Millions of Americans who purchase health insurance through the Affordable Care Act (ACA) Marketplace could see their premium payments increase by more than 75% on average in 2026. The potential surge in costs is linked to the scheduled expiration of enhanced federal tax credits at the end of 2025.
These subsidies, first introduced during the COVID-19 pandemic and later extended, have been crucial in making health coverage more affordable. A recent analysis from the Peterson Center on Healthcare and KFF, two non-profit health organizations, projects a significant financial impact on households if Congress does not act to extend them.
Key Takeaways
- ACA Marketplace insurance premiums could increase by an average of 75% to 80% in 2026.
- The primary cause is the planned expiration of enhanced premium tax credits on December 31, 2025.
- One study estimates that 3.7 million people could become uninsured as a result of the higher costs.
- The future of the subsidies depends on ongoing budget negotiations in the U.S. Congress.
Why Premiums Are Set to Increase
The core issue is the termination of enhanced financial assistance provided through the Affordable Care Act. These enhanced premium tax credits were established as part of the American Rescue Plan Act in 2021 to lower healthcare costs during the pandemic.
They were later extended through 2025 by the Inflation Reduction Act of 2022. The subsidies work by capping the percentage of income that individuals and families must pay for their health insurance premiums on the ACA Marketplace.
Background on the Subsidies
The enhanced tax credits have significantly boosted enrollment in ACA Marketplace plans. Since their implementation, enrollment has more than doubled, growing from 11.4 million people in 2020 to 24.3 million in 2025. This growth is largely attributed to the increased affordability provided by the subsidies.
Without these credits, millions of enrollees will be required to pay a much larger portion of their income for the same level of coverage. According to Timothy Jost, a Professor Emeritus at the Washington and Lee University School of Law, the expiration of these credits represents "the biggest threat to health care costs and health coverage eligibility at the moment."
The National and State-Level Impact
The analysis by KFF and the Peterson Center projects a nationwide average premium increase of over 75% for those enrolled in the ACA Marketplace. However, the impact will vary by state, with some projecting even steeper rises.
In Pennsylvania, Insurance Commissioner Michael Humphreys stated he anticipates rate increases of "82 percent or more" for individuals using the state's marketplace, known as Pennie.
Similarly, a report from HealthSource RI, Rhode Island's official marketplace, found that 88% of enrolled households in the state are expected to face higher premium payments. The report highlighted that "lower income households will experience the largest percentage impact when 2025 premiums increase an estimated 85 percent overall heading into 2026."
Potential for Widespread Coverage Loss
A study co-authored by Benjamin Sommers, a professor at the Harvard T.H. Chan School of Public Health, found that as many as 3.7 million people could lose their health insurance coverage entirely due to the loss of these subsidies.
Expert Analysis on Market Effects
Health economists warn that the consequences extend beyond the immediate price shock for consumers. The expiration of subsidies could create a ripple effect throughout the insurance market.
Jonathan Gruber, an economist who consulted on the development of the ACA, told Newsweek that costs will rise for two main reasons.
"First, most directly, most enrollees will pay more for their insurance. Second, because enrollees are paying more, many will drop coverage—particularly the most healthy—raising premiums further for everyone else."
This phenomenon, known as adverse selection, occurs when healthier individuals leave the insurance pool, leaving a sicker, more expensive group to be insured. This drives up costs for the remaining participants and the insurers, leading to further premium hikes.
Uncertainty Fuels Higher Prices
Benjamin Sommers also noted that market uncertainty is a contributing factor. Insurers dislike unpredictability, and the current debate in Congress over whether to extend the credits creates an unstable environment.
"Any time there is uncertainty in an insurance market, most insurers hedge their bets and raise premiums to provide more buffer against that uncertainty," Sommers explained. This means insurers may proactively raise rates for 2026 to protect themselves against potential financial losses.
The Political Path Forward
The fate of the enhanced premium tax credits now rests with the U.S. Congress. Lawmakers are negotiating the federal budget for the 2026 fiscal year and must reach an agreement by the October 1 deadline to avoid a government shutdown.
Senate Democrats have included a permanent extension of the subsidies in their budget proposal. However, this measure has faced opposition from Republicans, creating a political stalemate.
The outcome of these negotiations will directly determine whether millions of Americans will face substantially higher health insurance costs in 2026. If no action is taken, the subsidies will expire as scheduled at the end of 2025, and consumers will see the impact when they shop for health plans for the following year.
