By Siobhan Hughes and Anvee Bhutani

WASHINGTON -- Top Senate negotiators said that an effort to renew expired healthcare subsidies had effectively collapsed, likely ending the hopes of 20 million Americans that the tax-credit expansion could be revived and lower their monthly insurance premiums.

Talks had centered on a proposal from Sens. Bernie Moreno (R., Ohio) and Susan Collins (R., Maine) to extend a version of the enlarged Affordable Care Act subsidies for at least two years, while cutting off higher-income people from participating and eventually giving enrollees the option of putting money into health savings accounts. It also would eliminate zero-dollar premium plans. But lawmakers from both parties now say the chances of a deal have all but evaporated.

"It's effectively over," Moreno said on Wednesday. Sen. Bill Cassidy (R., La.) -- the architect of an adjacent plan -- agreed. While Collins declined to be as definitive, she did say that it was "certainly difficult."

The collapse in negotiations comes as new, higher health-insurance bills are kicking in for many households and just months after a standoff over extending the subsidies sparked the longest government shutdown in U.S. history. Now, both parties are set to head into the midterm elections with no breakthrough on healthcare coverage. Instead, the focus in Washington has largely turned to new restrictions of immigration enforcement officers.

The ACA subsidies were first expanded in 2021 by Democrats during the coronavirus pandemic with no Republican support. They allowed people with incomes over 400% of the poverty line -- currently $128,600 for a family of four -- to receive tax credits reducing the cost of premiums. The subsidies dramatically expanded the number of people who could obtain health insurance without paying a premium. The expanded subsidies expired at the end of last year.

Some Democrats who had been working to find a middle ground agreed that talks had collapsed over how to handle abortion coverage.

"Hyde language was an obstacle," said Sen. Tim Kaine (D., Va.) using the shorthand that refers to the existing federal ban on using federal funds for abortion, which is named after the original sponsor, former Rep. Henry Hyde (R., Ill.). "My Republican colleagues are dug in on that," added Sen. Mark Kelly (D., Ariz.).

Cassidy, chairman of the Senate Health, Education, Labor and Pensions Committee, said the primary impediment to a deal was how to treat abortion coverage. "The other issues maybe we could have gotten," he said.

ACA marketplace plans can offer abortion coverage, but existing law bars the use of federal funds toward abortion, except in cases of rape or incest or to save a mother's life. Subsidies can be used to pay for a plan that covers abortion, but enrollees have to pay a small out-of-pocket sum for the specific cost of the abortion coverage to ensure federal money isn't used for that. The antiabortion activists argue that the subsidies indirectly fund abortion services.

"Republicans will never support anything that allows federal tax dollars to be used for subsidizing abortions, period," said Moreno.

Democrats, who had met behind closed doors on Tuesday night, decided to approach Moreno on Wednesday about removing the ban on using federal dollars to fund abortions put into the provision creating health savings accounts, according to Kaine.

For his part, Moreno blamed Senate Minority Leader Chuck Schumer (D., N.Y.), saying that he was giving priority to a potent election-year issue over a policy outcome. "He wants a political issue," Moreno said. A spokesman for Schumer's office didn't immediately respond to a request for comment.

Schumer, for his part, has continued to push for restoration of ACA tax credits for the next three years in line with legislation that has already passed the House. "We're going to fight this fight till we bring those costs down," he said in a video last month.

"This is my final offer," Moreno told reporters last week as he sent off his proposal to Democrat leadership. "There's no way I can get 35 Republicans to vote for anything more." But Moreno said he didn't hear back from Democratic leadership.

Write to Siobhan Hughes at Siobhan.hughes@wsj.com and Anvee Bhutani at anvee.bhutani@wsj.com

(END) Dow Jones Newswires

February 04, 2026 16:58 ET (21:58 GMT)

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