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How would expiration of enhanced subsidies in 2025 affect health insurance premiums?
Executive Summary
The expiration of enhanced ACA premium subsidies at the end of 2025 is projected to sharply increase marketplace premiums for many enrollees, with multiple analyses estimating average post-subsidy payments could more than double and resulting in millions losing coverage. Policymakers face a clear trade-off: extending subsidies would substantially reduce premium shock but carry a multiyear federal cost measured in the tens to hundreds of billions of dollars [1] [2].
1. Why premium bills could explode for marketplace enrollees in 2026
Multiple independent analyses converge on the core mechanism driving premium increases: higher out-of-pocket premium payments once enhanced premium tax credits lapse. KFF estimates average annual premium payments for subsidized enrollees would jump from about $888 in 2025 to roughly $1,904 in 2026, a 114% increase in average annual payments that reflects the sudden removal of expanded credits [1]. Other groups frame similar results more broadly, saying premiums "more than double" on average and that insurers have signaled rate adjustments that would be layered onto the subsidy cut, pushing many consumers—particularly those who had been insulated by larger subsidies—into sharply higher monthly payments [3] [4]. These analyses are dated across fall 2025 and early November 2025, reflecting assessments made after insurers and modelers incorporated latest plan and enrollment data [1] [3].
2. Who bears the brunt: older, middle-income, and lower-income households
The distributional picture is consistent: older adults, middle-income families, and low-income enrollees stand to be hit hardest. Several analyses highlight that older adults and people above 400% of the federal poverty level would lose either enhanced or any access to credits, producing steep gross premium increases and higher net payments for those no longer shielded [2] [4]. KFF and other groups note that lower-income households, while still eligible for some credits, would experience greater percentage increases in post-subsidy premiums because their previously small net payments rose sharply; middle-income people above subsidy cutoffs would see the largest absolute dollar increases [4] [1]. These findings repeat across reports dated September through November 2025, underscoring broad agreement on the affected groups [1] [5].
3. How many could lose coverage and how that was estimated
Analysts consistently project millions could become uninsured as a result. The Congressional Budget Office and multiple think tanks estimate roughly 4 million people could drop marketplace coverage over a decade if subsidies are not extended; some estimates place near-term coverage losses at 4–4.8 million people, with one analysis calculating a 21% rise in the uninsured in a modeled scenario [3] [6]. Those estimates synthesize behavioral responses—people facing higher premiums may forego marketplace plans, switch to less comprehensive options, or remain uninsured—and they reflect differing time horizons and modeling choices, but they converge on the conclusion that subsidy expiration materially increases the uninsured population [3] [6].
4. Market stability, insurer behavior, and secondary effects
Beyond individual bills and coverage counts, experts warn of adverse selection and market instability if subsidies end. Higher net premiums can push healthier enrollees out of the market, leaving a sicker pool and upward pressure on premiums, potentially prompting insurer withdrawal or narrower networks in some states [7]. Some analyses quantify gross premium rises—median gross premiums projected to climb about 18% in 2026 in a combined Peterson Institute/KFF estimate—while others emphasize that insurer rate filings and market responses could amplify or moderate those increases depending on local competition and state actions [2] [5]. These assessments were published between September and November 2025, reflecting insurer rate filing cycles and updated modeling [2] [7].
5. The fiscal trade-off: costs of extending subsidies versus budgetary impact
Analysts present a clear fiscal arithmetic: extending enhanced subsidies reduces premium shocks but carries substantial federal cost. The Congressional Budget Office estimated a permanent extension would increase federal outlays by roughly $350 billion over a decade, while a shorter two-year extension was estimated at around $60 billion—figures cited across policy briefings in November 2025 [3] [2]. Reports also show that policymakers weighing extension face trade-offs between immediate relief for millions of enrollees and long-term budget impacts. The consistency of these cost estimates across late-2025 publications provides policymakers with a relatively stable fiscal baseline for deliberation [3] [2].
6. What’s missing from the debate and why context matters
Current analyses agree on direction but differ on magnitude and secondary pathways; important omitted considerations include state-level policy responses, timing of enrollment behavior, and insurer strategic choices, which could materially alter outcomes in specific markets. Reports generally use national or median estimates; local price and coverage impacts depend on state action (e.g., state-funded wraparounds, reinsurance, or outreach) and insurer entries or exits that are not fully predictable from national models [5] [7]. The available analyses from September–November 2025 converge on the core consequence—higher premiums and more uninsured—but the local picture could vary significantly depending on policy choices made in the months ahead [4] [5].