It's been a week since the longest government shutdown in U.S. history ended, but millions of Americans still don't know whether they'll be able to afford health insurance next year.
On November 12, a funding bill was signed into law, and the government shutdown finally ended. Notably, the law does not extend enhanced Affordable Care Act (ACA) subsidies, which 24 million Americans rely on to keep premiums somewhat affordable.
Enhanced ACA tax credits, introduced during the pandemic to expand health care affordability, are set to expire at the end of the year without action from Congress.
This year, 93% of ACA marketplace participants received tax credits. For many people, these expanded subsidies mean the difference between providing routine care for themselves and their loved ones and skipping those visits entirely.
Experts say the expiration of these subsidies will not only leave millions of Americans without access to care, it could also pose significant challenges to hospitals already facing financial pressures and could harm the entire economy.
Overall, health care leaders have a lot of concerns about what might happen if Congress doesn't extend the expanded tax credit — premiums could increase, more Americans could be uninsured, hospitals could be forced to take on more bad debt and uncompensated care, and, most worryingly, U.S. public health would further deteriorate.
Premiums may be about to skyrocket
When the ACA health insurance marketplace launched in 2014, tax credits took effect, making coverage more affordable for individuals and families. These tax credits were based on the income and household size of ACA shoppers and were then temporarily expanded in 2021 under the American Rescue Plan Act and then again in 2022 through the Inflation Reduction Act. IExpanded subsidy and eligibility criteria.
When the market was first established, the government provided subsidies to people with incomes of 100-400% of the federal poverty line, and individual premium payments ranged from 2.07-9.83% of income.
The American Rescue Plan Act and its extension under the Inflation Reduction Act increased these subsidies by lowering premium contributions to 0-8.5% of income and authorized $0 premiums for those with incomes between 100-150% of the federal poverty level. Changes introduced during the pandemic also allow Americans with incomes above 400% of the federal poverty level to qualify for subsidies if their premiums exceed 8.5% of their income.
The credits have played a key role in lowering the country's uninsured rate, which hit a record low of 7.9% last year.
When the enhanced tax credit expires, monthly premiums for a family of four will drop from $460 to $700, ACA market participant Shana Verstegen said on a media call hosted by the nonprofit advocacy group Keep Americans Covered.
She and her husband are small business employees at a gym in Madison, Wisconsin. They rely on ACA marketplace coverage for themselves and their two children.
“In 2026, $700 a month seems like a small number, but it's more than $2,500 a year. Now, our families are really going to struggle with this — losing the tax credit would create a real crisis for us,” Verstegen said.
She said she and her husband had discussed the possibility of him leaving the job he had loved for decades to secure employer-based coverage. Verstegen noted that not only was this a difficult and emotionally painful decision, but it was also one that needed to be made under tight time constraints.
Open enrollment for 2026 ACA coverage has begun and the deadline is approaching. Enrollment must be completed by mid-December for coverage to begin Jan. 1, giving families like the Verstegens little time to adjust.
She described this time as a “very difficult and, frankly, very scary” time for her family.
“This is not about politics and polls, winners and losers in Congress, red states, blue states or purple states. This is about real families and real children – the people who really need health care. Marketplace coverage and premium tax credits are critical for entrepreneurs and small business employees like me to pay for health care,” Verstegen declared.
Can hospitals cope with another financial hurdle?
Charlene MacDonald, executive vice president of public affairs for the American Hospital Association, said that if the tax credit expires, about 22 of the 24 million people with ACA coverage will see their premiums double, and an estimated 5 million people will lose coverage entirely.
When coverage shrinks, hospitals' levels of uncompensated care rise.
McDonald said hospitals are bracing for significant increases in uncompensated care, especially in states that have not expanded Medicaid coverage because private market plans are an especially important source of coverage in those areas.
“Hospitals treat every patient that comes in, regardless of their insurance or ability to pay, but those costs don't go away. They go back to the hospitals, employers and taxpayers,” she explained.
