What impact did the ACA have on insurance premiums, deductibles, and out-of-pocket costs for different income groups?
Executive summary
The Affordable Care Act (ACA) cut the uninsured rate and created income‑indexed premium tax credits and cost‑sharing reductions that capped premiums and lowered deductibles for low‑ and middle‑income people, but premiums and deductibles have still risen over time and recent policy changes and expiring “enhanced” subsidies are driving sharp near‑term increases: KFF estimates average marketplace premium payments would rise about 114% if enhanced premium tax credits expire, and insurers filed median premium increases of roughly 7–18% for 2025 depending on analysis [1] [2] [3] [4]. Studies show mixed longer‑term effects by income — low‑income groups saw greater coverage gains and reduced out‑of‑pocket burden while some higher‑income groups experienced larger premiums and out‑of‑pocket spending increases after ACA implementation [5] [6].
1. The ACA’s design: subsidies and caps that deliberately redistributed costs
The ACA created two main levers that alter who pays what: premium tax credits that cap how much an enrollee pays for a benchmark plan as a percentage of income on a sliding scale, and cost‑sharing reductions tied to silver plans that lower deductibles and other out‑of‑pocket costs for lower‑income enrollees [7] [6]. Under pre‑2021 law the premium credit eligibility cap was 400% of the federal poverty line; through 2025 enhanced credits removed that cap for many enrollees and greatly increased assistance [8] [9].
2. What happened to premiums and out‑of‑pocket costs overall
Sticker premiums (the “gross” prices insurers set) and many enrollees’ deductibles have risen since the ACA’s markets opened: analyses note median insurer filings around a 7% increase for 2025 and, in some reporting, insurers raising premiums by a median ~18% amid market uncertainty [2] [3]. KFF and other analysts warn that the expiration of enhanced credits will make enrollees’ net premium payments spike: KFF projects average marketplace premium payments would increase 114% if enhancements expire, raising average annual out‑of‑pocket premium payments from about $888 in 2025 to roughly $1,904 in 2026 absent legislative action [4] [10] [11].
3. Who benefited most from the ACA’s subsidies — income‑stratified effects
Lower‑income groups gained the most from both coverage and reduced financial burden: expanded subsidies and Medicaid expansions increased public coverage and cut uninsured rates and out‑of‑pocket spending for low‑income adults, with cost‑sharing assistance lowering deductibles particularly for those on silver plans [5] [6]. Middle‑income households (roughly 251–400% of FPL) typically qualify for premium subsidies but not enhanced cost‑sharing, so they saw different impacts; higher‑income people (>400% FPL) were not eligible for subsidies under original ACA rules and — in some analyses — have faced greater premium and out‑of‑pocket increases over time [5] [7].
4. Recent policy shifts that changed the distribution of costs
Two sets of policy changes are central to current cost shifts: temporary “enhanced” premium tax credits (from ARPA/IRA) that lowered net premiums and removed the 400%‑FPL cap through 2025, and regulatory and rule changes that can increase allowable deductibles and plan out‑of‑pocket features. The enhanced credits dramatically reduced what many enrollees paid — especially those above 400% FPL who otherwise would have been ineligible — so sunsetting those credits returns a “subsidy cliff” that would hit middle and some higher earners hard [9] [12] [13]. Separately, a finalized Marketplace rule lets insurers offer plans with higher deductibles and out‑of‑pocket costs, which analysts say will raise costs for millions [3].
5. Quantifying the near‑term pain: examples and projections
KFF and related models estimate average enrollee premium payments could more than double (about +114%) if enhanced tax credits lapse, amounting to roughly $1,016 higher annual net premiums on average [4] [11]. Other outlets report a range — Business Insider and Investopedia cite average premium increases of roughly 75% in some scenarios — but all cite large, uneven increases tied to subsidy expiration and insurer rate‑filing responses [14] [15]. State and demographic effects vary: enrollees in GOP‑led states and older adults in high‑cost areas face larger dollar hits, while most low‑income enrollees (who get the most comprehensive help) fare relatively better if subsidies continue [16] [9].
6. Tradeoffs, political contest and remaining uncertainties
Analysts disagree about who “benefits” most and the fiscal tradeoffs: proponents say enhanced subsidies drove enrollment, improved access and reduced financial strain; critics, and some Republican proposals, argue the subsidies funnel large sums to higher earners and propose alternatives such as HSA payments [13] [17] [18]. The exact 2026 impact depends on Congress, court rulings affecting Marketplace rules, insurer rate adjustments, and state actions — available sources do not mention a final legislative outcome for 2026 as of these reports [19] [2] [3].
Limitations: this summary relies on published KFF, Brookings, Commonwealth Fund, insurer filings and press reporting in the provided sources; it does not attempt new calculations and does not cover materials outside the supplied set [4] [2] [5].