Why Congress failed to reach an Obamacare deal

Brian Fitzpatrick didn’t expect to find himself in the middle of a political brawl over health policy.

The Pennsylvania Republican and former FBI agent doesn’t count the legislative area as a pillar of his portfolio. But early last fall, he joined a fledgling group of lawmakers incensed that House GOP leaders were doing nothing to extend enhanced Obamacare subsidies before they expired.

The lack of action, they knew, would send health insurance premiums soaring come January 1.

The effect, they also knew, would be broadly felt. The cost of premiums for most of the 24 million people on the Affordable Care Act exchanges was offset by the boosted subsidies, which Democrats passed into law in 2021 and extended in 2022 during the Biden administration.

“We ended up taking a lead because nobody else was,” Fitzpatrick, who represents a competitive district in the Philadelphia suburbs, recalled this month to reporters.

The group’s bipartisan bill, released on Sept. 4, kickstarted a futile, five-month odyssey to extend the enhanced ACA subsidies. In February, the effort eventually died in Senate negotiations over an issue Fitzpatrick’s bill sidestepped completely: abortion.

The stalemate over the Hyde amendment, which bans federal dollars funding abortion, wasn’t the only reason behind the legislation’s demise. Lingering ideological opposition to Obamacare, White House indifference, the lack of a unifying alternative and an influential lobbying effort tying the subsidies to fraud also played a part in the subsidies’ demise.

In many ways, the outcome of the debate was foreseeable months ago, lawmakers of both parties told POLITICO in more than a dozen interviews for this story examining how Congress failed to prevent the huge increases in health care costs.

By the time the saga had effectively ended, Democrats had turned the Republican health care paralysis into what promises to be a potent issue in the midterm elections: failure by the Trump administration to meaningfully lower the rising cost of living for American consumers. In a word, “affordability” — symbolized by the skyrocketing ACA premiums.

“They are against the ACA. It is not surprising they weren’t interested in talking about anything,” Sen. Peter Welch (D-Vt.) told POLITICO this month regarding Republicans’ approach to the issue. “But then they started hearing from the people they represent. The pain of the loss of the extended tax credits is universal.”

Republicans, on the other hand, said they were stuck with a mess made by Democrats, who did not make the enhanced credits permanent during Biden’s tenure. Republicans also point to structural problems within the health care system that have made ACA insurance unaffordable, which they also faulted Democrats for failing to address.

“They could have made [the enhanced subsidies] permanent” when Biden was president, Sen. Bernie Moreno (R-Ohio), one of the lead GOP negotiators working with Democrats to extend the tax credits, told POLITICO earlier this month.“They didn’t because they realized how expensive it is. What they failed to do is actually structurally lower the cost of health care.”

Early warning signs

Before the snow last winter gave way to spring, states, employers and health providers were already jittery over the prospect that the subsidies would not be renewed and the possible cascading effects if large numbers of Americans dropped insurance. 

Small businesses worried they would lose employees to employers that could offer private insurance. Hospitals worried about emergency rooms inundated with patients who couldn’t pay. State officials worried about the budget and health impacts of large numbers of uninsured residents.

Allowing the subsidies to expire would cause a “huge ripple effect,” Ingrid Ulrey, the CEO of Washington state’s Health Benefit Exchange, worried aloud at the time. That and massive cuts in the Medicaid program, which were being discussed and would later pass as part of the Republicans’ One Big Beautiful Bill, “would compound each other,” she said.

In April, top Democrats on House and Senate committees that oversee health policy requested a study about what would happen if the subsidies went away. A month later, the nonpartisan Congressional Budget Office issued a stunning forecast: nearly four million Americans would end up without coverage over the next decade.

Millions would drop their Obamacare plans during the 2026 enrollment period and more would slough off year after year, as the health care premiums continued to come due, the report predicted.

“Cold, hard math paints a grim picture — the Republicans’ long-pursued golden goose of dismantling and undermining the ACA means millions of Americans will see their premiums skyrocket and their care reduced or outright stolen,” saidthe Democrats who requested the study, Oregon Sen. Ron Wyden and Reps. Frank Pallone of New Jersey and Richard Neal of Massachusetts.

