President Donald Trump is pushing for an extension of soon-to-expire enhanced Obamacare subsidies – a key Democratic demand that Republicans fought fiercely and that was the basis for the longest-ever government shutdown.
Despite his populist campaign-trail rhetoric, Trump has for the most part governed like a typical Republican, cutting taxes and regulations that largely benefit the wealthy and big businesses. He fought against Obamacare for years, and his “One Big Beautiful Bill” act is expected to cut more than $1 trillion from health care and food stamps. That’s why his support for extending the enhanced subsidies has surprised some political observers.
But one simple fact of government pushed Trump and some congressional Republicans into backing Obamacare anyway: It’s really hard to take away government subsidies once they’ve been put into effect.
No politician wants to be the Grinch who stole subsidies. And Trump is particularly struggling to show that his policies are lowering the cost of living for millions of struggling Americans.
Roughly 22 million Americans use enhanced Obamacare subsidies. If the subsidies lapse at year-end, Americans face hundreds of dollars – and in some cases close to $1,000 – in monthly premium increases for their health care. Many people would be forced into difficult choices, including abandoning health insurance altogether.
Democrats put this issue front and center in the month-and-a-half government shutdown, banging the drum about the looming expiration and slamming Republicans’ hesitation to extend the subsidies.
The subsidies help American wallets. Taking them away could hurt – a lot.
Trump campaigned in 2016 on overturning Obamacare, then a relatively nascent government-supported health care program for millions of Americans who lacked employer-sponsored health insurance – and the means to pay for insurance out of pocket. The Senate voted on a repeal in 2017, but the bill failed – famously killed by the late GOP Sen. John McCain’s thumbs down.
Similarly, Democrats have largely been unable to undo Republicans’ tax cuts.
After decades of a top income tax rate of at least 70% for the wealthiest Americans, former President Ronald Reagan in 1982 knocked that down to 50% and in 1987 got it below 40%. Former President George W. Bush lowered the top bracket again to 35%.
Democrats have never come close to getting that bracket back up to the pre-Reagan era.
In 2013, former President Barack Obama raised the top bracket back to near 40%, while maintaining lower taxes for everyone else.
And the Republican party, which fiercely fought former President Lyndon Johnson’s Medicare and former President Franklin Roosevelt’s Social Security when they were introduced, has since embraced those wildly popular government subsidies.
Some Republicans have supported Medicaid, too, even as they recently added stringent work requirements that are expected to kick millions of Americans off its rolls. Trump repeatedly instructed Republicans not to cut a penny from Medicare and Social Security benefits during his campaign for his tax and spending policy bill this spring.
“There’s a fundamental difference between policy expansion and policy retrenchment,” said Jesse Rhodes, professor of political science at the University of Massachusetts Amherst. “Going back to the New Deal era and the Great Society era, Republicans were opposed to significant expansions to retirement security, health care expansion, you name it. But once these policies are in place, there is a long history of bipartisan cooperation to support these policies.”
Sometimes benefits do expire, though. Former President Joe Biden’s emergency expansion of the child tax credit nearly halved the share of children living in poverty in 2021. But Congress failed to extend the measure, and America’s child poverty rate surged to 12.4% from 5.2%, according to the Institute on Taxation and Economic Policy.
Similarly, the expiration of the pause in student loan payments last year sent delinquencies surging to nearly 8% from less than 1% before the pause expired, according to the New York Fed.
Trump is already losing the affordability argument to Democrats. Putting tens of millions of Americans at risk for higher health care costs won’t help his case.
Trump hasn’t unveiled his policy yet, hamstrung by congressional Republicans who have balked at his subsidy extension plan. The initial White House proposal was expected to include an extension combined with reforms that limit the scope of the subsidies.
Republicans’ constituents are clamoring for a deal: A new KFF poll shows more than 70% of Republicans with Obamacare coverage don’t want their enhanced premium subsidies to expire.
“You know, the president believes in affordable health care,” National Economic Council Director Kevin Hassett told reporters on Wednesday. “And so he’s very, very motivated to resolve this issue, but he’s got to work with Congress to come up with something that everybody agrees to.”
Trump officials are working on an extension plan that Republicans can live with, people familiar with the matter told CNN. Some Republican members of Congress have come out in favor of a short-term extension. And Trump himself this week said he continued to support a deal.
“Something’s going to happen,” Trump said at a Cabinet meeting Tuesday. “It’s probably not going to be easy.”
