President Donald Trump and Republicans have floated an alternative to the Affordable Care Act: Send money directly to consumers instead of health insurance companies.

Proposals vary and details are few, but Republicans are championing these options as Congress has yet to vote on the fate of cheaper health insurance for millions of Americans.

Democrats want to bolster the Affordable Care Act, often called "Obamacare," by extending COVID-19 pandemic-era tax credits that expire at the end of 2025. Without these enhanced tax credits, average costs for 22 million Americans who get subsidized ACA insurance will more than double on Jan. 1, 2026, according to KFF, a health policy nonprofit.

Senate Majority Leader John Thune, R-South Dakota, promised a vote on the enhanced tax credits by mid-December but would not guarantee Republicans' support to extend the subsidies. House Speaker Mike Johnson, R-Louisiana, hasn't committed to a vote and called the enhanced tax credits a "boondoggle."

When signing legislation to end a record 43-day government shutdown without extending the subsidies, Trump said he wanted "money to go directly to you, the people."

Though the tax credits would make Obamacare insurance more affordable for millions or enrollees, it would do little to slow rising health care costs most Americans face. Americans spend more on medical care than any other nation, and rising medical costs trigger higher insurance rates that all Americans pay, whether people get coverage through the workplace, Medicare or the Affordable Care Act.

More than 150 million Americans who get coverage through their employer will see average costs in 2026 rise at their highest level in a decade in a half. And older Americans on Medicare were notified their Part B premiums − the medical insurance that covers outpatient and preventive care, doctors' visits and medical equipment − will jump 9.7% in 2026, straining affordability for seniors who rely on Social Security to make ends meet.

How would sending money directly to consumers work?

Trump hasn't provided details on his proposal. In a Nov. 18 post on Truth Social, Trump said, "THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE" instead of insurance companies.

Members of Congress, former Trump administration officials and some academic researchers have proposed using health savings accounts to fund health care.

Health savings accounts are commonly used by working-age Americans who get health insurance through an employer. These accounts, paired with high-deductible health insurance plans, allow consumers to sock away part of their paycheck before taxes. The money can be spent on eligible expenses such as a doctor or hospital bill or prescription drugs.

Sen. Bill Cassidy, R-Louisiana, wants health savings accounts to be paired with "bronze" level Affordable Care Act plans. Families would get federal money deposited into a health savings account to shop for health care. "It empowers the patient to lower the cost," Cassidy said in a Senate hearing Nov. 19.

Brian Blase, a White House adviser during the first Trump administration, has proposed shifting a portion of Obamacare funding to health savings accounts for low-income enrollees.

The Affordable Care Act now gives lower-income enrollees "cost-sharing reduction" payments to offset costs such as deductible and copays. Under Blase's proposal, lower-income consumers would have to option of directing these subsidies to a health savings account instead of sending payments directly to insurance companies.

Similar to Blase's proposal, Sen. Rick Scott, R-Florida, announced a bill Nov. 20 that would convert the ACA's cost-sharing reduction payments to HSA-style "Trump Health Freedom Accounts." States would need to submit a waiver to the federal government to establish "freedom accounts."

Scott's proposal would allow consumers to use the accounts to pay for health insurance premiums. With limited exceptions, HSA accounts now can't be used to pay for health insurance premiums.

"Americans will alwaysmake a better choice for their families than the government will," Scott said in a statement. "We should give them that opportunity and take a huge step forward in fixing Obamacare.”

Democrats warn of health insurance 'cliff' for millions of Americans

Democrats are skeptical about the timing of the Republican proposals. They say there isn't enough time to change Affordable Care Act tax credits without risking insurance coverage for millions of Americans.

"Individuals are going to lose health care. This is a cliff," said Sen. Catherine Cortez Masto.

The Nevada Democrat said Congress should extend the enhanced premium tax credits for one year to give both parties time to study longer-term options. "It should be a thoughtful process and not putting people over a cliff," Cortez Masto said.

Sen. Ron Wyden, D-Oregon, agreed there's not enough time to craft health care legislation before insurance rates reset for millions of ACA enrollees in January. Congress should extend the enhanced premium tax credits first, he said.

"There is no way for Congress to put together a proposal in the next couple of weeks that's going to help people in January," Wyden said in a Senate committee hearing Nov. 19.

Health policy experts also are skeptical of proposals that would divert existing Obamacare subsidies to health savings accounts. Such a move could risk upending the ACA marketplaces and compel healthier people to drop coverage, leaving insurance pools with sicker people and pricier monthly insurance premiums, they say.

"The original tax credits that have existed since the ACA was first passed, that's what keeps that market working," said Cynthia Cox, KFF's vice president and director of the Program on the ACA. "Without those tax credits, the market collapses, and then there's no option for people who have preexisting conditions to get health insurance."

The concept of sending money directly to consumers instead of health insurers is "an old, old idea," said Robert Kaestner, an economist and research professor at the University of Chicago, Harris School of Public Policy. "This has been the conservative health reform plan for 40 years."

Kaestner said health savings accounts might work for middle- and higher-income people who can afford to fund the accounts while paying for everyday living expenses. But he said lower-income families don't have the same financial cushion, especially when they face a costly health expense such as cancer treatment.

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

This article originally appeared on USA TODAY: Trump's Obamacare fix: Send consumers money, not insurance companies

Reporting by Ken Alltucker, USA TODAY / USA TODAY

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