But the CBO report also contained a number that made many Republicans dig their heels in further: $350 billion, the price of extending the subsidies for a decade.

Then in July, Fabrizio Ward, Trump’s longtime polling firm, took the public’s pulse. Its poll alerted GOP leaders and vulnerable House Republicans of the political headwind if the subsidies were allowed to expire. Nearly eight in 10 voters supported an extension, including most Trump voters.

To the dismay of the House GOP’s campaign arm, steep premiums would make a dent in voters’ wallets right at the start of the midterm election year.

A preliminary August analysis by KFF, the nonpartisan health care think tank, found the median premium would jump by 18 percent. But that number hid just how much they could grow: In some congressional districts, couples could face bills in the thousands of dollars, or more than 500 percent higher than in 2025.

Yet many in Congress backburnered the issue.

“It’s coming, but…we have time to deal with this,” West Virginia Sen. Shelley Moore Capito, a Republican, told POLITICO in late July.

After all, there was an even earlier looming deadline: they had to pass legislation by Sept. 30 to keep the federal government funded.

Road to Shutdown

In September, insurers locked in ACA premiums for 2026 and sent them off to state regulators under the assumption that the subsidies would not be extended.

Democrats grew more vocal about the need for an extension, while Republicans representing districts with high numbers of Obamacare enrollees were forced to confront the looming cliff.

Fitzpatrick and his bipartisan group introduced their bill for a one-year extension on Sept. 4.

“We don’t need permanent pandemic-era policy — but we do need a responsible off-ramp,” Fitzpatrick said at the time to reporters.

Democrats started to talk about the subsidies as a non-negotiable addition to any government-funding deal. Soon, the ACA debate began to merge with the Senate appropriations process.

Progress was elusive. There were tense and unproductive House committee meetings. Partisan proposals failed in the Senate. The Problem Solvers Caucus, the House centrist group Fitzpatrick is a co-chair of, suggested an extension with a $200,000 income eligibility cap. The limit was an attempt to court Republicans who said they couldn’t support an extension because of concerns about fraud.

But the influential conservative health policy think tank Paragon Health Institute had been briefing lawmakers throughout the summer and fall about fraud problems on the ACA’s exchanges. Paragon — which is led by Brian Blase, a former Trump White House official — pointed to a rise in Obamacare customers who received coverage for no premium payment. Unscrupulous brokers signed people up without their knowledge to these no-premium plans and extracted fees, Blase said. It hardened conservatives’ opposition.

“Kind of feels like they’re giving Brian Blase the keys to the castle,” an aide to a moderate House Republican told POLITICO about Paragon’s access to Capitol Hill in September.

Increasingly, it was apparent that the subsidy hill was one the Democrats were willing to die on. But Republican leadership would die on that hill, too, refusing a subsidies debate to keep the government open.

Republicans unanimously opposed the boosted credits in 2021 and their extension in 2022, partly for ideological reasons. The party has long been reluctant to subsidize health care, and its animus toward the credits grew amid concerns over fraud. Republicans also said Obamacare had failed to bring down health care costs and that extending the credits only helped insurers raise them more.

“The number one underlying issue is the ACA made health care extraordinarily unaffordable,” Moreno told POLITICO this month.

Within 48 hours of the government running out of money on Sept. 30, party leaders finally met at the White House.

Senate Minority Leader Chuck Schumer demanded“real” negotiations, pleading that Republicans come to the table over extending the subsidies.

In the last hours of Sept. 30, dueling stopgap funding bills failed along party lines and didn’t broach a health care compromise at all.

By 12:01am on Oct. 1, the lights at the agencies went dark.

The Shutdown

It would be 43-days before eight senators in the Democratic caucus relented, ending the record-long shutdown. But there was still no subsidy deal in sight.

By mid-October, health providers and state regulators concluded it might already be too late. It would only get harder for states to update the insurance marketplace with new, lower rates if the subsidies were extended, without major disruptions.

“People will have dropped coverage, and we will work very hard to get them back, but they will not all come back,” Jessica Altman, executive director of Covered California, the state health insurance exchange, told POLITICO in October.

