As enhanced Affordable Care Act premium subsidies near their expiration at the end of the year, two Republican U.S. Senators, Bernie Moreno of Ohio and Susan Collins of Maine, have proposed the Consumer Affordability and Responsibility Enhancement (CARE) Act. This legislation aims to extend the tax credits for two years but introduces new restrictions on who can qualify for them.
The CARE Act seeks to cap household income eligibility for subsidies at $200,000 and mandates that all enrollees pay a minimum premium of $25 per month. This change would eliminate the zero-premium plans currently available to lower-income Americans. The introduction of this proposal marks one of the first responses from GOP lawmakers regarding the impending expiration of these vital subsidies, yet its success in Congress remains uncertain as the deadline looms.
If no action is taken, the expiration of these subsidies could lead to a dramatic increase in premium costs for those enrolled in Affordable Care Act plans, with premiums potentially doubling. In Ohio alone, over half a million residents could face financial difficulties due to the loss of these subsidies.
Moreno criticized the previous administration, claiming that the policies enacted under former President Barack Obama allowed large insurance companies to profit while causing healthcare costs to soar for everyday Americans. He expressed a willingness to collaborate across party lines to find solutions that would lower costs for everyone.
Senator Collins echoed this sentiment, emphasizing the need for practical solutions that would enhance affordability while avoiding disruptions in coverage. She argued that the CARE Act proposal would protect families from steep increases in health insurance premiums by extending the enhanced tax credits for another two years and placing reasonable income limits on eligibility.
As the December expiration date nears, the fear of a ‘subsidy cliff’ becomes increasingly palpable. The enhanced premium tax credits, which were first enacted in 2021 through the American Rescue Plan Act and later extended by the Inflation Reduction Act, have played a crucial role in lowering healthcare costs for millions. The number of people benefiting from these subsidies has surged from 11 million to over 24 million, according to estimates from the Kaiser Family Foundation (KFF). Without congressional intervention, these enhanced subsidies could end in 2025, potentially doubling premiums for many.
The Congressional Budget Office warns that without an extension of the subsidies through 2026, approximately 2.2 million individuals could lose their insurance in 2026 alone. This number would grow to 3.7 million in 2027 and 3.8 million annually from 2026 to 2034. Currently, subsidized enrollees pay an average of $888 annually in premiums. Without the enhanced tax credits, that figure could jump to $1,904 in 2026—a staggering 114% increase.
The CARE Act aims to address these issues by implementing several key provisions: extending subsidies for another two years, capping eligibility at a household income of $200,000, and eliminating zero-premium plans.
Analysts have warned that allowing the enhanced subsidies to expire could have broader repercussions beyond just individual affordability. Increasing uninsured rates would likely exacerbate the burden of uncompensated care on hospitals, especially in rural regions and states that have not expanded Medicaid. As the situation develops, the need for a legislative solution to avoid impending challenges in the healthcare system becomes increasingly urgent.
