For Julie Morringello, an artist residing in rural Maine, a recent notification brought unsettling news: her health insurance premiums under Obamacare could nearly double next year. Currently, she pays $460 a month, but this relies heavily on government subsidies that a Republican-controlled Congress might not renew.
“I don’t know what we’re going to do,” expressed Morringello, 58, who also covers her 14-year-old daughter. With a history of cancer requiring ongoing treatment, foregoing health insurance isn’t an option for her.
This potential surge in costs is a looming concern for millions of Americans ahead of the November enrollment period. A significant majority of individuals enrolled in Affordable Care Act plans receive federal tax credits, which were substantially expanded by President Joseph R. Biden Jr. and Congress in 2021.
These crucial subsidies are set to expire by the end of the year, becoming a central point of contention between Democratic and Republican lawmakers. Democratic leaders in both the House and Senate are demanding their extension as a prerequisite for supporting a government spending bill, which must pass this month to avoid a shutdown.
Republican leaders, however, have raised concerns about the high price tag – an estimated $350 billion over ten years – and allegations of potential fraud within the enrollment process. They have resisted attaching the subsidy extension to the short-term spending bill for this month.
Despite this, many individual Republican lawmakers have indicated openness to extending the funding in some capacity, recognizing that its termination could negatively impact their constituents just before the midterm elections.
Should a bipartisan agreement fail, over 20 million Americans will face substantially higher insurance premiums next year. The Senate’s failure to pass a spending bill last week has heightened the risk of a government shutdown over this very issue.
Drew Altman, CEO of KFF (a nonpartisan health research group), warns of “pretty dire” consequences, with costs “skyrocketing” for the 24 million people relying on marketplace plans. KFF estimates Americans’ share of premiums could jump by an average of more than 75 percent. Furthermore, the Congressional Budget Office projects that approximately two million people could lose their coverage next year if this extra funding ceases, a number expected to climb over the next decade.
These generous credits have significantly broadened access, covering more of the premium costs for a wider range of people since before the pandemic. Low-income individuals can now obtain plans with minimal deductibles at no premium cost, and for the first time, even higher-earning families (such as a family of four making over $160,000 annually) have received assistance.
The expiration of these subsidies could trigger a ripple effect throughout the broader insurance market. Combined with other recent legislative and administrative changes, the number of individuals with ACA plans could eventually halve, with states like Florida and Texas experiencing the most severe declines, according to an analysis by Wakely Consulting. Actuaries anticipate that those with ongoing medical needs, like Ms. Morringello, will likely maintain their enrollment despite increased costs, while younger, healthier individuals might opt to drop coverage.
Insurers are keenly observing these developments and many have already adjusted rates upwards, anticipating a less healthy pool of customers. KFF’s analysis of company filings shows insurers are, on average, boosting premiums by about 4 percentage points next year, in addition to increases driven by rising general medical costs.
Julie Morringello’s studio showcases her works in progress. Notably, about half of current Obamacare enrollees are either self-employed or work for small businesses that don’t provide health coverage.
Beyond the subsidies, other recent actions by the Trump administration threaten to further deter enrollment, particularly among younger, healthier populations. Health officials have promoted less comprehensive, cheaper insurance alternatives. They have also introduced new rules making Obamacare enrollment and annual renewals more complex. Many of these policy shifts are currently facing legal challenges in the courts.
While a complete collapse of the Obamacare market isn’t anticipated, experts caution that after next year, some insurers may reconsider offering plans in certain areas, leading to reduced consumer choice. For instance, Aetna, owned by CVS Health, chose to exit the Obamacare markets entirely in May, though its coverage nationwide was limited to about one million people.
“I don’t think it will go away, but I think it will be a lot worse,” stated Jeanne Lambrew, Director of Health Reform for the Century Foundation and a former state Human Services Commissioner.
Linda Greenfeld, a senior executive at L.A. Care Health Plan, which serves low-income residents in Los Angeles County, described the potential loss of expanded subsidies as “a devastating effect” for their clients. Over half of their customers currently pay nothing towards their premiums, making coverage “a reality for most people.” Even a modest $50 monthly premium increase could force some to choose between healthcare and essential necessities like food, she explained.
Critics of the subsidies argue that these expanded tax credits disproportionately aid wealthier Americans who don’t require assistance. Others claim that zero-dollar premium plans have led to fraudulent and duplicate enrollments. Some House Republicans have characterized the push for permanent expanded credits as “massive taxpayer-funded handouts to the wealthy and large health insurance companies.”
Brian Blase, President of the influential conservative Paragon Health Institute, advocates for eliminating zero-dollar premiums to curb fraud. He believes the “underlying Obamacare subsidies are themselves very generous,” noting that even without the expanded aid, the lowest-income Americans would still pay roughly $30 a month for insurance.
However, despite their party’s historical opposition to Obamacare, some Republicans are showing increasing interest in retaining at least some of these tax credits. Significant coverage losses are projected to hit Republican-led states like Florida and Texas particularly hard. Vulnerable Republican lawmakers are concerned about potential voter backlash from constituents facing sudden premium increases before the midterm elections. Ten Republican House members have already co-sponsored legislation for a temporary extension, and Senator Lisa Murkowski of Alaska introduced her own bill last week, with other Republican senators also expressing interest.
Nonetheless, Republican leaders have thus far maintained that they will not include the measure in the upcoming government spending bill, directly conflicting with Democratic demands.
In Alaska, where Obamacare insurance is exceptionally costly without subsidies, higher-income residents would experience substantial premium hikes.
Natalie Kenley, 43, of Palmer, Alaska, anticipates her family’s premium soaring from $1,600 to over $2,000 a month without the additional aid. As her husband owns a dental practice where she also works, Ms. Kenley, who has multiple sclerosis, requires continuous coverage. She expressed deep worry: “I’m really concerned about health care costs because they feel very unpredictable.”
Obamacare has become a vital health insurance solution for those without employer-sponsored coverage. Recent KFF analysis indicates that approximately half of all current enrollees are either self-employed or work for small businesses that don’t offer health benefits.
With her husband retired and on Medicare, Ms. Morringello has already chosen one of the cheapest plans available, which includes a steep $7,500 deductible. Finding an additional $5,000 annually for premiums will be a struggle. She is considering cutting back on expenses like her local Y membership.
“If I can’t pay it, I’ll have to use my savings,” she stated.