But at the same time battle lines were forming outside of the Capitol on abortion.

On Oct. 22, more than 100 anti-abortion groupswrote to all members of Congress asking lawmakers not to extend the subsidies, arguing they were a gimmick to get around the Hyde amendment.

Abortion-rights groups such as Planned Parenthood Action Fund and Reproductive Freedom for All responded by urging Democrats not to make any changes.

The outside pressure on Republicans played a part in negotiations in the House, said one lawmaker granted anonymity to candidly discuss private talks with POLITICO.

“We had talked about repeating current law,” the lawmaker said earlier this month. “I think [Republicans] realized with the pressure they were getting from their groups that wasn’t going to cut it.”

Another kind of pressure was also coming into play, especially for vulnerable House lawmakers.

At the start of open enrollment in November, would-be ACA customers had the chance to see just how high their monthly premium payments could be. A crush of media reports detailed the anger and dejection of Americans as they reeled from sticker shock.

In negotiations earlier in the fall, Alaska Sen. Lisa Murkowski had pitched the idea of a one-year subsidy extension. South Dakota Sen. Mike Rounds had agreed that state health exchanges needed the stability of a generous off-ramp for another year.

More Republican senators warmed to the idea.

While the Senate toiled, Speaker Mike Johnson kept the House in recess.

The most vulnerable House Republicans were open to talking with Democrats but with plenty of caveats.

By early November, a bipartisan House group released compromise principles: a two-year extension of the subsidies with an income cap buttressed by protections against fraud and abuse. It was no bill, but the blueprint was the first public, tangible health care proposal in a shutdown that had now stretched on for over a month.

“We started getting a lot of Democrats and Republicans saying OK this is an area we can land on,” said Rep. Don Bacon (R-Neb.), a key moderate, to reporters earlier this month.

But other pressures were also coming to bear, as the long shutdown was threatening food stamp benefits and prompting air traffic controllers to stay home. The Trump administration had begun limiting commercial flights.

Eight rank-and-file members of the Democratic caucus broke ranks and agreed to support a continuing resolution sans extension to reopen the government on Nov. 10. They secured the promise of a standalone vote on the subsidies.

“This was the only deal on the table. It was our best chance to reopen the government and immediately begin negotiations to extend the ACA tax credits,” New Hampshire Democratic Sen. Jeanne Shaheen said during a news conference.

A quiet White House

Throughout the negotiations, the White House offered few clues to lawmakers about what Trump wanted. Uncharacteristically, the president largely stayed out of the fray, though at one point he broached the possibility of extending the subsidies.

Individual Republicans were pitching ACA replacements. Florida Sen. Rick Scott released his own proposal with HSA-style “Trump Freedom Accounts.” Louisiana Sen. Bill Cassidy touted a plan to deposit cash in Obamacare enrollees’ health savings accounts. He said Trump stood behind his plan, but his colleagues and Democrats weren’t biting.

“Right now, it’s like trench warfare,” Cassidy said at a committee hearing on Nov. 19 bemoaning the state of negotiations.

Sens. Scott, Cassidy, Roger Marshall of Kansas and Mike Crapo of Idaho helped lead negotiations. But no subsidy alternative got traction.

The White House on Nov. 23 floated a two-year extension of the subsidies alongside income limits and minimum premium payments.

Rank and file GOP lawmakers were angry it did not include abortion restrictions.

Trump on Jan. 6 inflamed conservatives on Capitol Hill by calling for them to be “flexible” on the Hyde amendment.

The blowback was swift.

“I’m not flexible on the value of every child’s life,” Sen. James Lankford (R-Okla.) told POLITICO that day. “Children are valuable, and so I’d have to get up to the context of what he meant by that.”

Trump has routinely called for giving money directly to Americans as a replacement for the subsidies, but never again endorsed extending them. The White House has since pivoted its affordability efforts to drug prices.

Senate Democrats got their standalone vote on a three-year subsidy extension on Dec. 11. It had no chance of passing, but it earned the backing of four GOP senators, including Missouri’s Josh Hawley, who told reporters he backed the extension to get the ball rolling on a more bipartisan package.

