Recent analysis raises questions about the main argument from Democrats amid the ongoing dispute over government funding.
For almost three weeks, Democrats have insisted that any funding agreement must include an extension of Obamacare premium subsidies, which help manage costs due to the coronavirus and are set to end at the close of 2025. They warn that the expiration could lead to dire increases in healthcare expenses, accusing Republicans of trying to “decimate health care for everyday Americans.”
However, a study from the Paragon Health Research Institute suggests that the end of these subsidies would only represent about 3.3% of the premium estimates for 2026, according to a report published on Tuesday.
The institute notes, “The expiration of Biden’s coronavirus credits is not the primary factor driving the increases in ACA premiums. The insurance companies themselves indicate that the high premiums and the plan’s struggles are due to a larger issue: consistently rising healthcare costs.”
Interestingly, it seems that the imminent expiration of the pandemic-related subsidies won’t have a significant impact on premiums, as highlighted by industry analysts. They contend that most premium hikes in 2026 won’t be linked to these recent subsidies.
The Premium Tax Credit was established under the ACA to help individuals without insurance buy coverage through public exchanges. These credits were initially meant for families earning between 100% and 400% of the federal poverty level but were expanded by former President Biden in the American Rescue Plan and the Inflation Control Act. These legislative changes removed income limits, increased subsidy amounts, and, in some cases, effectively reduced premiums to zero for specific households.
Now, Democrats, who passed the subsidy enhancements without any Republican backing, are pointing to the anticipated premium hikes as a direct result of these subsidies expiring and are holding Republicans accountable for letting this happen.
“Families in my state currently paying $238 monthly for health insurance could face bills of $1,800 next year because of Republican actions,” stated Democratic Sen. Patty Murray from Washington during a news conference shortly before the government shutdown began on October 1.
House Minority Leader Hakeem Jeffries emphasized that Republicans are contributing to significant increases in health insurance costs for Americans.
As per Paragon, the typical premium for an ACA enrollee (like a 50-year-old with an income at 200% of the federal poverty level) is projected to be $8,326 in 2025, with a subsequent 20% rise expected in 2026, pushing it to $9,991. Out of this $1,665 increase, only $333, or about 3.3%, would be attributed to the loss of the pandemic-related subsidies.
The remaining increase, approximately $1,332, arises from various factors including heightened healthcare usage, inflation, industry consolidation, and rising specialty drug prices.
Even without the subsidies, taxpayers are anticipated to cover over 80% of the premiums for a typical Obamacare participant. This was highlighted by the Paragon report.
Critics of Obamacare argue that the push for an extension of subsidy expansions indirectly admits that the ACA, in its original form, has not succeeded in making healthcare affordable. Reports are circulating that extending these subsidies could cost taxpayers around $350 billion over the next decade, according to the Congressional Budget Office.
