Trump Discusses Direct Payments for Health Insurance
President Donald Trump announced that he has started conversations with Democrats regarding a new strategy to replace subsidies from the Affordable Care Act (ACA) with direct payments to American citizens.
Speaking to reporters at Palm Beach International Airport, Trump explained that his proposal aims to eliminate federal tax credits and replace them with cash payments that individuals could use for their medical expenses.
He said, “And I’m talking right now with some Democrats about doing that. People love it.” However, he did not specify which Democrats he had spoken to regarding this plan.
Trump further stated, “If approved, we’re going to take that money and give it back so people can get health insurance.” He mentioned that recipients could use the funds to negotiate prices and potentially deposit them into a medical account. “Now they can put it into their health insurance,” he added.
He emphasized that the funds would be “locked in,” clarifying that recipients wouldn’t be spending the money on luxury items like cars, but rather on health insurance.
Currently, Democrats are advocating for extending the enhanced ACA subsidies as the government shutdown approaches its 43rd day. Roughly 24 million people are enrolled in the ACA Marketplace and eligible for tax credits.
While Congress expanded ACA aid in 2021 and continued these enhancements through 2025, the recent federal funding bill signed by Trump did not include a continuation of these subsidies, which are directly sent to insurance companies to help offset costs.
Trump noted that “Insurance companies are making a lot of money,” claiming they are not sufficiently returning funds to consumers.
The Senate is expected to consider extending the ACA subsidy by mid-December, but some Republicans on the House Ways and Means Committee plan to formalize Trump’s direct payment proposal.
According to reports, the committee is working on a bill that mirrors Trump’s idea, which would enable ACA enrollees to receive a portion of their federal assistance in a Health Savings Account (HSA).
Concerns have been raised about potential negative impacts on Americans’ healthcare expenses and the types of insurance available. Gerald Anderson, a health policy professor at Johns Hopkins, warned that older Americans and those with pre-existing conditions may face difficulties under such a system.
Anderson expressed that if the tax credits were to disappear, it could heavily affect the ACA, as the law was designed to ensure that insurance packages on the exchanges are legitimate and beneficial. “What we had in the past was a lot of sham insurance,” he remarked.
If the enhanced credits do expire, premiums for ACA members could increase by an average of 114% in 2026, according to a nonpartisan health policy research group. Additionally, the costs of health insurance on the ACA Marketplace have already risen by 26% recently.
