Key Takeaways:
- Enhanced tax credits that reduced the cost of health insurance for millions of Americans have expired, resulting in higher health costs for many individuals and families.
- The expiration of these subsidies affects a diverse group of people, including self-employed workers, small business owners, and those who do not qualify for Medicaid or Medicare.
- The average premium cost for subsidized enrollees in the Affordable Care Act program is expected to increase by 114% in 2026.
- Some individuals may drop their health insurance coverage due to the increased costs, which could make the program more expensive for older and sicker populations.
- Lawmakers are considering a potential vote in January to extend the subsidies, but the outcome is uncertain.
Introduction to the Issue
The expiration of enhanced tax credits has resulted in higher health costs for millions of Americans, affecting a diverse group of individuals who do not receive health insurance from an employer and do not qualify for Medicaid or Medicare. This change comes at the start of a high-stakes midterm election year, with affordability, including the cost of healthcare, being a top concern for voters. Many Americans, such as 37-year-old single mom Katelin Provost, are facing significant increases in their health care costs, with some families experiencing premium costs that are doubling, tripling, or more.
The Impact of Expired Subsidies
The expired subsidies were initially introduced in 2021 as a temporary measure to help Americans during the COVID-19 pandemic. Democrats extended them, moving the expiration date to the start of 2026. With the expanded subsidies, some lower-income enrollees received health care with no premiums, and high earners paid no more than 8.5% of their income. However, with the subsidies now expired, the average premium cost for subsidized enrollees in the Affordable Care Act program is expected to increase by 114% in 2026, according to an analysis by the health care research nonprofit KFF. This surge in prices is driving up out-of-pocket costs in many plans, making it challenging for individuals to afford health insurance.
Effects on Enrollment and Healthcare Costs
Health analysts predict that the expiration of the subsidies will drive many younger and healthier Americans to forgo health insurance coverage altogether. Over time, this could make the program more expensive for the older, sicker population that remains. An analysis conducted by the Urban Institute and Commonwealth Fund projected that the higher premiums from expiring subsidies would prompt some 4.8 million Americans to drop coverage in 2026. However, the final effect on enrollment is yet to be determined, as the window to select and change plans is still ongoing until January 15 in most states. Individuals like Provost are holding out hope that Congress will find a way to revive the subsidies early in the year, but if not, they may be forced to drop their coverage or make difficult decisions about who to insure.
Months of Discussion, But No Relief Yet
Last year, Democrats repeatedly called for the subsidies to be extended, but Republicans refused to put it to a vote until late in the year. In December, the Senate rejected two partisan health care bills, including a Democratic pitch to extend the subsidies for three more years and a Republican alternative that would provide Americans with health savings accounts. In the House, four centrist Republicans broke with GOP leadership and joined forces with Democrats to force a vote that could come as soon as January on a three-year extension of the tax credits. However, with the Senate already having rejected such a plan, it’s unclear whether it could get enough momentum to pass.
The Human Impact of the Expired Subsidies
Many Americans whose premiums are skyrocketing say lawmakers don’t understand what it’s really like to struggle to get by as health costs ratchet up with no relief. They want the subsidies restored alongside broader reforms to make healthcare more affordable for all Americans. Individuals like Chad Bruns, a 58-year-old Affordable Care Act enrollee in Wisconsin, are calling on lawmakers to take action, saying, "Both Republicans and Democrats have been saying for years, oh, we need to fix it. Then do it. They need to get to the root cause, and no political party ever does that." As the situation continues to unfold, it remains to be seen whether lawmakers will be able to find a solution to restore the subsidies and make healthcare more affordable for millions of Americans.