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Senator Bill Cassidy has unveiled a proposal that would replace the enhanced Affordable Care Act (ACA) premium tax credits with pre-paid Health Savings Accounts, offering a dramatic shift in how millions of Americans may pay for their health coverage and medical expenses. The Louisiana Republican’s plan arrives at a moment of urgency, as Congress faces mounting pressure to address the rapid acceleration in Obamacare premium costs ahead of a major year-end deadline.

This year alone, the expanded ACA tax credits have helped roughly 20 million Americans lower their monthly insurance premiums. But these enhanced subsidies are set to expire at the end of December, leaving lawmakers scrambling for a solution that balances affordability with long-term sustainability.

How Cassidy’s proposal would work

Under the plan, individuals who enroll in ACA Bronze Plans—the marketplace’s most budget-friendly tier—would receive pre-paid HSAs, funded in part by redirecting money from the expiring tax credits. These HSAs wouldn’t cover monthly insurance premiums, but they would provide upfront cash that could be used for out-of-pocket costs, including co-pays, deductibles, and coinsurance.

Bronze Plans typically cover 60 percent of a person’s medical expenses, leaving enrollees responsible for the remaining 40 percent. Cassidy argues that sending funds directly to consumers rather than insurers would maximize value, claiming that insurance companies absorb about 20 percent of spending through “profit and overhead.”

Cassidy, who chairs the Senate Health, Education, Labor and Pensions Committee, framed his plan around efficiency: direct consumer control, reduced administrative waste, and more transparent health spending.

A Congress divided and a deadline approaching

The proposal surfaces just weeks after a historic government shutdown that began on October 1 and lasted 43 days—a standoff driven largely by Senate Democrats’ refusal to approve a funding bill without an extension of the ACA tax credits.

A breakthrough came when seven Democrats and independent Senator Angus King agreed to reopen the government in exchange for a promise from Senate Majority Leader John Thune to hold a mid-December vote on a bill extending the enhanced subsidies.

Even so, any extension faces steep political resistance. Republicans have sought to unravel the ACA since it passed under President Barack Obama, making bipartisan agreement difficult. Cassidy has acknowledged ongoing conversations with fellow GOP senators and officials within the Trump administration to refine the HSA-based alternative.

Early pushback and warnings from policy experts

Not all lawmakers or health-policy analysts are convinced. Critics argue that while HSAs can help with cost-sharing, they do nothing to address the core issue: rising premiums that Americans must pay before they can even use their coverage.

Health policy expert Larry Levitt of the KFF research group cautioned that removing the enhanced premium subsidies could leave many Americans unable to purchase plans with reasonable deductible levels. He noted that while Cassidy’s proposal may not trigger a full-scale “premium death spiral,” it could still strain affordability for low- and moderate-income enrollees.

Death spirals occur when healthier consumers exit the insurance pool, causing premiums to rise sharply for those who remain—a pattern that experts say remains a risk when financial support for premiums is reduced.

A narrow window for negotiation

With just weeks left before the promised vote, lawmakers face intense pressure to decide whether to extend the current ACA tax credits, endorse Cassidy’s HSA-centered alternative, or craft an entirely different solution. Each choice will shape the financial security of millions of Americans who depend on marketplace plans for essential health coverage.

As December draws near, the competing plans highlight a broader struggle over the future of U.S. health insurance—one that balances ideological differences with the urgent practical reality of rising medical costs.