What to know about Trump's idea for $2,000 tariff rebate checks, direct health insurance payments

President Donald Trump recently floated two ideas that he said will help Americans combat health care costs and reap the benefits of the nation's widespread use of tariffs. 

One proposal is to send Americans $2,000 tariff rebate checks and the other is to divert Affordable Care Act funds from health care insurers directly to Americans as cash payments. 

Trump's proposals, which came in two different series of posts on Truth Social Saturday and Sunday, have largely been framed as ideas and not formal proposals. On Sunday, Treasury Secretary Scott Bessent said the president’s idea about health care payments was not a formal proposal and was not being submitted to the Senate at this time.

On Saturday, Trump wrote on Truth Social that the "hundreds of billions" of dollars in Affordable Care Act funds sent to insurance carriers should instead "be sent directly to the people so that they can purchase their own, much better, health care."

The following day, the president took to the same platform to announce that tariff income could be used to pay "A dividend of at least $2,000 a person (not including high income people!) will be paid to everyone."

As of September, the end of the federal fiscal year, the United States had collected $195 billion in tariffs, according to figures from the U.S. Department of the Treasury. 

But local economists said tariff revenue can’t simultaneously be used to pay down the national debt if the same funds are also being given away to Americans as a form of stimulus.

"You can use tariffs to pay down the debt, but if you pay out these dividends, that’s not what you’re doing," said Mariano Torras, an economics professor at Adelphi University and chair of its finance and economics department.

Regional health insurance experts argue that insurers are best equipped to negotiate lower health care costs, not individual patients, so direct cash payments to Long Islanders and Americans broadly wouldn't lower costs for consumers.

"It’s unclear how that could possibly work for the average person," said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York, a nonprofit that promotes economic opportunity across New York City and state. "The whole point of insurance companies is they are supposed to bargain on behalf of people to get better deals." 

Here are five things to know about Trump’s tariff and health insurance proposals.

What is Trump proposing?

Amid the longest government shutdown in U.S. history, spurred on by Democratic efforts to seek a one-year extension of Affordable Care Act tax credits and continued criticism of Trump's sweeping use of tariffs, the president proposed direct payments to Americans.

Trump also floated the idea of sending direct cash payments to Americans enrolled in the Affordable Care Act instead of to their health insurers in a post on Truth Social.

Separately, on Monday, eight Senate Democrats voted to reopen the government without concessions on ACA subsidy extensions, without which health care premiums for tens of millions of Americans are expected to increase dramatically. The House of Representatives must consider the legislation Thursday.

How will a tariff rebate impact the economy?

Torras said some Americans could benefit from getting the extra funds.

"As far as the economics, sure you can make a case in theory that if you give the middle and working classes a windfall of $2,000 it’s not nothing for them," Torras said.

However, he added, because tariffs were initially framed as a vehicle to pay down the national debt, giving those funds away is counterproductive to the current administration’s goal.

"It really doesn’t line up to say you’re going to pay down the debt, and the tax break bill and you’re going to give people dividends," said Erica York, vice president of federal tax policy with the Tax Foundation, a nonprofit think tank in Washington, D.C., that researches tax policies.

Can the president authorize tariff rebates for Americans?

While Trump has mentioned paying Americans rebates from collected tariffs, Congress would need to approve the appropriation of those funds, Torras said.

How would Trump’s proposal for health care work?

Regional health care experts did not have clarity on the president's plan, but said sending Affordable Care Act funds earmarked for insurers to Americans first could lead to inefficiencies since those Americans would have to send the same funds to insurers eventually.

"The way the current system works is if you’re eligible for subsidies under the ACA, you have the option of taking it all at once as a tax rebate when you file your taxes, or, taking the subsidies in advance," which lowers monthly premiums, said Peter Newell, director of the health insurance project for the United Hospital Fund, a Manhattan-based nonprofit pushing for a more equitable health care system.

Newell said by sending funds to Americans first, they would still have to send the money to insurers in the end to cover costs.

Additionally, some, like Benjamin, with the Community Service Society of New York, said insurers are in a better position to negotiate lower care costs, versus individual Americans.

How much would tariff dividends cost?

While details are sparse, estimates suggest that if tariff rebates were structured similarly to COVID-era stimulus payments, paying $2,000 to Americans would cost about $600 billion, well above the $300 billion projected to be collected per year by tariffs, according to the Committee for a Responsible Federal Budget.