Legislative Summary: S. 3385, Lower Health Care Costs Act
Summary: The bill revives for three years (i.e., for 2026, 2027, and 2028) the now-expired enhanced system of premium subsidies first enacted by Democrats as part of the American Rescue Plan Act (P.L. 117-2), and extended until the end of 2025 in the Inflation Reduction Act (P.L. 117-169).
The below table compares the subsidy regime of Obamacare as enacted (i.e., current law subsidy levels) with the regime passed in ARPA and extended in the IRA, to which the bill would revert. All numbers are expressed as the maximum percentage of income a household would pay for benchmark coverage (i.e., the second-lowest cost silver plan), with the federal subsidy covering any difference.
Note that in 2025, the federal poverty level was $15,650 for a single individual, and $32,150 for a family of four. (Federal poverty levels for 2026 have not yet been released.) The Obamacare premium assistance percentages are adjusted every year, per a formula laid out in statute. The 2026 premium assistance percentages were published in IRS Revenue Procedure 2025-25.
Cost: The Congressional Budget Office (CBO) estimated that the bill would increase federal deficits by approximately $88 billion over five and ten years. CBO previously estimated that a permanent revival of the enhanced subsidies would cost $349.8 billion over ten years, exclusive of debt service costs.
The budget office estimates that the bill would increase the number of people with health insurance coverage by 400,000 in 2026, 3 million in 2027, 4 million in 2028, and 1.1 million in 2029. In 2028, the net increase in health insurance would come from:
- An increase of 6.2 million in Exchange coverage;
- An increase in Medicaid enrollment of 400,000;
- A reduction of off-Exchange individual health insurance coverage of 500,000;
- A reduction in employer-sponsored coverage of 2.1 million.
CBO further estimates that gross premiums for benchmark Exchange coverage in 2027, 2028, and 2029 would fall by 5.7 percent, 9 percent, and 3.3 percent, respectively, because “people who enroll in the [Exchanges] would be healthier than would be the case without” the revival.
Possible Conservative Concerns: Conservatives may have significant concerns with the bill, including but not limited to:
- No Impact on Gross Premiums in 2026: In its cost estimate, CBO admitted that the bill would have no effect on gross premiums for the current plan year, “because those premiums have already been set.”
- Expands and Entrenches Obamacare: The bill would for the second time extend COVID-era enhanced subsidies that were designed to be temporary, amounting to a major entitlement expansion on the installment plan.
- Continues and Perpetuates Fraud: The bill contains no reforms to address the fraud that the Congressional Budget Office, the Government Accountability Office, and other independent estimates have said plague insurance Exchanges.
- Funds Plans Covering Services Americans Find Morally Objectionable: Pro-life groups have consistently noted that Obamacare subsidizes plans that cover abortion—in recent months, Maryland has used Obamacare dollars to fund abortion tourism for out-of-state residents, and encouraged other blue states to follow suit. Moreover, Obamacare subsidy dollars have also been used to fund transgender procedures that many Americans find objectionable, and political indoctrination that violates the First Amendment.
- Increases the Federal Deficit: With the federal government over $38 trillion in debt, many would question the wisdom of incurring another $88 billion in deficit spending to subsidize health insurance companies.
- Undermines Employer-Provided Health Coverage: CBO noted that under the bill, 2.1 million fewer Americans would have employer-sponsored coverage. Expanding and entrenching Obamacare will only encourage more businesses to stop offering insurance and dump their workers on to the Exchanges.
- Increases Insurer Profits: The bill directs $88 billion in taxpayer funds to insurance companies. Because Obamacare allows them to keep one-fifth of premium dollars for profit and administrative expenses, the bill could see insurance companies receiving up to $17.6 billion in added profit—all at taxpayer expense.
- Costly “Free” Plans: The bill would revive the zero-dollar premiums for some enrollees that are anything but “free” for taxpayers—these plans have been a major source of fraud, and encourage individuals to retain their Exchange plan, even if they have other sources of insurance coverage.
- Welfare for the Wealthy: The bill would again lift the income cap on eligibility that Obamacare placed on its subsidy regime, allowing households with incomes in excess of $500,000 to qualify for “low-income” insurance subsidies in some instances.
- Raises, Rather than Lowers, Underlying Health Costs: Not only does the bill not contain any reforms to lower the actual cost of health care—Obamacare’s subsidy mechanism, under which every additional premium dollar is subsidized by federal taxpayers, only encourages health insurers to raise premiums.