Senate signs deal to end historic government shutdown
Lawmakers agree to end longest government shutdown in history and reopen government through January 30th
If you’re one of the millions of Americans enrolled in an Affordable Care Act health insurance plan (often referred to as “Obamacare”), you’re probably facing the prospect of significantly higher spending next year with no guarantee of relief.
A bipartisan agreement to end the month-long government shutdown won’t change the situation. The government reopening agreement postpones ACA affordability decisions to December. Congress will then decide whether to extend pandemic-era tax credits that make ACA plans more affordable. If the credit is not extended, it will expire at the end of 2025.
Although the change will not directly impact the household finances of most working-age Americans who purchase health insurance through their employers, experts say uncertainty and concerns about affordability will likely cause some cost-conscious and healthier consumers to opt out of the ACA.
“Unfortunately, this agreement will prolong uncertainty for the millions of Americans who have insurance through the Affordable Care Act,” said Sabrina Corlett, co-director of Georgetown University’s Center on Health Care Reform. “Congress has all but guaranteed that the market will lose enrollment of the people it wants to keep: young, healthy people.”
Who does this affect?
KFF estimates that the 22 million Americans who receive Obamacare tax credits will see their monthly premium payments more than double, on average. This doesn’t mean the price of these ACA plans will double, but without the additional subsidies, consumers will pay an average of $1,016 more in 2026. The amount a consumer ultimately pays depends on age, income, location, and coverage level.
Why are consumers facing high prices for Affordable Care Act health insurance?
If Congress approves the bipartisan deal, the insurance tax credit would return to its original level under the Affordable Care Act. Under the 2010 health care law signed by President Barack Obama (often referred to as Obamacare), cost-saving tax credits were limited to people with incomes up to four times the federal poverty level.
Congress has temporarily approved more generous subsidies during the coronavirus pandemic to help more Americans afford health insurance.
People who earn more than four times the federal poverty level will have to pay the full cost of their ACA plans because the pandemic-era subsidies have ended. Low-income Americans are eligible for Obama-era subsidies, but not the coronavirus-era subsidies that drastically reduced out-of-pocket costs.
How much will premiums increase for ACA members?
Health insurance companies typically increase premiums based on the underlying cost of medical care and how often a consumer receives treatment or writes prescriptions from a doctor or hospital.
Insurers selling plans in the ACA’s federal and state marketplaces are raising prices for plans by an average of 26% in 2026, according to an analysis by KFF, a health policy nonprofit.
But the out-of-pocket costs for most ACA consumers will further accelerate as pandemic subsidies expire.
People who earn more than four times the federal poverty level ($62,600 for an individual and $128,600 for a family of four) must pay the full amount. People with incomes less than four times the poverty level receive less financial support. In other words, they would receive the original Obama-era subsidies based on a sliding scale percentage of their income.
What happens to consumers who are asked to pay more?
Consumers would have the option to switch to Obamacare plans that offer less generous benefits. Enrollees in a “silver” plan may choose a bronze plan with a lower monthly premium but a higher deductible (the amount a consumer must pay before coverage begins).
The nonpartisan Congressional Budget Office estimated in June that up to 4.2 million Americans could lose their ACA coverage due to the pandemic-era credit expiration. But if the pandemic-era subsidies are extended, more than 3.4 million Americans would have coverage each year through 2034, the CBO said.
The nonprofit group Small Business Majority says entrepreneurs who can’t afford employer health insurance will be among those who will suffer if the pandemic tax credit expires.
“The agreement to reopen the federal government without renewing the Affordable Care Act’s enhanced premium tax credit is a major blow to the fortunes of America’s small businesses,” said John Arensmeyer, founder and CEO of the Small Business Group.
Corlett said other people who could face higher premiums include farmers and gig economy workers who don’t have access to insurance through their workplaces.
Corlett said that without the pandemic-era subsidies, ACA health insurers could end up serving a larger share of high-cost enrollees.
“We could find ourselves in a situation where insurers have to raise premiums again to reflect the contraction and deterioration of the market,” Corlett said. “As such, premiums are likely to be even higher in 2027, and some insurers may decide that this is a market they do not want to continue to be in.”
