As the threat of a federal government shutdown looms, one of the most pressing issues at stake in the funding debate is the future of health care costs. Premium tax credits (PTCs) play a vital role in reducing the cost of comprehensive insurance coverage for over 20 million individuals who purchase health insurance through the Affordable Care Act (ACA) marketplaces. However, the enhanced level of financial assistance that has been in place since 2021 is set to expire at the end of this year. Despite numerous opportunities to extend these subsidies, Congress failed to act as part of the legislation passed in July.
Unless Congress takes swift action to extend the enhanced subsidies, millions of Americans will face significantly higher insurance premiums. According to the nonpartisan Congressional Budget Office, around 4 million additional Americans could be uninsured by 2034 if the enhanced PTCs are not renewed.
With the annual open enrollment period beginning on 1 November, insurers have already begun notifying consumers of upcoming premium increases for 2026. Earlier in the year, insurers proposed a median 18% rise in premiums for the coming year, citing factors such as higher medical costs, a sicker risk pool due to the subsidy expiration, and other contributing factors. However, with the scheduled expiration of enhanced financial assistance at the close of 2025, the increase in premiums faced by millions of consumers will be even more severe.
Research by the Urban Institute, alongside analysis from the Center for American Progress, highlights that if the enhanced PTCs are allowed to expire, the national average increase in premiums for marketplace enrollees receiving financial assistance could be as high as 136%. In some states, the cost increases could be even more dramatic, exceeding 300%.
The amount of financial assistance a household receives depends on factors such as the premiums for marketplace coverage and household income. The Kaiser Family Foundation’s (KFF) interactive calculator can provide more precise estimates of the available premium tax credit with and without the enhanced subsidies, based on household composition and location.
Last year, the Urban Institute estimated that enrollees currently receiving financial assistance would face an average premium of $460 in 2025. However, without the enhanced subsidies, this figure could rise to $1,087, even for those who opt for the lowest-cost plan within their selected metal tier. This represents a 136% increase in premiums. In simple terms, the average net premium for many individuals would more than double if Congress fails to extend the enhanced PTCs.
The exact impact will vary from state to state, with some areas experiencing even more significant hikes. For example:
- In Alaska, the average premium for enrollees with financial assistance is expected to increase by 346%, or $909 annually.
- In California, the average premium will rise by 122%, or $1,000 annually.
- In Florida, premiums will increase by 132%, or $521 annually.
- In Mississippi, the increase will be 314%, or $602 annually.
- In Texas, the average premium increase will be 289%, or $459 annually.
As open enrollment approaches, the pressure is mounting on Congress to act and prevent millions of Americans from facing unaffordable health insurance premiums. Without an extension of the enhanced PTCs, many households will be forced to choose between paying significantly higher premiums or forgoing health insurance altogether.