Enrollment in the Affordable Care Act (ACA) marketplace has surged to a record high, but AM Best has reported that the White House is warning of potential premium increases and a significant loss of coverage if Congress does not renew the enhanced ACA premium tax credits.
The White House projects that if the enhanced tax credits expire at the end of this year, between 3 million and 5 million people could lose their health insurance. For instance, a single parent with an annual income of $50,000 could see premiums rise by $1,600, while a retired couple earning $85,000 might face an $18,000 increase in premium costs.
These enhanced tax credits were first proposed by the Biden administration in 2021 and were initially passed as part of the American Rescue Plan. They were later extended through the Inflation Reduction Act.
The credits lower the amount individuals must contribute to premiums, with some earning between 100% and 150% of the federal poverty level being eligible for silver-level plans at no cost.
Additionally, the enhanced provisions extend tax credits to those with incomes over 400% of the poverty level if their benchmark premium exceeds 8.5% of their household income, according to the Center on Budget and Policy Priorities.
AM Best reported that subsidies have played a key role in pushing enrollment numbers to new heights. In 2022, approximately 14 million people enrolled in ACA plans. The 2025 open enrollment period saw even more sign-ups, with 24 million Americans registering for ACA coverage. In total, 45 million people are currently covered under the ACA, either through the marketplace or Medicaid.
“When I took office, I made a promise to the American people that I would bring down the cost of health care and prescription drugs, make signing up for coverage easier, and strengthen the Affordable Care Act, Medicare and Medicaid,” said President Joe Biden in a statement.
However, experts warn that letting the tax credits expire would have broader consequences for the healthcare market.
Wayne Turner, senior attorney at the National Health Law Program, pointed out the potential for increased uncertainty.
“Having a huge influx of uninsured people just creates incredible uncertainty for health insurance,” he said.
Incoming Washington Insurance Commissioner Patricia Kuderer also expressed concern about the loss of federal subsidies.
“I can tell you from the campaign trail in Washington that the number one concern I heard about was health care affordability and accessibility," said Kuderer.
With the future of ACA subsidies uncertain, what impact do you think the expiration of these tax credits would have on healthcare coverage and costs? Share your thoughts in the comments.
