What policy options could Congress use in 2026 to mitigate premium and enrollment impacts of subsidy termination?
Executive summary
Congress can blunt the 2026 “subsidy cliff” — which would restore pre-ARP subsidy rules on January 1, 2026 and is projected by CBO to raise gross benchmark premiums by about 4.3% in 2026 (and higher in later years) — by doing a short-term extension, a multi-year extension with phased reductions, targeted assistance for older or higher-cost enrollees, or non-credit remedies such as reopening enrollment windows; each option has clear political and technical tradeoffs [1] [2] [3].
1. Extend the enhanced premium tax credits — clean and simple
The most direct mitigation is a “clean” statutory extension of the enhanced premium tax credits that were created or expanded during the pandemic and scheduled to sunset January 1, 2026; advocates and many Democrats favor this because it prevents immediate premium shocks and preserves enrollment gains [1] [4]. A clean one-year or multi-year extension could be enacted as an omnibus or a standalone bill; House Republicans have introduced one-year proposals that would punt the issue past the 2026 midterms, signaling bipartisan political pressure to avoid sharp 2026 premium increases [5] [6]. Critics on the right argue the temporary pandemic-era boosts were never intended to be permanent and prefer letting them lapse or replacing them with alternative supports [7] [8].
2. Time-limited or tiered extensions (600% or partial tapering)
A politically plausible middle path in recent proposals would retain enhanced subsidies for a broader income band for a short period (for example, raising eligibility to 600% of the federal poverty level) or apply reduced credits above certain incomes for one year to soften the cliff while lowering fiscal exposure [6]. That approach buys Congress time to negotiate longer-term reforms and directly targets older and higher-cost enrollees who would otherwise face outsized premium increases [6] [5]. Opponents will say partial tapering still leaves many exposed and complicates plan design and program administration [6] [9].
3. Reopen or extend enrollment windows and implementation timing
If Congress moves after the marketplace open enrollment period, it can restore or extend enrollment windows and delay effective dates so newly authorized credits apply for 2026 coverage — a stopgap that preserves coverage but creates administrative complexity and insurer uncertainty [3]. STAT and PBS reporting note that premiums and enrollment are already in motion for 2026 and that reopening enrollment is a realistic legislative lever if legislators reach a deal quickly [3] [8]. Insurers and marketplaces warn that late changes increase operational strain and may not fully prevent churn [3].
4. Targeted cash or account-based assistance as an alternative
Some Republican proposals and commentary favor non-credit responses — for example, federal flexible spending account deposits or one-time payments to help people cover premium spikes — which could be simpler politically but offer much less precision than tax-credit design and would not automatically scale to local premium variation [8]. PBS notes these alternatives have been floated publicly but are not yet the central focus of bipartisan negotiations [8]. Analysts caution such approaches could leave many with worse net protection than the current credits because they do not vary by plan cost or household composition [8] [9].
5. Program integrity and anti-fraud measures paired with extensions
Several proposals and stakeholder letters condition subsidy extensions on stronger program integrity checks to reduce erroneous or fraudulent payments; insurers and AHIP have urged extensions coupled with integrity measures to preserve public confidence and fiscal sustainability [4]. Lawmakers from both parties have referenced anti-fraud steps as bargaining chips in negotiations, and some bipartisan packages under consideration would fold modest integrity reforms into any extender [6] [4]. Debate remains over whether such measures would meaningfully reduce costs or primarily serve political signaling [6] [4].
6. Political feasibility and timing constraints
Practically, Congress is operating with a narrow window: open enrollment is underway and the enhanced credits legally expire Jan. 1, 2026; several Republican and Democratic proposals exist, but floor passage remains uncertain, and some extension efforts are framed as politically costly or temporary [3] [7] [5]. Senate Democratic votes to force an extension are likely to fail without Republican support, and some GOP leaders have resisted including subsidies in shutdown or funding deals — leaving reinstatement after-the-fact as a technically possible but politically fraught option [7] [10] [8].
Limitations and closing note: available sources document the legislative options, political positions, and estimated premium impacts, but do not provide a single, comprehensive scorecard ranking policy effectiveness across demographic groups. For analysts who want quantitative scenarios tied to particular bills, the Congressional Research Service and CBO analyses referenced in reporting are the primary public sources [1] [9].