No matter how long the government remains shut down, Democrats have demands for the Republican majorities and administration. The standoff is the result of an impasse over COVID-19-era premium healthcare credits for those buying plans on the Obamacare exchanges.
When Democrats pushed the American Rescue Plan through Congress in March 2021, they did so strictly along party lines. Not a single Republican voted in favor of the bill. There was no attempt at bipartisanship. Democrats had the votes to send it to then-President Joe Biden’s desk themselves. It was a pandemic-era firehose of new federal money, $2.1 trillion, hailed by the Democratic Party as the biggest burst of government relief since the New Deal.
Buried among stimulus checks, child tax credits, and business loans was something less headline-grabbing but politically potent: a temporary enhancement of Obamacare premium subsidies. These “enhanced premium tax credits” made health insurance cheaper for millions of people, extending help well into the middle class. The credits temporarily lifted the income limits that disqualified those with incomes 400% above the poverty level. It also capped the monthly premium at 8.5% of a family’s income. As such, a family of four earning $128,600 could now qualify for assistance at taxpayer expense — hardly “poor” by conventional standards.
But the program came with a lit fuse. Because Democrats used the budget reconciliation process, as they did with Biden’s COVID-19-era spending measure, they were forced to put an expiration date on the subsidies. While initially set to expire in 2022, the deadline was extended in the badly misnamed Inflation Reduction Act to the end of 2025.
And that has set up a political dilemma. Democrats created the policy and set the expiration dates, which led to the policy problem. But there are political risks to this fight for Republicans, too.
Democrats are the sharks in this battle, and they smell blood in the water. Democrats picked the shutdown fight because they see healthcare as a winning issue for them. Sen. Dick Durbin (D-IL), the minority whip, has raised the issue. In a recent floor speech, he said premiums would “skyrocket by more than 75%” if the credits vanish, citing families in Illinois who could see annual insurance bills climb by $7,500 or more. Senate Minority Leader Chuck Schumer (D-NY) has vowed to make this a central issue. Sen. Jeanne Shaheen (D-NH), who helped draft the 2021 expansion, has warned of dire consequences in rural states where insurance markets are already fragile.
That is the Democrats’ play: Republicans want to “raise your health insurance premiums” or “take away your healthcare.” They will frame it as a continuation of the GOP’s “obsession” with Obamacare.
Republicans could, in theory, have a relatively easy way to avoid political trouble. When asked, they could point out that Democrats wrote the bill, Democrats set the expiration date, and Democrats are now panicked because the cliff they designed is approaching. The line is simple: “Talk to the people who created the problem.”
Another possibility is to point out how much the policy favors insurance companies. The credits are made as direct advanced payments to insurance companies in exchange for reduced premiums. Democrats are always going on about insurance companies getting rich at the expense of patients, and here is a clear-cut example of Democrats paying insurance companies $125 billion a year in taxpayer money.
Finally, Republicans have one more strong argument at their disposal if they choose to use it. The need for these subsidies is, in itself, an indictment of the Affordable Care Act. If Obamacare were truly affordable, there would be no need for billion-dollar payments to insurance companies. The Washington Post editorial board admitted the issue on Oct. 5: “The real problem is that the Affordable Care Act was never actually affordable. President Barack Obama’s signature achievement allowed people to buy insurance on marketplaces with subsidies based on their income. The architects of the program assumed that risk pools would be bigger than they turned out to be. As a result, policies cost more than expected.” That a family making over $125,000 still needs government help to buy insurance is not a triumph but a complete failure.
The simplest message is “Democrats made this mess, and now they want us to clean it up.”
Some voices on the Right are looking for an out. Senate Finance Committee Chairman Mike Crapo (R-ID) has acknowledged that something may need to be done, although he hasn’t endorsed or offered any specific plan. Sen. Lisa Murkowski (R-AK) has hinted at openness to an extension. Rep. Jen Kiggans (R-VA), who represents a swing district, is offering up a bipartisan House bill that would extend the subsidies for another year.
Conservatives, particularly the House Freedom Caucus, want none of it. House Speaker Mike Johnson (R-LA) has flatly said an extension won’t be attached to any near-term funding bills. Most Republicans want the shutdown resolved first before negotiating on Obamacare.
The temptation to forge ahead and take on a fight is intense. President Donald Trump has rewired the GOP into a party of perpetual combat. In this case, however, a fight carries clear political risks if the party approaches it the wrong way.
This is always a problem when it comes to a government handout that is supposed to be “temporary.” President Ronald Reagan famously said, “Government programs, once launched, never disappear.” People have had lower premiums for the last four years, and insurance companies have been receiving billions in direct payments. Neither companies nor consumers want to give these benefits up.
If Republicans aren’t careful, they will take the blame for the problem Democrats created through partisan processes.
The smarter move for Republicans would be restraint. Let Democrats own the cliff they built. If Democrats can find the votes to extend the subsidies, let them. If not, it is their design flaw that will be exposed. Republicans gain nothing by charging headlong into a fight that plays directly into their weakest frame. The irony is that Democrats know it, which is why they are desperate to keep the subsidies alive.
In politics, perception matters more than procedure. When families open insurance renewal notices showing premiums jumping by 50%-75%, Democrats hope it won’t matter who wrote the sunset clause. What will matter is who voters believe is responsible for letting it happen.
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Sun Tzu, in The Art of War, wrote, “The supreme art of war is to subdue the enemy without fighting.”
For the modern Republican Party, that often proves challenging.
Andrea Ruth is a regular contributor to the Washington Examiner.
