Millions of Americans are bracing for potentially significant increases in their health insurance premiums next year, as the enhanced premium tax credits associated with the Affordable Care Act (ACA) are scheduled to expire. This development poses a serious concern for many enrollees who could experience sharp financial burdens unless Congress intervenes.
The ACA marketplace, created in 2010, offers health insurance options for individuals who do not qualify for Medicaid and are not covered through an employer. To address rising costs during the COVID-19 pandemic, Congress introduced the Enhanced Premium Tax Credit in 2020, which has substantially reduced monthly premiums. In some cases, low-income participants have seen their premiums drop to zero.
The Congressional Budget Office warns that allowing these subsidies to lapse could lead to premiums more than doubling for many Americans, potentially leaving an additional 2 million individuals uninsured.
Analysis from KFF Health indicates that older adults with middle incomes, particularly those just exceeding the previous ACA salary cutoff, will face the harshest financial impacts. For individuals at 401 percent of the federal poverty level—approximately $62,757 for a single person in the contiguous United States—the expiration of these credits could double, or even triple, their average annual premiums for benchmark silver plans in 46 states and Washington, D.C. In 19 states, premiums could account for over a quarter of an individual’s annual income.
The states projected to see the most significant increases include Wyoming, with an anticipated rise of $22,452 per year; West Virginia, which could see an increase of $22,006; and Alaska, with a projected increase of $19,636. Professors and health policy experts cite a combination of limited insurance competition, smaller and older populations, high healthcare provider costs, and geographic challenges as contributing factors to these steep increases.
Conversely, states like New York, Massachusetts, and New Hampshire will experience smaller, yet still notable, increases of $4,469, $4,728, and $4,877 respectively. These states entered the ACA with existing regulations that had stabilized their individual markets, resulting in deeper risk pools and more predictable pricing, which has mitigated the impact of losing enhanced tax credits.
As income rises, fewer states are expected to see their premiums double. At incomes reaching 501 percent of poverty (approximately $78,407 for an individual), the number of states facing doubled premiums drops to 37, and at 601 percent, to 19 states. Premium increases for younger individuals, such as 40-year-olds, are anticipated to be more modest across all income levels.
In a recent statement, former President Donald Trump expressed his reluctance to extend the expiring subsidies under the ACA, calling it a “disaster” while making it clear that he would prefer not to prolong the funding. Although the Trump administration has indicated efforts to mitigate substantial premium hikes resulting from the expiration of ACA subsidies, the future of health insurance costs remains uncertain, leaving millions of Americans anxious about their healthcare affordability heading into the new year.
