What is the projected cost of extending American Rescue Plan subsidies?

1. What “extending ARPA subsidies” means in dollars

When analysts talk about “extending” the American Rescue Plan (ARPA) subsidies they mean continuing temporary changes that expanded who gets premium tax credits and reduced the share of income people must pay toward premiums beyond 2025. The Congressional Budget Office (CBO) has said a full extension would add roughly $350 billion to federal costs over ten years, while a much shorter, two‑year patch would cost on the order of $60 billion ^{[1] [4]}. Other fiscal projections translate to roughly $25–30 billion per year or about $305 billion over a decade depending on the baseline and whether offsetting savings or revenue changes are counted ^{[2] [5]}.

2. Why estimates vary: scope, time window and offsets

Different numbers reflect differences in assumptions: whether the estimate covers FY2026–2035 or a calendar‑year 10‑year window, whether “permanent” means fully indexed, and whether analysts net out revenue feedback (like taxable wages rising if employers shift compensation) or health‑care price effects. For example, Oliver Wyman summarizes a CBO scenario that showed about $305.5 billion in direct subsidy costs through 2032 with about $57.6 billion in offsetting revenue effects ^[2]. The Committee for a Responsible Federal Budget cites CBO work that frames the cost as roughly $350 billion over FY2026–2035 ^[4].

3. The near‑term arithmetic: what a two‑year extension looks like

If policymakers sought only a short extension, the CBO’s numbers are materially smaller: a two‑year extension is estimated at about $60 billion — substantially less than a decade‑long permanent change but still a meaningful budgetary item ^[1]. Advocates and analysts sometimes present the per‑year cost (around $25 billion) to communicate the annual budget footprint, while others emphasize the 10‑year total to show long‑run fiscal implications ^{[5] [3]}.

4. Who pays and who benefits — the distributional angle

The enhancements eliminate the “subsidy cliff” and cap premiums as a share of income, benefiting low‑ and middle‑income families and even some higher‑income households who would otherwise face very large premiums. Analysts note that well over $50 billion of the long‑run cost could go to households making more than five times the poverty level, and some additional dollars flow indirectly into higher health‑care prices and insurer revenues ^{[4] [5]}. Policy discussions therefore turn on both affordability goals and concerns about targeting federal dollars.

5. Policy tradeoffs and offset proposals

Commentators and fiscal watchdogs emphasize that lawmakers could offset extension costs through other health‑care or tax changes — for example, by changing Medicare payments or reducing certain insurer payments — but those offsets are politically and technically contested. The Committee for a Responsible Federal Budget and other analysts point to possible offsets but warn they would not fully erase the fiscal cost ^{[1] [4]}.

6. What the public ought to watch for in legislation

Because estimates hinge on legislative details (duration, indexing, eligibility), look for the bill’s sunset date and whether it makes the ARPA rules permanent or temporary. CBO and other scorekeepers will recalculate costs when specific language is introduced; thus, advocates’ “per‑year” framing and watchdogs’ 10‑year totals are both technically correct but answer different policy questions ^{[2] [1]}.

7. Limits of current reporting

Available sources provide consistent ranges but differ in framing: CBO‑based summaries cluster around $350 billion over a decade for permanent extensions and about $60 billion for a two‑year patch, while some coverage emphasizes roughly $25–30 billion per year ^{[1] [4] [2]}. Available sources do not mention precise, single‑number costs for any as‑yet‑unintroduced congressional bill, because final scores depend on specific legislative text and offsets ^{[6] [3]}.

Bottom line: extending ARPA’s enhanced subsidy rules is costly but feasible; short extensions (two years) are tens of billions, while a permanent or decade‑long extension is several hundred billion dollars — estimates center on roughly $60 billion for two years and about $305–$350 billion over ten years depending on methods and offsets ^{[1] [2] [4]}.