Senate ACA Proposal Would Add Nearly $300 Billion to Deficits

Members of the Senate Democratic Caucus introduced a bill yesterday to temporarily extend the enhanced Affordable Care Act (ACA) subsidies that are set to expire at the end of this year and make other changes to the ACA exchanges. We preliminarily estimate this bill would add nearly $300 billion to deficits as written or nearly $550 billion if the enhanced subsidies are made permanent.

The bill would extend the enhanced subsidies in full with no further income limits for three years – from 2026 to 2028. It would also permanently repeal provisions in the 2025 reconciliation law that eliminated subsidies for certain groups enrolling during special enrollment periods, required full repayments of overpayments of the advanced subsidies, and required enrollees to affirmatively verify their eligibility for subsidies and reconcile those subsidies on their taxes. Finally, the bill would nullify portions of a 2025 regulation loosening limits on the actuarial value of exchange plans and changing the methodology of calculating the subsidies.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

With the national debt as large as the economy and interest payments costing $1 trillion annually, it is absurd to suggest adding hundreds of billions more to the debt.  

Any extension of the enhanced ACA subsidies should be enacted in the context of a bill to reform the subsidies, lower health care costs, and reduce overall deficits. At an absolute minimum, any extension should be fully paid for without games or gimmicks.

The new Senate bill is far worse than even a debt-financed extension – it borrows even more to expand the underlying ACA subsidies and remove recently-enacted program integrity measures. This is a bad idea made worse.  

Even assuming the extension only goes three years, we estimate this bill would add $300 billion to deficits. If the temporary subsidies are made permanent, we could be talking well over half a trillion dollars more in borrowing over the next decade.  

While other extension proposals at least give lip service to reducing fraud and abuse in the ACA exchanges, this bill would actually make it worse. Given the recent Government Accountability Office investigation showing how easy it is to defraud these exchanges, it’s hard to see the case for repealing program integrity measures.

After a pointless government shutdown over this issue, it is beyond disappointing that this is the preferred solution to such an important issue. With health care costs rising and deficits approaching $2 trillion a year, we need to be putting in place smart solutions to slow the growth of our borrowing and lower health care costs. This bill would do neither.  

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.