Will the end of enhanced ACA subsidies mean the beginning of a health insurance crisis?

Despite multiple proposals floated in Congress on how to address the enhanced Affordable Care Act (ACA), it appears that millions of Americans will see their health insurance premiums soar in 2026.

“I don’t think there are any rabbits coming out of a hat at this point,” Katherine Hempstead, Ph.D., a senior policy officer at the Robert Wood Johnson Foundation, said in an interview with MHE.

The latest plan unveiled by House Republicans, which is expected to come to a vote this week, includes a variety of provisions that the Republicans contend will fill the void left by a sharp drop in enrollment in ACA plans because of the end of the enhanced subsidies that lower premiums. The Republican plan would allow small businesses and individuals to band together to buy association health plans and include federal funding for cost-sharing subsidies for lower-income ACA enrollees in order to reduce their deductibles and out-of-pocket costs. The Republicans also tacked on elements of pharmacy benefit manager reform legislation that has stalled in Congress despite bipartisan support.

Democrats support the continuation of the enhanced subsidies, but so do a small group of Republicans. One of them, Rep. Kevin Kiley, a California Republican, told NPR Monday that the plan supported by House Speaker Mike Johnson was “hastily thrown together” and fails to address “the crisis in front of us. ACA enrollees “shouldn't be forced to pay the price for congressional inaction,” Kiley added.

“While Democrats demand that taxpayers write bigger checks to insurance companies to hide the cost of their failed law, House Republicans are tackling the real drivers of healthcare costs to provide affordable care, increase access and choice, and restore integrity to our nation's healthcare system for all Americans,” Johnson said in a statement Friday about the new proposal, according to ABC News.

The congressional politics around the ACA and Republican healthcare are fluid. Politico reported yesterday that the Republican moderates are prepared to back Johnson’s bill.

Hempstead said she has seen “some sincere effort for the middle ground.” Next year’s midterms are a factor in the politics. Some lawmakers are also concerned about the impact that failing to extend the tax credits might have on their re-election bids.

Johnson may allow House members to vote on an amendment extending subsidies, but it is unlikely to gain approval, Politico reported.

Another GOP proposal calls for sending money to ACA enrollees using health savings accounts (HSAs) that could be used to defray healthcare expenses.

The various proposals “are all over the place,” said Matt McGough, M.P.H., a policy analyst for KFF for the Program on the ACA. The range of proposals illustrates “how fragmented the GOP is on healthcare,” he noted.

There is “some infatuation with HSAs among some people within the Republican caucus,” Hempstead said. But relying on HSAs “is not a good solution for someone with serious health insurance needs,” as many plans have high deductibles and high out-of-pocket costs. The House proposal would give individuals between the ages of 18 and 49 $1,000 for an HSA paired with a bronze or catastrophic health plan. People between the ages of 50 and 64 would receive $1,500.

The GOP proposals “are not too serious or well thought out,” Hempstead said.

Premium hikes

Two votes in the Senate to break the impasse failed, with votes largely following party lines. The Republican bill would have set up HSAs, while a Democratic bill would have extended the enhanced subsidies for three years.

If Congress fails to act, the enhanced premium tax credits that were put in place in 2021 because of the COVID-19 public health emergency will expire at the end of the year. Fueled by enhanced, premium-lowering subsidies, ACA enrollment has more than doubled during the past several years, from 12 million in 2021 to 24.3 million this year.

Without an extension, premiums would soar by an average of 114%, according to KFF. The average annual premium payment would jump from less than $900 in 2025 to $1,900 next year.

Households that make more than 400% of the federal poverty level would no longer be eligible for a tax credit. A study by the Urban Institute and the Commonwealth Fund has estimated that 4.8 million more people will be uninsured next year if the larger tax credits expire.

The impact of the expiring tax credits would vary greatly based on an individual’s age or income level. Younger ACA enrollees, or those with lower incomes, might not see a premium increase, or it might rise by just a few dollars a month, McGough said. But older enrollees and those who are middle class would be particularly hard hit, he said, with some seeing an annual increase of $10,000 or more, he said. “People 50 and older will feel the heat,” McGough said. Hempstead agreed, saying it would put a squeeze on those who are not yet Medicare eligible. “It’s not an option for them to not have health insurance.”

High approval rating

Although some conservative members of Congress are staunchly opposed to the ACA, a recent Gallup Poll found approval of the ACA at its highest level ever, with 57% of those surveyed voicing their support for the program. The previous record high, of 55%, was reached in April 2017 and November 2020. Support among independent voters, a group prized by both parties, is growing. The poll found that 91% of Democrats, 63% of independents and 15% of Republicans approve of the ACA. Of those who approve of the law, nearly 50% say it should remain in place but needs significant changes, while 45% prefer to keep it as is, Gallup found.

Although backed by Democrats and the signature achievement of the Obama administration (thus the "Obamacare" moniker that was used disparagingly but then appropriated by Democrats), more than 55% of ACA plan enrollees live in congressional districts represented by a Republican, a distribution that has fuzzed the partisan divide on the ACA to some degree.

In absolute numbers, the red states of Florida and Texas have the largest number of people enrolled in ACA plans, 4.7 million and 3.9 million, respectively. Florida and Texas are also among the 10 states that have failed to expand their Medicaid programs under the ACA.

Healthcare and affordability

Hempstead says the ACA is far from perfect, but adds that “everyone needs health insurance. It’s not like a luxury good.” Perhaps that need is keeping ACA enrollment numbers high for 2026, notwithstanding all the uncertainty about the enhanced subsidies. According to CMS, almost 5.76 million people had signed up for ACA coverage as of Dec. 5, including almost 950,000 new enrollees. That’s about 400,000 more enrollments compared with the same period last year, the Associated Press reported. “I don’t see how the numbers are going to hold up,” Hempstead said. She suspects people will sign up but not pay their premiums.

But even if the Dec. 31 deadline for the enhanced premium tax credits passes, McGough said there is “no absolute drop-dead date to extend subsidies.” Congress could vote to implement retroactive tax credits, he said.

Along with consumers losing their healthcare coverage and insurers losing members, healthcare providers will also take a hit, Hempstead predicted. If people sign up for cheaper care with higher out-of-pocket costs or drop coverage entirely, “it might mean people stint on care.”

That will “show up on the revenue side” for providers, as they deal with sicker patients who require charity care, she said. That uncompensated care “could increase prices for everyone,” McGough said. “Most people on the [ACA] marketplace are going to be left with no good option next year,” he added.

As a result of congressional inaction, healthcare has become “one more issue in the national conversation about affordability right now,” McGough said. “Maybe we’ll have a more serious conversation in 2026” about healthcare, Hempstead said. “Maybe this is an inflection point. It could be good in the medium to long run.”