A prominent Republican senator is hopeful about reaching a bipartisan agreement to continue health care subsidies poised to expire soon, though securing the support of leaders from both parties remains challenging.

Absent an agreement, health insurance premiums are expected to surge significantly next month. However, Senate leaders John Thune (R-S.D.) and Chuck Schumer (D-N.Y.) have their own reasons for hesitating to endorse a bipartisan solution.

Moreover, not passing a bipartisan measure to control the rising premiums may lead to a potential government shutdown in February. This scenario could unfold if liberal lawmakers on Capitol Hill leverage the situation, demanding health-related concessions in exchange for government funding.

“I truly believe we have the framework for a deal,” said Senator Bill Cassidy (R-La.), who chairs the Senate Health, Education, Labor and Pensions Committee and is a key Republican figure in the ongoing bipartisan health care discussions.

“The deal’s framework would involve extending the enhanced premium tax credits temporarily and incorporating health savings accounts, allowing enrollees to choose between the two options,” he explained to The Hill.

He cautioned, however, that key details still need to be worked out.

 “Now that’s high-level because details we’ve got to work out,” Cassidy said. “I do think there’s potential for a deal there.”

“I think we can do it,” he added.

A Republican senator who requested anonymity to discuss the negotiations said that Thune has appeared to shift on the issue of extending enhanced Affordable Care Act (ACA) tax credits after four House Republicans signed a discharge petition to force a House vote on a Democratic proposal to extend the subsidies for three years.

The Democratic proposal, which Senate Republicans defeated last month, now appears likely to pass the lower chamber and come back to the Senate.

Thune says a straight three-year extension of the enhanced subsidies isn’t going anywhere in the Senate but he offered that a House-passed bill could be used as a “vehicle” to pass a bipartisan compromise to address rising health insurance premiums in 2026.

“I think a straight-up extension is a waste of money,” Thune said before the recess. “But if there are reforms and both sides sit down and agree on what that looks like and then there’s a transition that gives people the option of putting money into a [health savings account] … then there could be a path forward.”

He said a House-passed bill would be a revenue vehicle to carry a compromise on health insurance premium subsidies and savings accounts if Speaker Mike Johnson (R-La.) is willing to schedule a vote on it and President Trump is open to signing it.

The GOP senator who requested anonymity to comment on internal conference discussions said Thune had previously expressed staunch opposition to extending the enhanced subsidies in any way.

“That’s a significant change of position because he’s been in the camp of no deal on subsidies at all,” said the source. “He’s been very adamant against that.”

Sen. Angus King (I-Maine), an independent who caucuses with Democrats and who helped lead negotiations to end the government shutdown this fall, said he’s working on a potential deal with Cassidy, though he declined to comment on the emerging details.

Other senators involved include Senate Finance Committee Chair Mike Crapo (R-Idaho), Senate Appropriations Committee Chair Susan Collins (R-Maine) and centrist Democratic Sen. Jeanne Shaheen (N.H.).

Shaheen said the proposal to merge an extension of the enhanced health insurance premium tax credits with health savings accounts is on the table but added “there are a lot of details that still need to be worked out.”

She said there’s a “50-50” chance of reaching a deal next month.

Senators in both parties say it will be difficult to persuade Schumer to agree to a compromise that combines an extension of the expiring tax credits with the GOP proposal to set up health savings accounts for individuals on the ObamaCare marketplace.

The Democratic leader initially dismissed the idea of setting up savings accounts to help people who by insurance through the ACA pay for out-of-pocket expenses.

More recently, Schumer has argued that higher health insurance premiums are largely set for 2026 and that Congress has little ability to change next year’s rates.  

“After Jan. 1, the toothpaste is out of the tube. Millions of people will have lost their health care. Many more will have changed their policies and signed policies,” he said before the Christmas recess, downplaying the chances of a health care deal next month.  

 “The bottom line is we always want to work with people who will lower health care costs but if the Republicans want to do something, they have until Jan. 1 to pass the one bill that can get it done — our bill,” he said, referring to the three-year extension of the enhanced subsidies.

Schumer said Republicans would get the political blame next year for premiums that are projected to be 26 percent higher for people on the ACA marketplace.

“This is on the Republicans,” he said.

A Democratic senator who requested anonymity said Schumer doesn’t want to give Republicans a political escape from rising health insurance premiums, which Democrats plan to campaign on extensively ahead of the midterm election.

“He’d much rather have the issue,” said the lawmaker, downplaying the likelihood of Schumer agreeing to a compromise with Republicans that would phase out enhanced ObamaCare subsidies.

Schumer said last month that he would not support a deal to replace enhanced ACA subsidies with health savings accounts.

“We insist that the ACA tax credits be renewed and extended, period. If Cassidy’s proposal replaces [the subsidies,] it looks like it’s privatizing health insurance and it looks like it’s really problematic and particularly problematic to do very quickly,” he said.

Yet, Schumer is coming under pressure from Democratic colleagues to reach some kind of a deal with Republicans to spare millions of Americans from higher costs, which will force an estimated 2 million to 4 million people to drop their health insurance.

On the other hand, a deal could give political cover to vulnerable moderate Republicans whom Democrats are trying to defeat in the 2026 election, such as Sen. Susan Collins (R-Maine).

“I’m just glad that we have some momentum to enact a bipartisan bill that includes reforms,” she said of a prospective Senate deal.

She met with Democratic and Republican colleagues for more than two hours before the Christmas break to put together a deal to address rising premiums.

“We’re now working on drafting a specific bill to incorporate those conversations that will include reforms as well as a two-year extension” of the subsidies, she said.