After a government shutdown and months of drama, it appears that President Trump may be about to drop his aggressive opposition to extending soon-to-expire enhanced Affordable Care Act subsidies.

And by doing so, he may have made it much more likely that 22 million people currently receiving premium tax credits will continue to receive their full subsidies. Preserving the subsidies, and the ACA marketplace itself, would be especially important to people ages 55-65 and those with pre-existing medical conditions.

According to published reports, Trump may soon abandon his half-formed idea of replacing ACA subsidies with cash payments to US households. Just by floating this scheme, he stalled congressional efforts to reach a compromise on the subsidy issue and added to Americans’ already-growing uncertainty over health care costs.

Reportedly, Trump soon will back extending the existing ACA subsidies for two years, roughly tracking a bipartisan House plan floated a few days ago. He also may propose some still-unspecified changes to the current program. His 180 degree shift from just a week ago likely reflects widespread public support for the existing subsidies.

Capitulation

For weeks, his eventual capitulation seemed inevitable. But instead of looking for an off-ramp, Trump had been more publicly resistant to continuing the COVID-era enhanced tax credits.

Trump described his initial alternative in a series of off- the-cuff comments and social media posts. He would have replaced the current premium tax credits with an unspecified amount of cash that would go into a tax-advantaged Health Savings Account-like product.

Almost no matter how such a scheme is designed, it would fail any reasonable test for good fiscal, economic, or health care policy. And it would almost certainly have died in Congress.

For months, Trump’s hardline criticism of the enhanced subsidies effectively blocked Hill GOP leaders from engaging in talks to extend the ACA tax credits that are due to expire in just five weeks. Now that he has flipped on the issue, those discussions may resume. And chances that some version of a subsidy extension will pass within the next few weeks have significantly increased.

GOP conservatives are furious at Trump’s about-face and almost certainly will oppose any extension of the enhanced credits. Until now, House Speaker Mike Johnson (R-LA), who called the subsidies “a boondoggle”  has refused to even schedule a vote on the issue,  likely at the bidding of the White House.

That will now change. And combined with Democrats, enough Republicans will support the extension to win passage.

Running Out Of Time

Trump would have replaced, partially or entirely, the premium tax credits that about 22 million people now receive to help subsidize their ACA marketplace health insurance.

The merits of such an idea are questionable. But the more immediate problem is that   turning any such proposal into a functioning program would be enormously complicated and time-consuming in the best of circumstances.

Not only would a bill have to be passed, but reams of complex new regulations would have to be written to flesh out the law, a process that would take months at best.

As a result, it will be impossible to replace the existing system before the enhanced COVID-era premium tax subsidies expire on January 1. And not renewing them would significantly raise ACA premiums for millions of people. And many would not buy the insurance at all.

If Congress extends the existing tax credits for two years, as Trump now seems to favor, lawmakers would give themselves time to work on useful reforms to the current ACA. In today’s political environment, that effort may not get very far. But just buying time will protect ACA policyholders from painful premium increases in just a few weeks.

Some ideas that likely will be raised: Should low-income ACA participants pay some premium to enroll, even if it is very modest? Should subsidies continue to be available to households with incomes up to 400% of poverty, which is about $63,000 for a single person and about $120,000 for a family of four.

The Insurance Paradox

Policymakers face a paradox when it comes to health insurance. It is true that insurance increases health care costs, though it is not the only cause. It also is true that those with insurance have better health than those without, though that story is complicated too.

It would be terrific if policymakers did the hard work of addressing those conflicting challenges. But they can’t do it in the next few weeks. And until they do, they have an obligation to protect those who have been relying on the existing ACA. It appears that after some needless drama, the president has come to the same conclusion.