As Congress nears a crucial deadline concerning the expansion of Obamacare subsidies amid the ongoing government shutdown, it may already be too late to shield the public from potential price increases during the current shopping period.
Even if an agreement were somehow reached before November 1—though that seems unlikely—there might still be a chance for state and federal authorities to adjust prices with the enhanced subsidies in mind. However, Republicans have made it clear that any tax credits need to be modified before they can be extended.
Jessica Altman, executive director of Covered California, noted that any major policy discussion on market affordability should ideally focus on coverage for 2027, not 2026.
“The further we push back, and the more different it becomes from today’s setup, the more complicated it will become for markets and consumers, making it quite disruptive,” Altman added.
As the government shutdown stretches on—now one of the longest in history—there’s little sign of resolution. Democrats continue to urge Republicans to renew enhanced tax credits that would lower health insurance costs for millions, but Republicans insist there won’t be a discussion about health care until the government is functioning again.
If Congress allows the enhanced subsidies to lapse, the original ones will still be active, but they will exclude anyone earning over 400% of the poverty level, which translates to about $62,000 for individuals and $128,000 for families of four.
Currently, the enhanced credits are without that limit, meaning premiums for those above the 400% threshold are capped at 8.5% of their annual income.
These expanded subsidies have become especially popular among higher-income individuals, including small business owners, who will find themselves without any financial support once the enhanced credits expire.
If the supplementary funding is allowed to expire, nearly 4 million fewer people are expected to maintain marketplace plans over the next decade, according to the Congressional Budget Office.
Health officials and experts warn that as each day passes without an agreement, meeting the changes Republicans seek will only become more challenging. “It’s not just a simple switch,” explained Jean Lambrew, a former senior health advisor during the Obama administration. “At this point, we’ve definitely moved past the window to implement meaningful changes to the premium tax credit by January 1st.”
The Department of Health and Human Services did not answer inquiries about how long it would take to make adjustments to Healthcare.gov if a deal is finalized after November 1, or whether they plan to communicate with consumers.
Though the enhanced subsidies don’t officially expire until year-end, some are already feeling the consequences of inaction.
In many states running their own exchanges, consumers have started their window shopping, and the federal Healthcare.gov site is set to unveil insurance prices next week.
Idaho has been actively recruiting since October 15. State health officials estimate that without the tax credit, average out-of-pocket premiums could rise by $1,200 per year, or a 75% increase.
Washington state expects those receiving the enhanced premium tax credit to see net premiums soar by around 65%. For the roughly 17 million people using the federal Healthcare.gov site, premiums are anticipated to spike by an average of 30%.
Insurers are concerned that healthier individuals might drop their coverage, citing the expiration of enhanced subsidies as a key factor for increasing premiums.
Without stronger tax credits, next year’s hikes for consumers could be steeper. According to KFF, the average consumer is projected to pay around $1,904 in annual premiums next year.
In California, Altman mentioned that monthly payments could rise by an average of 97% if the subsidy situation doesn’t improve.
“I don’t know if we can ever effectively mitigate sticker shock,” Altman remarked. “People might choose not to get insurance, and some may not return even if subsidies are restored.”
State officials and industry leaders have urged Congress to act swiftly on extending the enhanced subsidies.
“Republicans should have prioritized healthcare discussions earlier this year. Instead, they opted to focus on tax cuts for the wealthy and left families waiting until price hikes become unavoidable,” lamented Sen. Patty Murray (D-Wash.).
After Republicans chose not to include the subsidy extension in a partisan tax cut bill earlier in the summer, attention turned to embedding it into the government funding negotiations.
“We’ve been emphasizing for quite some time that the sooner a decision is made, the more certainty and stability it brings to the market,” stated Devon Troley, executive director of the Pennsylvania Insurance Exchange, in a recent interview.
While Congress could potentially pass a straightforward extension through 2026, making policy changes effective in 2027, the level of bipartisan support for this remains uncertain. Separate proposals in the House and Senate aim to extend subsidies for one or two years without making policy adjustments.
However, there are differing opinions within the Republican Party regarding subsidy extensions.
Some lawmakers from critical states are urging leaders to focus on negotiations, but only once the government is up and running again. A few have been vocal about not wanting to assist Democrats in improving the Affordable Care Act and prefer that the subsidies expire.
Republicans have also proposed limiting the enhanced subsidies to specific income brackets and requiring some minimal premiums to prevent “phantom enrollees”—those who were unknowingly registered by fraudulent brokers.
Additionally, there’s talk of restricting subsidies for new enrollees while removing aid for those already benefiting.
Senate Majority Leader John Thune articulated the Republican stance in a recent interview, arguing that the enhanced subsidies lack income limits and result in “zero-premium insurance” that many are unaware of.
Complications may increase further if Republicans push to include provisions restricting funding for elective abortions, a move Democrats reject as not constructive. They assert that federal law already prohibits taxpayer money from covering abortion services and that the Affordable Care Act mandates keeping federal funds separate from abortion insurance.
