Millions of Americans who rely on Affordable Care Act (ACA) health insurance plans, commonly known as “Obamacare,” are facing a difficult year ahead, with the prospect of significantly higher premiums and no guaranteed relief. While a recent bipartisan deal to end a month-long government shutdown provides a temporary resolution, it has pushed back critical decisions about ACA affordability to December.
In December, Congress will decide whether to extend the pandemic-era tax credits that have helped make ACA plans more affordable for many Americans. If these credits are not extended, they will expire at the end of 2025, leading to potentially steep cost increases for consumers.
The delay in action means that millions could see their monthly insurance premiums rise, and some may drop their coverage entirely, especially those who are young, healthy, and cost-conscious. According to Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms, this uncertainty is likely to lead to a reduction in the number of young and healthy individuals enrolled in ACA plans. “Congress is almost guaranteeing that the marketplaces will lose enrolment from people you want to keep – the young and healthy folks,” she said.
The Impact on Consumers
Estimates from KFF (Kaiser Family Foundation) suggest that 22 million Americans who receive ACA tax credits could see their premiums more than double in the coming years. While the total cost of ACA plans will not double, those without the enhanced subsidies will pay, on average, an additional $1,016 per year starting in 2026. The precise amount will depend on various factors such as age, income, location, and the level of coverage selected.
This is a result of the decision to revert to the original ACA subsidy levels under President Barack Obama’s 2010 health care law, which limited cost-saving tax credits to individuals earning up to four times the federal poverty level. During the COVID-19 pandemic, Congress temporarily expanded subsidies to ensure more Americans could afford coverage. However, with these temporary subsidies set to expire, those earning more than four times the federal poverty level will be required to pay the full cost of their ACA plans.
Rising Insurance Costs
Health insurers typically increase rates based on the cost of medical care and the frequency with which consumers use healthcare services, including doctor visits, hospital stays, and prescription medications. According to an analysis by KFF, insurers offering ACA plans on both federal and state marketplaces are expected to raise rates by an average of 26% for 2026 coverage.
However, the real financial strain on consumers will come from the expiration of pandemic-era subsidies. For those earning more than four times the federal poverty level — $62,600 for an individual or $128,600 for a family of four — the full cost of their ACA plan will now be their responsibility. Those earning below this threshold will still receive subsidies, but they will be significantly smaller than the enhanced credits provided during the pandemic.
Consequences for ACA Enrollees
The expiration of pandemic-era credits will force some consumers to reconsider their coverage. Many may opt for less expensive plans that offer fewer benefits. For example, an individual enrolled in a “silver” plan may switch to a “bronze” plan, which has lower monthly premiums but higher deductibles, meaning they will pay more out-of-pocket when they need care.
According to a June estimate from the nonpartisan Congressional Budget Office (CBO), as many as 4.2 million Americans could drop their ACA coverage due to the expiration of the enhanced subsidies. However, if the subsidies are extended, the CBO predicts that more than 3.4 million Americans could gain coverage annually through 2034.
Small business owners, farmers, and gig economy workers, who do not have employer-sponsored health insurance, will be among those hardest hit by the end of these subsidies. John Arensmeyer, founder and CEO of Small Business Majority, warned that not renewing the enhanced premiums would have a devastating impact on small businesses across the country. “An agreement that would reopen the federal government without renewing the Affordable Care Act’s enhanced premium tax credits deals a huge blow to the fortunes of small businesses in America,” he said.
Looking Ahead
Without the extended subsidies, ACA insurers may find themselves with a higher proportion of high-cost enrollees, such as individuals with chronic conditions or those who require expensive treatments. According to Corlette, this could lead to even higher premiums in the future. “We could be in for a stretch where insurance companies have to raise their premiums again to reflect a smaller and sicker market,” she said. “So, 2027 premiums are likely to be even higher, and some insurance companies may decide this is not a market they want to continue being in.”
As the government shutdown deal pushes critical decisions to December, the fate of millions of Americans’ health insurance coverage hangs in the balance. The coming months will be crucial in determining how Congress handles the future of the ACA and whether or not the enhanced subsidies will be extended to help keep premiums affordable for those who rely on them most.