This strain will affect all health care providers, but rural and safety net hospitals will be hurt the most. McDonald added that these providers tend to have smaller patient volumes and a higher proportion of patients on Medicaid and Medicare, which reimburse hospitals at lower rates and often fail to cover the full cost of providing care.
She said that for many vulnerable hospitals, losing ACA tax credits is not just another financial hurdle, it also poses a threat to service lines and, in some cases, their long-term viability.
“When coverage declines, the impact manifests itself in reduced services for patients and reduced capacity in the health care system. Hospitals facing higher levels of uncompensated care are forced to make difficult choices to maintain community access to 24/7 care, whether by scaling back services or delaying investments that improve quality and patient access,” commented MacDonald.
She also noted that higher rates or uncompensated care could exacerbate health care's workforce crisis by reducing hospitals' ability to offer competitive wages.
The broader economy could also take a hit
The expiration of enhanced subsidies under the Affordable Care Act could also have a negative impact on the overall economy.
Julio Fuentes, CEO of the Florida Hispanic Chamber of Commerce, warned that additional medical bills from expiring credit could force small business owners to make “decisions that no one actually wants to make,” such as delaying hiring, raising prices for customers and cutting employee hours.
Although these small business owners do not provide coverage to their employees, they often cannot afford a sudden spike in personal medical expenses without cutting hours or reducing staff.
“This is a Main Street crisis. This is definitely not a Wall Street problem. The people who are feeling this pain first are the people who keep our communities running — you're talking about the landscaper with five employees, the woman running a small janitorial business, the contractor who relies on a handful of subcontractors,” he explained.
Economists estimate that allowing ACA tax credits to expire would result in approximately 286,000 job losses and reduce the country's GDP by $34 billion.
The estimates come from the Commonwealth Fund and the George Washington University Milken Institute School of Public Health. Their team first calculated how much federal spending on enhanced Affordable Care Act (ACA) tax credits would disappear if subsidies expired—roughly $26 billion next year alone.
Reduced spending affects not only families, but also health care providers and payers, whose incomes decline as fewer people can afford coverage. The researchers explain that approximately 10% of Americans are employed in the health care industry, so putting financial pressure on the industry will inevitably lead to a wave of job losses.
The researchers used input-output modeling to estimate the wider impact on the economy – taking into account direct effects, such as reduced provider income and job losses, as well as indirect effects, such as reduced household lifestyle spending.
time is running out
Some lawmakers, including Sen. Bill Cassidy (R-La.), have floated the idea of replacing the ACA premium tax credit with other mechanisms, such as pre-funded health savings accounts (HSAs). They were curious whether directing funds to individuals could increase efficiency and reduce overhead.
“Who doesn't want to take a large portion of the money that we use to help Americans buy health care and give it directly to individuals so that 100 percent of it is used to buy health care, rather than giving that money to insurance companies and 20 percent of it going to profits and overhead?” Cassidy, chairman of the Senate Health, Education, Labor and Pensions Committee, said during Monday's hearing.
Lauren Aronson, executive director of Keep Americans Covered, said that approach is impractical.
She noted that would likely impose more costs on the federal government than simply extending the tax credit, and would not leave enough time to implement an entirely new system.
“Theoretically, if you were to pre-fund an HSA, it would likely cost you more federal dollars than the cost of extending the tax credit itself. You would have to pre-fund between $1,500 and $6,000 per year. And then operationally, plans would have to resubmit rates and bring new high-deductible health plan products to market in 2026 — and there's no time to do that between now and January 1,” Aronson explained.
She said the Affordable Care Act's current design — applying points directly to monthly premiums — is critical to keeping coverage affordable for middle-class families in real time.
Senators from both parties are forming working groups to address the issue, but despite the looming health care affordability crisis, there have been no public hearings or votes on extending the ACA premium tax credit.
Aronson stressed the need for immediate action to prevent a crisis.
Photo: krisanapong detraphiphat, Getty Images
