As the first government shutdown since 2019 unfolds, GOP leaders are asserting that they will boost subsidies for the Affordable Care Act (ACA) plan until at least mid-November.
“We won’t let ourselves be held hostage over more than a trillion dollars in new spending while looking for a resolution,” said Senate Majority Leader John Thune (Rs.D.) on Tuesday.
Insurance professionals, however, caution that if Republicans have their way, many individuals buying insurance via the ACA could face significant premium increases.
If no action is taken next month, the enhanced tax credits introduced during the pandemic will assist people, but Democrats are insisting on a permanent extension as a condition for their votes on short-term resolutions to keep the government funded.
While some Republicans seem content to let these enhanced subsidies end, party leaders are aware that there are potential political repercussions. They are open to discussions but maintain that any extensions should not be part of the temporary legislation. They also show little interest in a permanent extension, which the Congressional Budget Office estimates would cost $358 billion over the next decade.
“We’re open to talking about issues they want to address, whether that’s about extending the premium tax credit with or without reforms. The conversation is fine, but at this moment, it feels like an American takeover,” Thune remarked on Monday.
Republicans appear to want to delay decisions, but experts in state health insurance markets argue that the expansion really needs to happen by November 1, when the enrollment period for ACA plans begins.
If Congress waits too long, most individuals on Healthcare.gov may have already selected their plans. This delay could lead to “sticker shock,” prompting many to reconsider their coverage.
The vast majority of individuals enrolled in ACA Exchange plans benefit from subsidies. This year, over 24 million Americans are registered in the insurance market, with around 90%—or more than 22 million—relying on subsidies.
Additional market grants have reportedly saved the average enrollee about $705 annually on premium costs, according to KFF, a nonpartisan health policy research organization. Should these grants expire, those benefiting from subsidies could see their premiums more than double.
“If premiums rise to unaffordable levels, many will opt out. Those already covered could choose to cancel or avoid signing up altogether,” an expert warned.
The CBO projects that approximately 4 million people might exit the ACA in the first year after subsidy cancellations, likely comprising younger and healthier individuals, which would leave a riskier population of older, sicker enrollees.
Even if the tax credit is renewed after November 1 or before its expiration, some individuals may not return. If they drop their coverage due to unexpectedly higher premiums, it might prove difficult to entice them back.
“When changes occur late in the game, the market has to adapt quickly,” shared Morse Gasteer, who actively communicates with consumers. “It’s a tough job trying to reach those who might be deterred.”
Cynthia Cox, Vice President of KFF and Director of the ACA Program, mentioned that if the tax credit is extended during the enrollment period, the administration might opt to prolong this period or initiate a special enrollment time for those needing the new tax credit.
However, in states that are openly opposed to health laws, such expectations seem unlikely. Earlier this year, the Trump administration even suggested closing open enrollment for 2025 a month earlier than planned, pushing back new policies into 2026.
Democrats have been discussing the urgency of extending these subsidies for months, trying to incorporate them into the GOP’s major tax reform bill. That effort fell flat, and now lawmakers are racing against time.
“Many individuals have faced significant challenges with their health coverage,” noted Leighton Ku, a professor and director at George Washington University’s Center for Health Policy Research.
“Republicans were able to extend the 2017 tax cuts but could have applied similar effort to the expansion of Obamacare subsidies. Unfortunately, they didn’t.”
