December 10, 2025, 12:16 PM ET
Senate Republicans Propose Direct Medical Payments Instead of ACA Subsidies
Senate Republicans are proposing to provide Americans between $1,000 and $1,500 to help with medical expenses, opting against extending the Affordable Care Act’s enhanced subsidies that have made health insurance more affordable for many.
On December 8, Republican Senators Mike Crapo and Bill Cassidy introduced a bill that would fund health savings accounts for eligible individuals. This initiative would replace the temporary tax credits put in place during the COVID-19 pandemic, which significantly reduced premiums under the ACA, often referred to as “Obamacare.”
Senate Majority Leader John Thune has indicated that the Senate will vote on the Crapo-Cassidy bill on Thursday, December 11. A separate Democratic measure to extend ACA’s enhanced premium tax credits for three years will also be voted on the same day.
Eligibility for the Proposed Payments
The Crapo-Cassidy Act would allow the federal government to deposit $1,000 into health savings accounts for consumers aged 18 to 49, while consumers aged 50 to 64 would receive $1,500.
These payments would be available to those earning up to 700% of the federal poverty level, which translates to about $109,550 for individuals and around $225,050 for families of four in 2025.
However, enrollees would need to choose bronze or catastrophic plans under the ACA. The deposits would occur in 2026 and 2027.
The bill, as explained by Republicans, aims to direct funds to patients instead of insurance companies, which they believe could lead to lower premiums overall. Notably, the legislation would restrict the use of these funds for abortion and transgender services.
Limits of the $1,500 Payments
Experts argue that the amount provided may not be sufficient to cover most ACA bronze or catastrophic plans’ average deductibles.
For instance, one analysis found that the average individual deductible for a bronze ACA plan in 2026 is expected to be around $7,476.
A deductible refers to the out-of-pocket costs that individuals must pay for in-network care before their insurance kicks in. Nevertheless, ACA plans do cover numerous preventive services without charging the consumer, including vaccinations and various health screenings.
Health professionals have expressed concern that if the Crapo-Cassidy proposal passes, consumers could face significant out-of-pocket expenses when accessing healthcare services.
“This may be beneficial for healthy individuals,” noted Sabrina Corlett, co-director at Georgetown University’s Center on Health Care Reform. “But it doesn’t offer much for those managing chronic health issues.”
Understanding Health Savings Accounts
Health savings accounts are linked with high-deductible health plans and allow consumers to save pre-tax money for medical costs, including doctor visits and prescriptions. Individuals can carry over their account balances year after year and can choose to invest the funds, using the tax-free gains for qualified expenses.
Support from Trump and Republicans for Cash Payments
Senator Cassidy stated that empowering patients with cash could encourage them to negotiate better prices, effectively making them more informed consumers regarding their health needs.
This proposed bill reflects an idea from former President Donald Trump, who expressed his approval for the concept of giving money directly to consumers rather than insurance providers.
“I really support the concept of funds being distributed to the people, not the insurers,” Trump said. “This could be in health savings accounts or various formats.”
Rising Health Insurance Costs
Without the enhanced tax credits expiring at the end of 2025, the average cost of health insurance for the 22 million Americans relying on subsidized ACA plans is projected to more than double on January 1, 2026, according to KFF.
As the debate unfolds regarding the future of health coverage for about 24 million Americans enrolled in ACA plans, the focus has shifted away from the roughly 154 million working-age adults who receive employer-based health insurance, which forms the crux of the U.S. health system.
In 2025, the average cost for a family health plan available through employers reached $26,993, reflecting a 6% increase from the previous year, per a recent KFF report.
This contrasts with an annual 4% wage increase for workers and a 2.7% rise in inflation.
Interestingly, a recent survey indicated that nearly half of American adults are anxious about their ability to fund medical expenses over the next year.
