Millions of Americans relying on the Affordable Care Act (ACA) could face a significant increase in health insurance premiums, potentially as high as 75%, if federal subsidies are not extended. This warning comes as expiring financial aid threatens to impact out-of-pocket costs for many households, especially those in rural areas and small business owners.
Key Takeaways
- ACA health insurance premiums could rise by an average of 75% for many Americans.
- Enhanced federal subsidies, introduced in 2021 and renewed in 2022, are set to expire.
- Rural enrollees could see their out-of-pocket costs double if subsidies end.
- The expiration would affect over 21 million people currently receiving enhanced aid.
Potential Premium Hikes for ACA Enrollees
Senator Amy Klobuchar (D-Minn.) highlighted the potential for substantial premium increases during a CBS "Face the Nation" interview on September 28. She stated that a failure by Republicans to extend expiring subsidies would lead to a "big hit" in out-of-pocket health insurance costs for many Americans. Klobuchar specifically mentioned a 75% increase in premiums, effective November 1, for small business owners and farmers.
Her remarks underscored the ongoing political debate surrounding federal funding and healthcare affordability. The discussion took place just three days before a potential government shutdown, with Democrats advocating for the extension of these enhanced ACA subsidies.
"Republicans have created a health care crisis," Klobuchar said. "My constituents, Americans, are standing on a cliff right now with these insurance premium increases that are upon them. So, Democrats are united in pushing on this and saying, look, let us do something about this crisis before it is too late — a 75% increase in premiums starting Nov. 1 on people who are small business owners, people who are farmers out there, twice as much in the rural areas."
Understanding Enhanced ACA Subsidies
The Affordable Care Act marketplaces allow individuals to purchase health insurance plans with varying levels of coverage and costs. Most purchasers qualify for subsidies, provided they meet specific income requirements. These subsidies help reduce the monthly premium burden.
Background on ACA Subsidies
In 2021, then-President Joe Biden signed legislation making ACA subsidies more generous. This law significantly lowered the maximum amount individuals had to pay for coverage. It also extended subsidies to households earning more than 400% of the federal poverty level, a group previously excluded from receiving aid. For a one-person household in 2024, 400% of the poverty limit was $60,240, with the figure rising for larger households.
Congress renewed these enhanced subsidies in 2022, but they are now scheduled to expire at the end of 2025. The subsidies have proven popular, leading to a substantial increase in enrollment. Data from KFF, a healthcare think tank, shows that the number of people receiving these subsidies grew from 12 million in 2021 to 21.4 million in 2024.
Origin of the 75% Increase Figure
The 75% figure cited by Senator Klobuchar is rooted in analysis by KFF. Using 2024 federal data, KFF calculated the average annual premium for enrollees benefiting from enhanced subsidies. Under the original ACA subsidy rules, the government covered an average of $5,727 of the total premium.
Premium Breakdown
- Government-paid portion (original ACA rules): $5,727
- Beneficiary's out-of-pocket (original ACA rules): $888
- Portion covered by enhanced subsidy: $705
If the enhanced subsidy of $705 were to disappear, beneficiaries would then be responsible for both their original out-of-pocket cost of $888 and the $705 previously covered by the enhanced subsidy. This totals $1,593. This new out-of-pocket amount represents approximately a 79% increase compared to what the same person was paying with the enhanced subsidies in place. This calculation closely aligns with Klobuchar's 75% figure.
It is important to note that just two days after Klobuchar's remarks, on September 30, KFF released a revised estimate. This new analysis indicated an even higher potential out-of-pocket increase of 114%, superseding their earlier 79% estimate.
Disproportionate Impact on Rural Areas
Senator Klobuchar also stated that the out-of-pocket hit would be "twice as much in the rural areas." This statement can be understood in two ways: either comparing rural costs to urban costs, or comparing rural enrollees' costs before and after the subsidies expire.
Klobuchar's office clarified that the senator intended the latter interpretation. She referred to rural enrollees' out-of-pocket costs doubling compared to what they would pay if the enhanced subsidies continued. This interpretation is supported by an analysis from The Century Foundation, an independent think tank.
The Century Foundation's analysis concluded that out-of-pocket insurance costs in rural counties would, on average, rise from $713 to $1,473. This represents a 107% increase, or slightly more than a doubling of costs. For comparison, the increase for people in urban counties was estimated at 89%.
However, the analysis found less evidence to support the idea that rural enrollees would experience a hit *twice as big* as enrollees elsewhere. While the increase for rural areas is disproportionately large, it is not double that of urban areas. The Century Foundation's August analysis showed that the average increase in out-of-pocket costs from expiring enhanced subsidies would be $760 for rural counties, compared to $624 for all counties and $593 for urban counties. This means the rural increase would be 22% larger than the overall average and 28% larger than for urban enrollees.
Conclusion on Premium Increases
The claim by Senator Klobuchar that Affordable Care Act insurance premiums could see a "75% increase" if enhanced subsidies are not extended, particularly for farmers and small business owners, holds largely true. Initial analysis by KFF estimated an average out-of-pocket cost increase of 79%, a figure later revised to 114%.
Regarding the "twice as much in the rural areas" statement, while rural areas would face a disproportionately larger increase (107% according to The Century Foundation), it would not be twice as large as the increase for urban enrollees. However, the interpretation intended by Klobuchar's office – that rural enrollees' out-of-pocket costs would double compared to their current payments with subsidies – is accurate based on the available data. The situation highlights the significant financial impact the expiration of these subsidies could have on millions of Americans.
