Image copyright AP Image caption The Senate passed legislation on Wednesday but there have been no agreements about how to pay for it
Democrats say they have reached agreement with Republicans on a potentially historic $1.5 trillion (€1.2 trillion) package to improve healthcare and other provisions.
The bill would re-authorise funding for the popular Children’s Health Insurance Program (CHIP) as well as help fund Medicaid.
Democrats have strongly objected to provisions in the bill that would speed federal insurance subsidies in exchange for more for lower-income Americans.
However, the agreement appears to prevent a government shutdown that would otherwise begin at midnight on Friday.
Under the deal, that period is extended for three months, allowing time for Congress to hammer out final, and likely politically toxic, language.
If the agreement is ratified in a straight party-line vote, it would be the first such bipartisan compromise in recent years.
Medicaid is a major federal and state program that provides insurance to millions of Americans, and CHIP, which is primarily for children, provides health insurance to some 8 million children.
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The Senate passed legislation on Wednesday to extend funding of CHIP for five years, which is an important deal for Democrats since it means that the children of working Americans will be covered.
In exchange, Senate Republicans have made sure that those people will eventually be subject to new federal subsidies.
A programme called cost-sharing subsidies help low-income Americans pay their medical bills through private insurance policies.
However, Trump’s administration has frozen the payments for more than a year and used them as a political weapon against Democrats.
Trump promised to keep the payments for those Americans, and the budget deal sets aside $8 billion for those payments – roughly the cost of the past two years of the current program.
Paying for the costs requires Republicans to reverse the funding cut and save the money.
Many Republican lawmakers say the government would be better off freezing the payouts of the cost-sharing subsidies, although they disagree on how to pay for the new funding.
Many Republicans see the insurance premium subsidies as government giveaways that drive up health insurance costs for working Americans.
But Democrats counter that those subsidies help people cover insurance premiums, or out-of-pocket expenses such as deductibles and co-payments.
The budget bill would also add $70 billion to Medicaid over 10 years.
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The budget deal was also designed to win votes from eight Republicans, who are up for re-election in 2020.
Democrats said they hadn’t gained anything in return for the billions of dollars the new deal would save.
They are still insisting that the subsidies to lower-income Americans must be fully paid for and that they will not support the measure unless those provisions are addressed.
“In the rush to get this done,” Democrats said in a statement, “our Republican colleagues sacrificed the assistance that millions of Americans desperately need for our children and the rest of the country – and they did so without laying out a plan to fully fund the bill in the next budget.”