A few days later, Rep. Mike Lawler (R-N.Y.) stormed out of a GOP caucus meeting, furious House leaders had no plans to extend the subsidies before the Dec. 31 deadline.

“This is absolute bullshit,” Lawler said at the time. “I think it’s idiotic not to have an up-or-down vote on this issue.”

Lawler was not the only one upset over a lack of action on the issue.

In an extraordinarily rare move on Dec. 17, a group of GOP moderates staged a mutiny against Johnson. They signed a Democratic discharge petition to force a vote in the House on a three-year extension.

The bill didn’t move past the Senate, but the list of GOP defectors in the House grew to 17 after the tallies were counted. The moderates and a surprising number of newcomers bucked their chamber’s leaders and voted with the Democrats to support the extension. It was clear that some in the party were feeling the heat from constituents or worried about reelection.

Several moderate Republican lawmakers said they voted to do something on the issue, while still pressing for a bipartisan solution that would give the Senate something to build on.

“Everybody knew the three-year extension was never going to become law,” Lawler told POLITICO earlier this month, noting that Democrats needed to compromise on Hyde.

Hyde returns

Shortly before the holiday break, New Hampshire’s Shaheen and her Senate colleague Susan Collins (R-Maine) organized a bipartisan meeting for a subsidy deal.

A big topic: how to handle Hyde.

Hyde does apply to the ACA’s tax credits. However, the law leaves it up to states to decide if a plan should cover abortion. There are 25 states that ban all abortion coverage on the exchanges, and the remaining do allow or require such coverage. The claims for the procedure are paid through separate accounts that do not rely on federal subsidies.

As anti-abortion and abortion-rights groups were ramping up pressure on both sides in October, House negotiators decided to sidestep the issue. The two major bills released in the fall did not mention Hyde.

Fitzpatrick said this was by design.

“I don’t think it has any place in it…I don’t know why they want to bring abortion into every single piece of legislation,” he told reporters earlier this month.

But the bipartisan Senate group knew they would not be able to do that. They had to find some compromise that would satisfy both sides.

Throughout the holidays and into January, Democratic lawmakers believed they found the sweet spot.

They reached an agreement with GOP negotiators for a health plan audit to ensure compliance with Hyde. Sen. Angus King (I-Maine) also crafted language noting Hyde’s status quo remained unchanged, Sen. Tim Kaine (D-Va.) told POLITICO earlier this month.

But Republicans threw a curveball on Feb. 2 during the group’s last meeting.

Moreno, the freshman Republican co-leading the 2026 health negotiations on an ACA deal, introduced another Hyde provision that extended language to health savings accounts. Moreno’s proposal would convert some of the enhanced subsidy funding to an HSA.

Kaine said he wasn’t too surprised by the new provision since they were still in negotiations, but worried the Hyde additions were a bridge too far. Democrats were adamant about retaining the status quo on Hyde in the ACA and the new language could have limited what could be done with an HSA, King added.

“We said you’ve got to take this provision out if you want this negotiation to go forward,” Kaine said.

A few days after the Feb. 2 meeting, Moreno declared the talks dead. He pointed the finger at Democratic leader Schumer.

“I am absolutely convinced that Schumer prefers to use the suffering of American people to gain political power,” he told POLITICO, implying that Schumer did not truly care about lowering the premiums and instead wanted to use the issue to attack Republicans in the midterms.

Democratic members of the bipartisan group countered that Schumer had not even been involved in the negotiations after pushing to start them.

“Schumer had nothing to do with it. Zero,” King told reporters earlier this month when asked about Moreno’s comments.

Even as Hyde was a sticking point, time became an even bigger problem.

As the calendar turned to 2026, lawmakers turned their attention to yet another looming deadline: Jan. 30, when funding for most of the government was set to expire following the November spending deal.

In a twist, lawmakers did reach an agreement on health care, striking a deal in the Senate Finance Committee to ride along with a new funding bill.

It extended Medicare telehealth authorities and set new rules for drug industry middlemen, but the enhanced subsidies were not part of it.

Meanwhile, the federal government released the tally for ACA open enrollment. Signups for 2026 have declined by more than 1 million people compared to last year. Experts expect the number to keep growing.