Policy Week in Review – No Clear Path Yet on ACA and an Uphill Climb for Reconciliation Round Two
With the government reopened and the immediate crisis of the shutdown temporarily gone, President Trump and Congress are looking to set priorities on a number of political and policy issues this week. Below is a summary of important policy developments over the last week and how they impact the rest of 2025 and beyond.
Health Care Plans Being Developed in Congress with No Clear Path Yet
As a condition to get Democrats to support a vote to reopen the government last week, Senate Majority Leader John Thune (R-SD) promised to hold a vote to extend enhanced tax credits for people enrolled in the Affordable Care Act (ACA). That vote is pledged to happen by December 12, 2026. While the vote is guaranteed, the outcome is not. There is also no promise that the House will take up a bill if it passes in the Senate.
Prevailing wisdom on Capitol Hill is that there are enough votes between Democrats and vulnerable Republicans to pass an extension of the enhanced credits with reforms. Yesterday, Senator Rick Scott (R-FL) released his alternative to the extension of subsidies which converts the tax credits to direct payments to consumers that can be used for the purchase of health care coverage. It remains to be seen whether the bill Democrats put forward will include reforms that could garner more Republican support by lowering the price tag of full and permanent extension.
The open question is where President Trump land on the issue. His support will be key to getting a vote in the House. His staff has expressed skepticism about subsidies in the past. The President, however, is almost certainly paying attention to polling on the issue. One solution that could possibly serve both of the President’s goals would be endorsing a short-term extension of the subsidies (two to three years) while simultaneously promising action on a new, Republican health plan either next year or after the midterms. In that case, the President can get subsidies now while rhetorically agreeing with conservatives that the policy is unsustainable.
Increased Talk About Second Reconciliation Package
Discussions around possible components of a reconciliation package for fiscal year 2026 are picking up momentum. Congress can bypass the 60-vote cloture threshold and pass major legislation with only Republican votes using this process. After the success of tax cuts and spending reform earlier this year, many Republicans are hoping to use the process again. Even if they get started it will be difficult to get to the finish line.
Given the razor-thin GOP majorities in Congress, another reconciliation bill faces tough odds next year. That fact notwithstanding, there is a growing chorus of Republicans who feel that they must present a proactive agenda heading into the midterms next year. Reconciliation is being strongly considered as the vehicle to demonstrate Republican solutions to major issues, even if it will be very difficult to pass.
This week, the White House said that it would be presenting a health care plan that would include new legislation. The President’s political director specifically cited reconciliation as a path forward on health care and tariff dividends. If Republicans move forward, here is some conjecture about what could be included in that reconciliation proposal:
Health Care Reform: Whether or not the expiring enhanced premium tax credits are fully extended, the White House appears interested in presenting a health care alternative to the current ACA structure. That plan could include allowing consumers to use subsidies to shop for additional types of plans as well as an expansion of health savings accounts and health coverage options that do not currently conform to ACA. For instance, President Trump has proposed giving everyone receiving coverage from the ACA $2,000.
Rebate Checks: President Trump has proposed providing Americans with tariff rebate checks of $2,000. A direct cash rebate distribution would require Congressional action, and reconciliation would be the most viable option.
Tax Cuts: Republicans will look to build support for another reconciliation bill with additional tax cuts. Where and how those would apply is still unknown. With a growing focus on affordability, Congress might look at tax cuts on payrolls or tax credits for major purchases. Tax proposals are certainly in nascent stages.
Energy or Permitting: Producing more energy domestically continues to be a focus of Congress. Energy development permitting reform has been stuck between chambers. It seems like a logical addition to garner support.
More Spending Reductions: Conservatives, especially in the House, have advocated for applying the types of Medicaid reforms in the first reconciliation bill to other programs. Any cuts, however, could cost support from moderates in the Senate.
The prospects for another budget reconciliation bill are low. There is no pressing tax increase to spur action nor a single policy goal that brings Republicans together. Despite those obstacles, many now believe that beginning the steps toward budget reconciliation next year is the only way to demonstrate that Republicans are seeking solutions while Democrats are merely obstructionists.
House and Senate Vote to Release Epstein Files
On Tuesday, the House voted 427-1 to require the Department of Justice (DOJ) to release all files on disgraced financier Jeffrey Epstein. The Senate approved the same resolution late Tuesday night by unanimous consent, and President Trump signed the bill into law on Wednesday evening. The bill requires the DOJ to release all unclassified records related to Epstein within 30 days.
What to Watch Next Week
The House and Senate are both out of session next week, and we expect a light week from the Administration as well with the Thanksgiving holiday.
Comments