Health Costs Expected to Triple as Senate Republicans Advocate $1,500 HSA Solution

A 55-year-old couple earning $85,000 (£64,000) a year might see their health plan costs rise dramatically, from $7,225 (£5,432) to over $24,535 (£18,446) annually. According to KFF analysis, when the enhanced Affordable Care Act (ACA) assistance disappears after December, this kind of spike will impact many seniors across the US.

Senate Republicans believe that a $1,500 (£1,127) health savings account (HSA) deposit could help cushion this blow. Senator Bill Cassidy of Louisiana and Senator Mike Crapo of Idaho unveiled the Health Care Freedom for Patients Act on Monday, presenting it as an alternative to what they describe as 'COVID bonuses' that funnel billions to insurance companies rather than directly to patients.

'Instead of 100% of this money going to insurance companies, let's give it to patients,' Cassidy said in the official announcement. 'By giving them an account that they control, we give them the power. We make health care affordable again.'

Crapo added that 'giving billions of taxpayer dollars to insurers is not working to reduce health insurance premiums for patients.'

How the HSA Proposal Would Work

Under the legislation, Americans earning less than 700% of the federal poverty line could receive government funding deposited into a health savings account. Those aged between 18 and 49 might receive $1,000 (£752), while individuals aged 50 to 64 would get $1,500 (£1,127). To access these funds, recipients would need to sign up for either a bronze plan or a catastrophic plan through the Obamacare marketplace.

The bill also suggests funding cost-sharing reduction payments to lower insurance premiums, expanding access to low-cost catastrophic plans, and requiring states to verify citizenship before providing Medicaid coverage. According to the Senate Finance Committee summary, these funds cannot be used for abortion services or gender transition procedures.

The Numbers Gap Facing Working Families

KFF, a group dedicated to health policy research, estimates that most people receiving subsidies could face premiums that are 114% higher once tax credits expire. Those with lower incomes are likely to be impacted more severely. For example, a four-person household earning $45,000 (£33,832) annually could see their premium payments increase from zero in 2025 to owing $1,607 (£1,208) each year starting in 2026.

The average bronze plan deductible in 2026 is projected to be around $7,500 (£5,700), meaning families will face significant out-of-pocket expenses before insurance coverage applies — even with an HSA deposit covering roughly 13% to 20% of that deductible.

Currently, HSA funds cannot be used to pay insurance premiums; they are limited to out-of-pocket costs such as deductibles, copayments, and coinsurance.

'An HSA deposit of $1,000 (£752) to $1,500 (£1,127) cannot offset premiums of hundreds or thousands of dollars per month once the enhanced tax credits expire,' noted the Centre for American Progress in its analysis.

Political Standoff as Deadline Looms

Senate Minority Leader Chuck Schumer dismissed the Cassidy-Crapo framework as 'junk insurance', according to reports, while Democrats prepare to push for a three-year extension of the enhanced subsidies this week. Neither measure is expected to garner the 60 votes needed to pass.

The Congressional Budget Office estimates that around 2.2 million Americans may lose coverage by 2026 without legislative changes; otherwise, approximately 3.8 million could go without insurance each year over the next decade.

Self-employed workers and small business owners make up about a quarter of marketplace enrollees, according to the Treasury Department estimates cited by the Centre on Budget and Policy Priorities. For these groups, the stakes are particularly high.

Insurers are proposing a median 18% premium increase for 2026, according to KFF. Americans are making coverage decisions during open enrolment, but legislative resolution remains uncertain with just weeks remaining before subsidies are due to expire.