings Accounts (HSAs) rather than insurance companies may be an improvement, but it still does not break away from the ACA framework.
White House spokesperson Karoline Leavitt pointed out in a press conference on Thursday that “Democrats passed the Affordable Care Act without any Republican support. Then, they expanded the bill with exorbitant pandemic subsidies… later on, they doubled down on these subsidies, setting their expiration for 2025.”