Impact of ACA on health insurance premiums
Executive summary
If Congress does not extend the ACA’s enhanced premium tax credits, KFF projects average annual premium payments for subsidy recipients would rise 114%, from $888 in 2025 to $1,904 in 2026 (KFF) [1] and KFF’s broader analysis warns that premium payments “would more than double” for the 22 million people receiving credits [2] [3]. Insurers and policy analysts say those expiring subsidies are the main driver of steep sticker-price increases, alongside insurer rate proposals and rising medical costs [4] [2].
1. Why premiums look so much higher for 2026: the subsidy math
Enhanced premium tax credits enacted in 2021 and extended through 2025 by Congress reduced what many enrollees pay out of pocket; if those enhancements expire Dec. 31, 2025, people would suddenly face the full benchmark premium or a much larger share of it, which KFF calculates would raise average annual payments for subsidy recipients 114% in 2026 [2] [1] [3].
2. Insurers’ rate filings reflect more than just subsidies
Insurers propose rate increases for 2026 for multiple reasons: expected growth in health care spending (including specialty drugs), operational costs, and the structural risk mix if healthier people leave the marketplace when subsidies shrink. Peterson‑KFF finds insurers’ assumption that subsidies will lapse adds roughly 4 percentage points to proposed rates and that many carriers already priced plans assuming the enhanced credits end [4].
3. The federal policy fight — direct cause of uncertainty
Congressional deadlock over whether to extend the enhanced tax credits has created the policy uncertainty driving both insurer behavior and consumer decisions. News outlets report Senate debate and competing GOP and Democratic proposals: Democrats pushed a three‑year extension while Republicans offered alternative reforms [1] [5]. The stalemate helps explain why insurers and consumers are reacting now rather than later [1].
4. What people on the exchanges are saying and doing
Survey and reporting data show real financial stress and behavioral responses: KFF’s enrollee survey found about one‑third would likely choose lower‑cost plans with higher deductibles and one‑quarter would very likely become uninsured if premiums doubled [3]. Reuters and AP reporting find some states experiencing enrollment drops and people shifting to short‑term or faith‑based alternatives because of sticker shock [6] [7].
5. Alternative policymaker claims and competing narratives
Republican lawmakers frame the issue differently: GOP proposals claim to lower premiums through market reforms and cost‑sharing fixes and criticize Democratic extensions as lacking structural reform [5]. Democrats counter that letting subsidies expire would sharply raise costs for millions and cause coverage losses [5] [3]. Both parties are using premium projections to justify competing agendas [5].
6. Independent analyses and caveats: not a single driver
Think tanks and trackers emphasize multiple contributors: the expiration of enhanced credits is central, but rising medical costs, insurer pricing strategies, and utilization trends (including new drug use) also matter [4] [8]. Brookings notes that the 2026 sticker changes are large but not unprecedented, pointing to past years of sharp insurer adjustments when policy shifted [8].
7. How federal rules and agency action factor in
CMS recently finalized a rule it says will lower individual market premiums about 5% on average by strengthening eligibility verification and reducing improper enrollments; CMS also moved to tighten “lawfully present” definitions affecting DACA recipients’ eligibility — changes that CMS frames as improving market integrity and cost pressures [9]. Available sources do not mention how CMS’s rule interacts quantitatively with KFF’s 114% projection beyond the agency’s own 5% estimate [9] [2].
8. What to watch next — deadlines, votes, and enrollment signals
Watch the Dec. 15–31 enrollment deadlines and any Senate floor votes: media report a Dec. 15/December window and fast‑moving negotiations [1] [5]. Early enrollment figures, state notices to consumers, and insurer rate approvals will show whether people respond by downgrading plans, delaying enrollment, or dropping coverage [6] [7].
Limitations and final note: analyses cited here rely on projections and insurer assumptions; KFF’s headline 114% is an average for current subsidy recipients and depends on the specific policy scenario studied [2] [3]. Readers should expect a range of outcomes across income levels and states; competing political narratives use different metrics to make their case [5] [10].