With ACA subsidies set to expire in 2025, millions of Americans stand to lose health insurance
With Republicans edging closer to gaining control of Congress, millions of Americans may be at risk of losing enhanced subsidies that currently underwrite the cost of health insurance bought through the Affordable Care Act's marketplaces, according to industry experts and the Congressional Budget Office.
The November 5 election gave control of the Senate to Republicans, while control of the House remains in limbo Monday as votes in several critical races continue to be tallied. Currently, Democrats are projected to win at least 210 House seats and Republicans 215 seats, with a party needing 218 seats in order to have the majority.
If Republicans gain control of Congress, they are widely expected to allow the enhanced ACA subsidies to expire at the end of 2025, depriving many people who buy coverage through the ACA and who currently receive these subsidies of that financial assistance, according to health care policy experts.
So-called enhanced Affordable Care Act (ACA) subsidies, which lower the cost of health plans for millions of Americans and were passed under the Biden administration, will expire unless lawmakers renew them. During his first term in office, President-elect Donald Trump backed efforts by Republican lawmakers to repeal the ACA, but hasn't yet revealed his plans for the program, commonly known as Obamacare, for his second term in office.
Republican House Speaker Mike Johnson said at a campaign stop last week just before the Nov. 5 election that "the ACA is so deeply ingrained, we need massive reform to make this work, and we've got a lot of ideas on how to do that."
Who is eligible for enhanced ACA subsidies?
Americans with incomes over 400% of poverty — those who make just above four times the poverty level, or $103,280 for a family of four — are eligible for the enhanced ACA insurance subsidies. They also increase financial help for those who were already eligible for assistance under the ACA.
KFF, an independent health policy nonprofit, estimates the subsidies have cut premiums for eligible enrollees by 44%, or $705 annually. The organization says that if the tax credit expires, average premiums for subsidized enrollees in 12 states would at least double.
In 2024, of the 21.6 million Americans who purchased health insurance plans from ACA marketplaces, 20.1 million received enhanced subsidies, according to the CBO.
People most at risk of losing ACA coverage if the enhanced subsidies lapse are those who live in states where health insurance premiums are particularly high, including in rural parts of the U.S. Middle-income households that depend on the enhanced subsidies could see a sharp rise in premiums, Cynthia Cox, vice president and ACA policy researcher at KFF, told CBS MoneyWatch.
"They could go from paying no more than 8.5% of their income to easily paying 20% or more," she said. "I imagine a lot of those folks would drop coverage."
Without enhances subsidies, many middle income ACA Marketplace enrollees with incomes just above four times poverty would be priced out of health insurance coverage, according to Cox.
Subsidies remain for 2025
Louise Norris, a health policy analyst at healthinsurance.org, noted that 93% of people who buy health insurance through ACA marketplaces receive enhanced subsidies. A sharp increase in their premiums would lead many to drop their coverage, leaving them uninsured, she said.
The CBO estimates that 22.8 million total Americans will enroll in ACA marketplace health insurance plans in 2025. The agency expects enrollment to drop sharply, from 22.8 million to 18.9 million, in 2026 if the subsidies are not renewed. By 2030, enrollment could dip to 15.4 million people without the enhanced subsidies.
For now, the subsidy enhancements will remain in place through the end of 2025.
"If people are signing up now during open enrollment, their coverage will take effect in January, and it will cover them for the whole year. Their premiums won't change — they're good for 2025," Norris said.
The enhanced subsidies, which were first passed in 2021 as part of the American Rescue Plan Act, will have been in place for roughly five years when they expire in 2025, or about half as long as the ACA marketplace has existed, Cox said.
Enrollment in ACA plans has roughly doubled since the enhance subsidies have been in place, she noted, with most of that growth coming from low-income enrollees. "That's one group you might expect to see, if they have to start making a higher premium payments, would drop their coverage," she said.
Making the enhanced subsidies permanent would cost $335 billion over 10 years, according to the CBO.