Millions of Americans who purchase health insurance through the Affordable Care Act (ACA) marketplace could see their premium payments more than double next year. According to analysis from KFF, a health policy research organization, premiums are projected to increase by an average of 114% if Congress fails to extend enhanced financial assistance programs set to expire at the end of the year.
With the open enrollment period beginning on November 1, more than 24 million people face significant uncertainty about the affordability of their health coverage. The outcome of ongoing legislative debates will directly determine the cost of insurance for a large segment of the population, including many small business owners, early retirees, and residents of several key southern states.
Key Takeaways
- ACA marketplace enrollees could face an average premium payment increase of 114% if enhanced subsidies expire.
- The deadline is critical, as the ACA open enrollment period starts November 1.
- Over 24 million people are currently enrolled in ACA plans, a number that has more than doubled since the enhanced subsidies were introduced in 2021.
- The impact would be concentrated in states like Florida, Texas, Georgia, and North Carolina, affecting a large number of Republican voters.
- Broader consequences could include higher premiums for all individual market buyers and increased financial strain on rural hospitals.
The Financial Cliff for ACA Enrollees
The central issue is the pending expiration of enhanced premium tax credits, which were first implemented in 2021. These subsidies were designed to lower monthly premium costs for individuals and families purchasing health insurance through the ACA marketplace. Without legislative action, these financial aids will revert to their previous, less generous levels.
Cynthia Cox, Vice President at KFF and Director of its Program on the Affordable Care Act, highlighted the urgency of the situation. She explained that consumers will see the impact immediately when they begin shopping for plans for the upcoming year.
"If Congress doesn't act soon, then what's going to happen is people are going to log on to shop on Nov. 1, and they're going to see that their premium payments are doubling or more, on average," Cox stated.
This sharp increase in cost could make coverage unaffordable for many of the people who have come to rely on it. Since the enhanced subsidies were put in place, enrollment in ACA marketplace plans has surged from approximately 11 million to over 24 million people, demonstrating the significant role financial assistance plays in healthcare access.
By the Numbers: The Impact of Expiring Subsidies
- 114%: The average estimated increase in premium payments without the extension.
- 24 Million: The number of people currently covered by ACA marketplace plans.
- 11 Million: The number of enrollees before the enhanced subsidies were introduced in 2021.
Disproportionate Impact on Specific States and Demographics
While the effects of the subsidy expiration would be felt nationwide, certain regions and population groups would bear a heavier burden. According to KFF's analysis, the growth in ACA enrollment has been particularly strong in several large, Republican-leaning states.
"When we look at where all this growth has been concentrated, more than half of it is in Texas, Florida, Georgia, and North Carolina," Cox noted. "Big Southern Red states are going to be really affected."
This geographic concentration means that a significant portion of those who would lose financial assistance reside in areas represented by lawmakers who have historically been critical of the ACA. Beyond geography, the demographics of those affected are also distinct.
Key Groups at Risk
The individuals who would be hit hardest are often those who do not have access to employer-sponsored health insurance. This includes:
- Small business owners: Many entrepreneurs and self-employed individuals rely on the ACA marketplace for their coverage.
- Older adults and early retirees: People in their 50s and early 60s who are not yet eligible for Medicare often face the highest premiums on the individual market and depend heavily on subsidies.
- Farmers: Agricultural workers frequently purchase their own insurance and would be directly impacted by rising costs.
These groups are particularly vulnerable to premium spikes because they often have moderate incomes that place them just above the threshold for traditional Medicaid but not high enough to comfortably afford unsubsidized insurance.
Understanding Premium Tax Credits
The Affordable Care Act provides two main types of financial assistance. Premium tax credits lower the monthly cost of an insurance plan. The "enhanced" credits, active since 2021, increased the amount of assistance and made it available to more people, including those with higher incomes who previously did not qualify. The expiration would eliminate this expanded eligibility and reduce the subsidy amounts for everyone else.
Broader Consequences for the Entire Health System
The potential fallout from expiring subsidies extends beyond the individuals who receive them. Experts warn of several ripple effects that could destabilize the individual insurance market and strain the wider healthcare system.
One major concern is a phenomenon known as adverse selection. If premiums double, healthier individuals may decide that insurance is no longer worth the cost and choose to drop their coverage. This would leave a sicker, more expensive group of people in the insurance pool.
"Health insurance companies are saying, 'Well, we think that this market... is going to be sicker next year, because healthier people are going to see this premium spike and they're going to drop out,'" Cox explained. In response, insurers would likely raise premiums even further for everyone buying their own plans, including those who do not receive any financial assistance.
Strain on Hospitals
A significant increase in the number of uninsured Americans could also create serious financial challenges for hospitals. When uninsured individuals need emergency care, they are often unable to pay for it, leaving hospitals to absorb the cost as uncompensated care.
This could be particularly damaging for medical facilities that are already operating on thin margins, such as those in rural communities. Cox warned that a large influx of uninsured patients could force some struggling hospitals to cut essential services or, in extreme cases, shut down entirely. This would reduce access to care for everyone in the affected community, regardless of their insurance status.
As the November 1 deadline approaches, the pressure on Congress to find a solution intensifies. The financial well-being of millions of Americans and the stability of the U.S. healthcare market hang in the balance.
