‘Premiums will rise,’ says health care insider on loss of ACA subsidies
The enhanced Affordable Care Act premium tax credits are set to expire in December, potentially leading to premium increases of up to 75% for some individuals enrolled in the marketplace.
The future of COVID-era health care subsidies for millions of Americans has become the centerpiece of an ongoing standoff between Democrats and Republicans over avoiding a government shutdown before the Oct. 1 deadline.
The enhanced Affordable Care Act (ACA) premium tax credits are set to expire in December, potentially leading to premium increases of up to 75% for individuals enrolled in the ACA marketplace.
Democrats have made the tax credits a key demand of their ongoing negotiations with GOP leaders, who have been adamant that the subsidies won’t be included in any stopgap measure to keep the government in operation through November.
Gary Young, director of Northeastern University’s Center for Health Policy and Healthcare Research, says that letting the ACA subsidies expire would have serious consequences on millions of Americans at a “critical” moment in health care policy.
Northeastern Global News spoke to him about those consequences, which he says compound the strain on the U.S. health care system on the heels of a $1 trillion cut to Medicaid over 10 years. His comments have been edited for brevity and clarity.
How will premiums and coverage be affected if these health care subsidies are allowed to expire at the end of the year?
Premiums will rise. I mean that’s a fact. How many people would lose coverage — that’s perhaps more debatable. The Congressional Budget Office said, in reference to the One Big, Beautiful Bill Act, that the first year would see 2-4 million people lose their insurance.
But certainly premiums will go up because the original framework that was adopted under the Affordable Care Act capped subsidy eligibility to people who made less than 400% of the federal poverty line. That was revised in the American Rescue Plan Act passed during the COVID-19 pandemic to provide subsidies to people who were paying more than 8.5% of their income on premiums. That really provided a lot of people with subsidies who were not getting it under the old plan. Then the Inflation Reduction Act later extended that to 2025, which gets us to today.
Over 90% of individuals in the ACA marketplace currently receive subsidies, which vary based on income — but nearly everyone gets some level of financial assistance. Without those subsidies, premiums would rise significantly for many enrollees. Some estimates project average increases of around 75%, making it a substantial hike.
We can certainly expect that many will drop their coverage. The backdrop to all this includes Medicaid cuts from the Big, Beautiful Bill, which likely means a significant increase in the number of uninsured. That, in turn, will put pressure on hospitals as uncompensated care costs rise. This is a critical moment for the health care system.
We made significant progress in reducing the uninsured population after the ACA, but without renewed subsidies, some of those gains will likely be reversed in the next year or two. So, health plans and hospitals are lobbying for extending the subsidies because this will affect health plans negatively, and of course, hospitals will see a rise in uncompensated care that will put pressure on their margins.
What is the story behind the GOP’s opposition to the extension of these enhanced subsidies?
There’s a long-standing political principle at play: once people receive a benefit, it’s very difficult to take it away. That doesn’t mean subsidies shouldn’t be extended, but it’s a relevant consideration for Republicans.
The original ACA framework was not as generous as the recent amendments. Some Republicans argue these enhanced subsidies were meant to be temporary as a response to the COVID-19 pandemic, and not permanent. There will be debate around that, but their position is clear: they don’t believe subsidy extensions should be used as a bargaining chip to keep the government open.
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Some reports suggest that some Republicans remain open to extending the subsidies, but prefer to do so closer to their expiration date in December rather than tying it to government funding negotiations. Of course Democrats are skeptical and believe that if they don’t use this as leverage now, Republicans may be unwilling to engage in meaningful talks about extending the subsidies come December.
When do the current ACA subsidies expire, and what are the possible options for their future?
They’re due to expire at the end of 2025. So, one option would be to phase them out immediately; another would be to grant another temporary extension. Obviously, the Democrats want them to be permanent. They could be phased out, but that would require legislation.
You mentioned that this is a critical moment in U.S. health care. How does the debate over ACA subsidies fit into the broader discussion about universal health care access in the U.S.?
It’s important to understand this in the context of the country’s long-standing debate over universal access to health care. As you know, we are the only high-income nation that doesn’t meet the World Health Organization’s definition of universal access. This debate has been ongoing for decades — dating back at least to the late 1940s — about whether the U.S. wants to achieve universal coverage.
Even with the ACA, we made substantial progress, but roughly 10% of the population still lacks health insurance. Since 2010, we’ve made significant gains, but now we may be headed in the opposite direction. For many, this is a critical moment in health policy: after years of progress, we could be starting to lose ground.
Again, you have to put this in the context, not just in the ACA subsidies, but also the Medicaid cuts. Between the two, we are going to see — and there will be debates about what the numbers will be — a certain rise in the uninsured population.
