Trump Proposes Direct Payments Over Obamacare Subsidies

The proposals vary and details are scant, but Republicans are supporting these options because Congress has yet to vote on the future of affordable health insurance for millions of Americans.

Democrats want to strengthen the Affordable Care Act, often referred to as "Obamacare," by extending COVID-19 pandemic-era tax credits, which expire at the end of 2025. According to the health policy nonprofit KFF, without these increased tax credits, average costs for the 22 million Americans receiving subsidized ACA insurance would more than double by January 1, 2026.

Senate Majority Leader John Thune, R-South Dakota, promised a vote on the increased tax credits by mid-December but did not guarantee Republican support for extending these subsidies. House Speaker Mike Johnson, R-Louisiana, has not promised a vote and has called the increased tax credits "nonsense."

Signing legislation to end the 43-day government shutdown without increasing subsidies, Trump said he wants "the money to go directly to you."

Congress Passes Deal to End Longest Government Shutdown in US History
President Donald Trump shakes hands with House Speaker Mike Johnson after signing a bill package to reopen the federal government in the Oval Office of the White House on November 12, 2025, in Washington, DC. Congress on Wednesday ended the longest government shutdown in US history, a 43-day period that paralyzed Washington and left millions of workers without pay, while Republicans and Democrats engaged in a blame game. The Republican-led House of Representatives voted largely along party lines to approve the package passed by the Senate. Americans spend more on medical care than any other country, and rising medical costs will force all Americans to pay higher insurance rates, whether they have workplace, Medicare, other health insurance policies, or coverage under the Affordable Care Act.

For the more than 150 million Americans who receive coverage through their employers, average spending will rise to the highest level in half a decade in 2026. And older Americans on Medicare have been told that their Part B premiums—medical insurance that covers outpatient and preventive care, doctor visits, and medical equipment—will increase by 9.7% in 2026, making it less affordable for older adults who rely on Social Security.

What will happen with sending money directly to customers?

Trump has not provided details about his proposal. In a post on TruthSocial on November 18th, congressional representatives, former Trump administration officials, and some academic researchers proposed using health savings accounts for health care.

Health savings accounts are commonly used by working Americans who receive health insurance through their employer. These accounts, combined with high-deductible health insurance plans, allow customers to save their savings before taxes. This allows individuals to save a portion of their salary. This money can be spent on eligible expenses such as doctor or hospital bills or prescription drugs.

Senator Bill Cassidy, R-Louisiana, wants health savings accounts integrated with "bronze" level Affordable Care Act plans. Families would receive federal money deposited into the health savings account to purchase health care. "This helps reduce patient costs," Cassidy said during a Senate hearing on November 19.

During the first Trump administration, White House advisor Brian Blase proposed diverting a portion of Obamacare funding to health savings accounts for low-income enrollees.

The Affordable Care Act now provides low-income enrollees with "cost-sharing reduction" payments to offset expenses like deductibles and co-pays. Under Blase's proposal, instead of sending payments directly to insurance companies, these subsidies would be sent to low-income consumers. They would have the option to direct the funds to a health savings account.

Similar to Blase's proposal, Senator Rick Scott, R-Florida, announced a bill on November 20 that would convert the ACA's cost-sharing reduction payments into HSA-style "Trump Health Freedom Accounts." States would have to submit a waiver to the federal government to create "Freedom Accounts."

Scott's proposal would allow consumers to use the accounts to pay health insurance premiums. Except in certain cases, HSA accounts cannot be used to pay health insurance premiums.

"Americans will always choose better options for their families than the government," Scott said in a statement. Democrats have warned of a health insurance "cliff" for millions of Americans.

Democrats are suspicious of the Republicans' timing.

They argue there isn't enough time to reform the Affordable Care Act tax credit without jeopardizing the insurance coverage of millions of Americans.

Sen. Catherine Cortez Masto said, "People are about to lose health care. It's a difficult situation."

The Nevada Democrat said Congress should extend the Enhanced Premium Tax Credit for one year to give both parties time to study long-term reforms. "This should be a thoughtful process and not put people in a difficult position," Cortez Masto said.

Sen. Ron Wyden, D-Oregon, agreed that there isn't enough time to enact health reform legislation before insurance rates reset in January for millions of ACA enrollees. He said Congress should first extend the Enhanced Premium Tax Credit. During a Senate committee hearing on November 19, Wyden said, "There's no way Congress can come up with a proposal in the next few weeks that will help people in January."

Health policy experts are also skeptical of proposals that would divert existing Obamacare subsidies into Health Savings Accounts. Such a move could threaten to disrupt the ACA marketplace and force healthy people to drop coverage, leaving behind sicker people in the insurance pool and higher monthly insurance premiums.

Cynthia Cox, KFF's vice president and director of programs on the ACA, said, "The original tax credits that have been in place since the ACA was first passed are what keep that market running." "Without those tax credits, the market collapses, and then people with pre-existing conditions are left with no option to get health insurance."

Robert Kastner, an economist and research professor at the University of Chicago Harris School of Public Policy, said the concept of sending money directly to consumers instead of through health insurance companies is "a very old idea." "It's been a conservative health reform plan for 40 years."

Kastner said health savings accounts can work for middle- and higher-income people who can fund the account while meeting everyday expenses. But he said lower-income families don't have as much financial support, especially when facing expensive health expenses like cancer treatment.

"HSA can't cover your cancer care," Kastner said.