Brace for the largest-ever spike in health insurance premiums

As the federal government enters the ninth day of a shutdown sparked by Congress’ failure to pass a continuing resolution which would fund the government for around two more months—with hundreds of thousands of workers going unpaid, federal loans to small businesses on hold, and the future of SNAP benefits at risk for coming months if the shutdown continues; soaring health care costs, the crux of the shutdown fight, are looking increasingly likely.

As part of the Affordable Care Act, which paved the way for more widespread access to healthcare, the federal government uses tax credits to subsidize the premiums of tens of millions of qualifying people.

But unless Congress extends them, as Democratic politicians—and a few Republicans—are demanding, those tax credits are set to expire by the end of the year. That means “creating greater numbers of uninsured, requiring more government funding for uncompensated care, and worsening health outcomes in the United States,” in the words of an August report from the Commonwealth Fund, a nonprofit health care–focused think tank and grantmaking organization based in New York.

I spoke to one of the authors of the report, Jeanne M. Lambrew, about what’s at stake if ACA tax credits expire. Lambrew is the director of health care reform at the Century Foundation, where she is also a senior fellow, and previously served as Commissioner of the Maine Department of Health and Human Services, director of the Office of Health Reform at the US Department of Health and Human Services under the Obama administration, and as President Obama’s deputy assistant for health policy.

Why are Affordable Care Act rates going up?

I don’t think, in health policy history, we’ve [ever] seen as big a projected increase in health insurance premiums as we’re seeing right now for the ACA marketplace. It results from two different actions. One is administrative actions that are increasing tariffs, restricting immigration, and otherwise constraining our ability for our healthcare system to adapt and improve. And then also from the largest healthcare cuts in federal history: $1.1 trillion was cut through HR 1, the one known as the One Big Beautiful Bill Act, which has a big impact.

So, there are premium tax credits that matter for 20 million people in this country, and they will be cut on January 1 without action. That will result in the average person seeing a more than doubling of their out-of-pocket premium, and that is significant. So all those changes from action, inaction, and neglect will result in truly the highest increases in health insurance premiums for any group in history for the marketplace.

Do you think that this issue is widely understood? Do you think most Americans on Marketplace plans realize how much their rates will go up?

The understanding is growing, but partly because when we created the Affordable Care Act, we wanted to be normal. We wanted to be part of how people get health insurance. So we didn’t single it out. We never called it Obamacare. It was all private insurance, what people get, what people turning age 26 get. We try to normalize it, which means that the understanding is less than it should be.

All that said, we are only 23 days away from [the enrollment period], and it will be instantly apparent how much more they will pay for health insurance next year.

What is at stake for individuals and their families if premium tax credits expire? Which households will be hit the hardest?

I think we often don’t really look hard at the actual premium impacts, but they’re very large. So on average, it is up for everybody. [If tax credits are preserved,] we will be seeing these premium tax credits increasing by $1,016; that’s a lot of money on average.

And when you look at a family of four with a median income of $90,000, just due to the lapse in premium tax credits, that will be a loss of $3,735. These are not estimates. These are actual. Just to put that into context, $3,735 for a family of four is huge. It probably wipes out all potential increases in wages next year. It exceeds rent increases, food increases. It is a very large number, so I do think that this has a significant impact on families.

How did premiums and credits change under the first Trump White House, and then the Biden administration? 

When President Trump came in the first time, he stopped paying the subsidies for low-income people to reduce their deductibles and co-pays. We all were terribly worried about what that would mean for people. But the state and insurance companies really cared about trying to make health care affordable, so they created a different way of subsidizing that coverage. So it kind of limped along.

But when the Biden administration came in during the pandemic, they tweaked the premium tax credits to improve them, which doubled enrollment. It increased the racial diversity of enrollment. It increased [the number of] low-income people enrolled. It removed a cliff, so when people’s income increased, they didn’t like fall off and have nothing. All that led to great gains and all that is at risk.

Do you think it’s a politically risky move for Republicans to let these tax credits expire?

It’s a sleeper issue, potentially because we were trying to make this part of the mainstream healthcare system, that people aren’t really that aware of what the Affordable Care Act did for private health insurance.

I think that Republicans are waking up to it, as all their state insurance commissioners, small businesses that are significantly affected, [and] their rural residents are affected. All those constituents are beginning to say, “Hey, wait a minute.”

You know, a significant proportion of farmers rely on the ACA marketplaces for coverage because they can’t get employer-sponsored insurance. And it’s a fact that in states that have not expanded Medicaid under the Affordable Care Act, more people rely on these premium tax credits, so states like Texas and Florida are especially affected.

This is a non-partisan issue. It is across the board. We are hoping that there’ll be a real realization that health coverage matters, that caring for people matters, that preventing people with cancer or disabilities from losing coverage is important, and there will be some action on these premium tax credits in the coming days, weeks and months.

This interview has been lightly edited for clarity. The writer has received fellowship support from the Commonwealth Fund, which published a study cited in this article.