Right now, roughly 21 million Americans have signed up for health coverage through the Affordable Care Act marketplace, though the number with active, effectuated coverage at any given time is typically lower. Most of those enrollees never see the federal money that makes their insurance affordable. Each month, the Treasury sends premium tax credits directly to their insurer, shrinking the bill before it arrives. The system is invisible by design, and for most enrollees, it works.
President Donald Trump wants to tear out that plumbing and replace it. Under what his administration calls “The Great Healthcare Plan,” Congress would stop routing subsidy payments to insurance companies and instead deposit funds into health savings accounts controlled by individual consumers. The pitch: let people shop for coverage on their own terms, free from what the White House describes as a system that funnels “billions” to “big insurance companies.”
The proposal, outlined in a White House fact sheet published in January 2026, lands at a precarious moment. Enhanced ACA premium tax credits are set to expire, and if Congress does nothing, millions of households will face sharply higher insurance costs. The question is whether Trump’s alternative would actually protect them, or leave them exposed during a transition that has no timeline, no cost estimate, and no enacted legislation behind it.
How the money moves today, and how Trump would change it
Under current law, the ACA’s premium tax credits are advanced monthly to insurers on a consumer’s behalf. The enrollee never handles the funds; the insurer applies the credit to the premium, and the IRS reconciles the amount against actual household income at tax time. The Kaiser Family Foundation estimated the federal government spent roughly $80 billion on these credits in 2025, with the average subsidy exceeding $700 per month for eligible enrollees.
That structure means insurers receive the payment, but not as profit. The credits reduce what consumers owe. Insurers are intermediaries in the transaction, not beneficiaries of it. The distinction is important because the White House frames the change as cutting out a middleman, a characterization that misrepresents how the current system functions.
Trump’s plan would redirect those dollars. In a January 15 vlog, the president said the government would put “extra money straight into the healthcare savings account in your name” so people can “go out and buy your own healthcare,” according to a White House article accompanying the announcement. A transcript published by the U.S. Senate Democratic Caucus confirms the exact wording.
Critical details the administration has not provided
As of May 2026, the administration has not released a cost estimate from the Office of Management and Budget or the Congressional Budget Office. Without one, there is no way to determine whether depositing equivalent sums into individual accounts would cost more, less, or roughly the same as the current credit structure. The White House fact sheet uses the word “billions” but never specifies a dollar figure.
The accounts themselves remain undefined. The administration describes deposits going into “healthcare savings accounts,” but has not clarified whether these would mirror existing tax-advantaged HSAs, which by law require enrollment in a high-deductible health plan, or operate as an entirely new type of federally administered account. That distinction matters enormously. Traditional HSAs have annual contribution limits, and research from the Employee Benefit Research Institute and others has consistently shown that lower-income households struggle to build meaningful HSA balances. If the new accounts function like current HSAs, people with chronic conditions or modest incomes could find the money insufficient or difficult to access when they need care most.
Risk pool stability is another unresolved concern. ACA premium tax credits encourage a broad mix of healthy and sick enrollees to purchase coverage through the marketplace, which keeps average costs manageable for insurers and consumers alike. If direct payments allow people to buy plans outside the current marketplace, or to spend funds on short-term or non-comprehensive coverage, the remaining ACA risk pool could skew toward higher-cost patients. That would drive premiums up for everyone who stays. No official statement from the White House or the Department of Health and Human Services has addressed how the direct-payment mechanism would interact with existing risk adjustment rules that keep the marketplace stable.
There is also no clarity on pre-existing condition protections. The ACA requires marketplace plans to cover people regardless of health history and to charge the same premiums to sick and healthy enrollees of the same age. If consumers use direct-pay accounts to purchase coverage outside the ACA marketplace, those protections may not apply, depending on the type of plan they choose.
The coverage gap risk Congress has not resolved
The most immediate danger for consumers is not the long-term design of the new system. It is the gap between the old one expiring and anything new taking effect.
A Congressional Research Service report on the expiration of enhanced premium tax credits spells out the stakes. The CRS, a nonpartisan analytical arm of Congress, found that if lawmakers take no action, many marketplace enrollees would face significantly higher premiums, with lower-income households absorbing the worst increases. That scenario is the backdrop the White House is using to argue for its alternative.
But as of spring 2026, no standalone bill text implementing the direct-pay deposit mechanism has been introduced in Congress. No committee markup has produced scored legislative language detailing how the health savings account deposits would be calculated, funded, or phased in. Broader budget reconciliation discussions are underway in both chambers, and the direct-pay concept could theoretically be folded into a reconciliation package, but whether it can attract enough votes remains an open question, particularly among lawmakers who supported expanding ACA subsidies in recent years.
Separately, the Centers for Medicare and Medicaid Services has proposed a rule governing ACA marketplace parameters for the 2027 plan year. That proposed rule, published in the Federal Register, includes changes to risk adjustment, eligibility verification, and catastrophic plan policies. If both the legislative proposal and the CMS rule move forward, regulators would need to reconcile marketplace rules written for the current subsidy structure with a funding mechanism that bypasses insurers entirely. No agency has explained how that reconciliation would work.
If the enhanced credits lapse and the direct-pay model is not yet operational, millions of enrollees could find themselves stranded: the old subsidies gone, the new accounts not yet funded, and open enrollment for 2027 plans approaching.
How the 2027 open enrollment deadline forces the issue
The calendar is what turns this policy debate into a household emergency. Insurers must file 2027 plan rates with state regulators months before open enrollment begins, meaning they will have to price plans without knowing whether the current subsidy structure, the proposed direct-pay model, or neither will be in effect. That uncertainty alone could push carriers to raise premiums as a hedge, or to exit thinner markets altogether, narrowing choices for consumers in the states that can least afford it.
For the millions of people whose health coverage depends on federal subsidies, three developments will determine whether this proposal moves from rhetoric to reality. First, whether Congress produces scored bill text that specifies deposit amounts, eligibility thresholds, and account rules for the direct-pay system. Second, whether the CBO publishes an independent analysis of how the shift would affect premiums, enrollment, and the federal deficit. Third, whether HHS issues guidance on how the new accounts would interact with existing marketplace rules, consumer protections, and the ACA’s coverage requirements for pre-existing conditions.
Until those pieces materialize, no one can say with confidence who benefits and who loses under the proposed system. But the federal government currently spends tens of billions of dollars a year subsidizing coverage for millions of households, and the mechanism delivering that aid could be fundamentally restructured before the next open enrollment window opens. Every month without legislative text or regulatory guidance is a month closer to a deadline that does not move.
