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The ACA enhanced premium tax credits expanded financial assistance to more Marketplace enrollees, an expansion that was especially helpful to older middle-income enrollees, who would see the largest increases in out-of-pocket premiums if the enhanced credits expire.
Until Congress passes the reconciliation bill, Marketplace insurers will face uncertainty regarding the regulatory landscape and may find it difficult to set premiums for 2026.
A new analysis from the Kaiser Family Foundation estimates that the average health insurance premium tax credit received by consumers in 2020 would be at least 36 percent lower under replacement proposals being discussed by Republicans in Congress than under the Affordable Care Act.
Affordable Care Act Marketplace insurers are raising premiums by an average of 18% next year, due in part to the expiring enhanced premium tax credits. Even if the credits are extended in shutdown negotiations, it is unlikely that insurers will have time to revise premiums, though the credits would still offer enrollees relief from them.
Since the enhanced premium tax credits became available in 2021, ACA Marketplace enrollment has increased significantly in some red states, and 57% of enrollees now live in Republican congressional districts.
The expiration of the ACA enhanced premium tax credits at the end of this year would reintroduce the “subsidy cliff,” which abruptly ends the credit for Marketplace enrollees earning over 400% of poverty. That means some middle-income enrollees, especially older ones, would spend a much larger share of their income on premium payments than those earning just slightly less with the credit.
ACA Marketplace changes are technical and numerous but consequential. While more attention has been focused on cuts to Medicaid, upcoming changes to the ACA Marketplaces could lead to just as many people losing health insurance coverage.
A per capita cap in Medicaid may be a solution in search of a problem. However, if a cap substantially reduced federal Medicaid spending over time, it would put states at financial risk and force cuts to services and rates paid to physicians, hospitals, and nursing homes.
KFF Vice President Cynthia Cox takes a broader look at the expiring enhanced tax credits, which Congressional Democrats have made central to their government funding demands, and how they lower health costs for many traditionally Republican constituencies, such as people in southern states, small business owners and employees, farmers and ranchers, older adults, and rural Americans.
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