This week saw the release of prices for next year’s Obamacare health insurance plans, revealing significant increases in premiums across the United States. These figures provide insight into what individuals may pay, particularly if temporary tax subsidies enacted during the pandemic are allowed to expire at the end of this year.
Most individuals purchasing insurance independently do not pay the full premium thanks to tax credits introduced by the Affordable Care Act (ACA). However, the newly published prices raise concerns about affordability when supplemental tax subsidies, extended through 2022 after initial passage in 2021, are removed.
The extent of premium increases is expected to vary significantly based on factors such as geographic location, age, and income. According to estimates from the Congressional Budget Office (CBO), extending the tax subsidies would cost the federal government approximately $23 billion next year and $350 billion over the next decade. If these subsidies lapse, numerous Americans may encounter cost hikes exceeding $1,000 per month—an especially pertinent issue as the midterm elections approach.
This funding topic has become a contentious point in ongoing congressional negotiations that have resulted in a government shutdown currently lasting nearly a month. While Democrats are advocating for the extension of these subsidies, Republicans insist they will not consider such provisions until the government reopens.
Data published by healthcare.gov and state websites, allowing prospective insurance buyers to “window shop,” informs the current premium assessments. However, it’s important to note that these increases will significantly affect those with lower incomes. For individuals earning less than $24,000 per year, the elimination of these subsidies means losing access to free insurance, potentially resulting in costs ranging from $27 to $82 monthly for a typical plan.
For example, a single individual earning $22,000 will find their monthly premium jump from no cost to $66 after subsidies are removed. About half of ACA marketplace enrollees may be forced to navigate similar challenges, particularly in states that did not opt to expand their Medicaid programs. This demographic has seen a considerable surge in sign-ups, particularly in states like Texas, Florida, and Georgia.
Those earning slightly more—around $35,000 annually—will similarly face notable premium hikes. Their typical plan prices could increase from $86 a month to $218 without the extended subsidies. Approximately 40% of enrollees fall within the income bracket of $24,000 to $63,000, facing similarly steep increases.
Age and location also play crucial roles in determining premium costs for higher earners. For individuals around $65,000, those nearing retirement may experience sharp increases, with some seeing premiums rise to $1,000 or more monthly as the loss of subsidies combines with substantial base premium increases, roughly 26% on average.
Premium variability is further exacerbated based on residence, with individuals living in rural areas facing steeper costs. A 60-year-old in southern Illinois, for example, could see their monthly premiums soar from $460 with subsidies to an astounding $2,800 once they expire.
High-income earners—those making $95,000—have largely not benefited from additional subsidies, as assistance is typically earmarked for those whose insurance costs exceed 8.5% of their income. While older individuals in this income bracket might see savings with extended subsidies, many others have already been paying higher premiums and could face even steeper costs next year without the assistance.
Household impacts will differ as well. Families at lower income levels might see more consistent premium increases, whereas those at higher income levels will be affected by multiple factors, including the ages of family members and state of residence.
For those eager to gauge their potential household expenses, tools for estimating costs with and without the subsidies are available through organizations like KFF. The data presented has been calculated from insurance premiums advertised on healthcare platforms and reflects a broad look at market trends impacting insurance expenses for the upcoming year.
