Trump Proposes Direct Payments to Patients in New Healthcare Framework

2026-01-16 politics

Washington D.C., Friday, 16 January 2026.
Shifting focus from subsidies to direct cash payments for patients, the proposal triggered an immediate rally in insurance stocks despite experts warning the framework lacks critical technical details.

Market Reaction and Strategic Shift

On January 14, 2026, President Donald Trump officially unveiled the framework for his “Great Healthcare Plan,” a legislative proposal aimed at restructuring how Americans pay for medical care [1][4]. The administration’s strategy centers on replacing government insurance subsidies with direct payments to consumers, potentially utilizing health savings accounts (HSAs) to facilitate these transactions [4][6]. Financial markets reacted swiftly to the announcement, displaying a clear divergence between sectors. Insurance stocks rallied on the news, with Oscar Health surging 6.4%, Humana rising 3.5%, and UnitedHealthcare gaining 0.8% [4]. In contrast, the pharmaceutical sector faced immediate headwinds; Eli Lilly shares dropped 3.7% and AbbVie fell 1.9%, likely responding to the administration’s renewed push to codify “most-favoured-nation” drug pricing deals that would tie U.S. costs to those in other wealthy countries [4][5].

A Radical Shift in Funding Structure

The central pillar of the new framework is a departure from the subsidy model established by the Affordable Care Act (ACA). Instead of tax credits paid to insurers, the President is calling on Congress to authorize direct federal funds sent to patients, asserting that this will allow Americans to “buy the health insurance of their choice” [3][5]. However, health policy experts have expressed skepticism regarding the viability of this approach due to a lack of specific technical details [1][3]. Gerard Anderson, a professor of health policy at Johns Hopkins, labeled the direct payment model a “bad idea,” while Nick Fabrizio of Cornell University warned that without strict vouchers, funds might be diverted to non-healthcare expenses [3]. The Committee for a Responsible Federal Budget estimates that while the plan’s cost-reducing provisions could lower primary deficits by approximately $50 billion over a decade, changes to the ACA structure could swing the fiscal impact significantly, potentially increasing deficits by up to $350 billion depending on the final legislative design [7].

The Premium Crisis and Legislative Deadlock

The release of this framework comes at a precarious moment for American households. Enhanced ACA subsidies expired on December 31, 2025, a legislative cliff that has already resulted in skyrocketing costs for enrollees [1][5]. Data indicates that premiums for Obamacare plans have more than doubled in the last year, rising from $888 in 2025 to $1,904 in 2026 [4]. This represents a staggering increase of 114.414%. Consequently, federal data released on January 13, 2026, showed that ACA sign-ups were more than 800,000 lower compared to the same time the previous year [5]. Experts like Edwin Park from Georgetown University warn that without an immediate extension of the expired subsidies, roughly 4 million people risk becoming uninsured [1].

Political Hurdles Ahead

The path to codifying this framework remains uncertain in a divided Congress. While Senator Bernie Moreno (R-Ohio) praised the plan, stating he “loved” the proposal, Democrats have signaled strong opposition [2]. Senator Ron Wyden dismissed the announcement as “empty promises,” and Cynthia Cox of KFF noted that the proposal appears to be a compilation of Republican ideas that may be “dead on arrival” regarding Democratic support [2][6]. With the ACA open enrollment period having effectively ended on January 14, 2026, the pressure is mounting on lawmakers to address the affordability crisis, though the Trump administration has not yet provided a concrete timeline for the plan’s implementation [2][4].

Sources

Healthcare Reform Price Transparency