Medical costs could skyrocket as ACA subsidies expire
Millions are at risk of skyrocketing health costs in 2026 if Congress fails to extend health care subsidies.
Leslie Smith is one of the millions of Americans rushing to meet the 2026 deadline to secure health insurance coverage.
Smith, a 64-year-old Arizona resident who has diabetes, faces the daunting prospect of juggling more expensive Affordable Care Act premiums and daily living expenses. Smith delayed choosing a coverage plan for 2026 as Congress debates whether to extend coronavirus-era subsidies that make Obamacare health insurance cheaper for 22 million Americans.
The Senate on Thursday rejected a Democratic proposal to keep the subsidies in place. Smith and others face a significant increase in the cost of ACA insurance starting January 1, 2026, because the Senate did not extend the enhanced premium tax credit that is set to expire at the end of 2025.
And House Republicans unveiled a bill aimed at making health care more affordable without extending premiums under Obamacare. A House vote could take place next week.
Obamacare enrollees must select a plan by Monday, December 15th to receive coverage starting January 1, 2026.
Rising insurance premiums force consumers to evaluate options
ACA experts say many consumers are likely taking a closer look at their monthly expenses as enhanced tax credits expire. Consumers would have to pay higher costs or downgrade to a cheaper Obamacare plan.
“People have to make big financial and health decisions, and they’re making them right now,” said Sabrina Corlett, co-director of Georgetown University’s Center on Health Care Reform.
About one in three Affordable Care Act enrollees is “very likely” to buy a new insurance plan in 2026 if costs more than double, according to a recent study by the health policy nonprofit KFF.
“Many people are likely to be actively shopping or switching (plans) this year,” said Cynthia Cox, vice president and director of the ACA program at KFF.
Arizona woman’s plans shattered by soaring Obamacare premiums
Since Smith was diagnosed with diabetes in her 20s, she has made affordable and solid health insurance a priority. This also influenced my decision to change jobs. And when the Maricopa County, Arizona, woman retired five years ago, she knew she could get health insurance from the Affordable Care Act.
If Ms. Smith does nothing, she will be re-enrolled in the 2026 plan, which will cost her $948 per month, an increase of $368 per month. She is strongly considering downgrading her coverage to a less expensive plan until she becomes eligible for Medicare in mid-2026.
If you choose a plan with a lower monthly premium, you may end up paying more for deductibles and other cost-sharing requirements because your insurance coverage is less robust. That means she may have to postpone plans for costly knee replacement surgery.
“That’s very frustrating to me,” Smith said. “You’re doing things the right way, but frankly you mess up.”
Republicans were initially reluctant to include the enhanced insurance premium tax credit in the federal budget. This inaction led Democrats to shut down the federal government for a record 43 days. The government shutdown ended with Senate Republicans promising to vote on whether to extend expanded tax credits.
Four Republicans sided with Democrats, but they fell short of the minimum 60 votes to extend the subsidy. As a result, the majority of ACA enrollees had just a few days to switch plans before the higher premiums applied.
“Everyone was panicking,” Smith said.
Buy cheaper options now
Consumers need to have some idea of how much their insurance premiums will go up next year. Many states that run their own health insurance markets are “eager to get the word out that people need to meet the (Dec. 15) deadline,” Georgetown’s Corlett said.
Corlette recommends that consumers sign in to their ACA account and evaluate their options. Those currently enrolled in a gold or silver-level Obamacare plan may want to consider the less expensive bronze plan coverage option, Corlett said.
With the expiration of the enhanced premium tax credit, KFF projects that 22 million Americans will see their monthly premium payments increase by an average of 114%.
A KFF study found that one in four ACA consumers would likely drop their coverage if costs more than doubled.
People who expect their health care costs to increase next year expect to take other steps to pay their premiums. According to the KFF survey, among ACA enrollees who expect their medical costs to increase by $1,000 or more in 2026, two in three are likely to cut back on daily necessities, and one in three will take out a loan or increase credit card debt.
Affordable Care Act customers won’t be the only ones facing health insurance sticker shock next year. Most working-age Americans get health insurance through their employers, and research shows that workers will face the largest increase in health insurance premiums since 2010 in 2026.
Advocacy groups said some consumers are likely to drop their insurance because they can no longer afford rising health insurance premiums.
Erica Lee, a health policy analyst at the Florida Policy Institute, warned that the expiration of the enhanced tax credits “will increase Florida’s uninsured population to levels not seen since before the Affordable Care Act.”
More than 4 million Floridians rely on subsidies to buy health insurance, and without them, Lee said, families “would face higher premiums and, in the worst-case scenario, many would be forced to go without insurance.”
Contact Ken Alltucker at alltuck@usatoday.com.
