How did the cost of ACA subsidies change after the 2017 individual mandate repeal and subsequent policy shifts?
Executive summary
The 2017 tax law eliminated the ACA’s federal individual mandate penalty effective 2019, a change the Congressional Budget Office estimated would raise the uninsured by millions and push up individual-market premiums (CBO projected 4 million more uninsured in 2019 and 13 million by 2027) [1]. Policymakers’ later decisions — stopping insurer CSR payments in 2017 and the temporary 2021–2025 subsidy expansions under ARPA/IRA — interacted with the mandate repeal to raise gross premiums in 2017–19 and then temporarily lower net premiums through 2025; letting the enhanced subsidies expire at end of 2025 would sharply increase what consumers pay in 2026 (several sources quantify large premium rises) [2] [3] [4] [5].
1. The 2017 repeal of the penalty: an engine of higher premiums and some added uninsured
When Congress set the individual mandate penalty to $0 in the 2017 tax bill, analysts warned of meaningful coverage losses and premium pressure. The CBO/JCT estimated the repeal would cut federal deficits by about $338 billion over 2018–2027 while increasing the uninsured by roughly 4 million in 2019 and 13 million by 2027 [1]. Insurers anticipated a sicker risk pool and factored mandate repeal — plus expansion of non‑ACA plans — into 2018–19 rate-setting, producing insurer‑reported premium impacts that, on average, added several percentage points to 2019 rates and cumulatively helped drive up premiums in 2017–2019 [3] [6].
2. Cost-sharing reductions (CSRs) and “silver loading”: another 2017 policy shock
Separately in 2017 the administration stopped direct CSR payments to insurers while leaving the legal requirement that insurers provide reduced cost‑sharing to low‑income enrollees; insurers raised Silver plan list prices to cover the shortfall (a practice called “silver loading”), which pushed up gross Silver premiums in 2017–2018 and made non‑subsidized coverage less affordable in many areas [2] [7] [8]. Analysts warned that reversing silver loading without boosting premium subsidies would cut federal subsidies and raise net costs for consumers [9].
3. How subsidies respond to underlying premium swings — and why formula changes matter
For people receiving premium tax credits, year‑to‑year gross premium changes are partially offset because the tax credit formula links subsidies to benchmark plan premiums; thus what matters most is changes to subsidy rules themselves, not only insurer pricing [10]. The ARPA enhancements and the IRA extension through 2025 made the subsidy formula more generous — lowering required household contributions and extending help to some above 400% FPL — which held down net consumer payments through 2025 even as gross premiums rose [11] [12].
4. The short‑term relief (2021–2025) vs. the looming reversal (post‑2025)
Enhanced premium tax credits under ARPA/IRA reduced average consumer payments and expanded eligibility through 2025; sources say the average subsidized enrollees’ net premiums were kept low (KFF found average net premiums steady at $888 annually in 2024–25) [4] [11]. But those enhancements were temporary; multiple analyses warn that if they expire at end of 2025, average subsidized enrollees’ premium payments would more than double in 2026 and millions could lose coverage — Urban Institute and CBO‑based estimates foresee millions dropping marketplace coverage and millions becoming uninsured [4] [13] [12].
5. Quantifying the consumer hit if enhancements lapse
KFF and other analysts project very large increases in what consumers pay if enhanced credits expire: average net payments that were stable under enhanced credits would spike dramatically in 2026, with some analyses estimating that marketplace premium payments would more than double for subsidized enrollees [4]. States and consumer advocates report enrollment pullback and people delaying sign‑ups amid uncertainty, a practical signal that the expiration would materially increase consumer cost burdens [14].
6. Competing perspectives and policy tradeoffs
Analysts and advocates emphasize that extending enhancements protects millions from premium spikes and prevents coverage losses [12] [13]. Critics and some Republican proposals stress program integrity, fraud concerns, and want reforms or alternatives such as HSAs or tighter eligibility rules; proposals on the Hill mix extension pay‑fors, income caps, and guardrails [15] [16] [17]. Restoring insurer CSR payments (ending silver loading) without raising credits would reduce federal outlays but likely raise net premiums for many enrollees, per CBO and CBPP analysis [9].
7. Limitations and what the sources do not say
Available sources document modelled and observed premium and coverage effects tied to the 2017 repeal, CSR stoppage, and the 2021–25 subsidy enhancements, but they do not provide a single definitive dollar figure for total net cost change across every affected enrollee over the entire period; estimates vary by model, state, and income group [1] [3] [4]. Sources do not mention any final 2026 legislation that fully replaces ARPA/IRA enhancements as of these reports [5] [14].
Bottom line: the 2017 individual‑mandate penalty repeal and simultaneous policy moves (CSR payments stopped) pushed up gross premiums in 2017–19; the 2021–25 subsidy enhancements offset those consumer costs for most subsidized enrollees, but allowing those enhancements to expire at the end of 2025 would reverse that protection and produce large, well‑documented increases in what consumers pay in 2026 unless Congress acts [3] [11] [4].