For the 24 million people currently enrolled in Affordable Care Act (ACA) health plans, the upcoming year presents a daunting dual challenge: significant premium increases and a substantial decrease in federal subsidies. These changes, often referred to as Obamacare, are primarily driven by rising medical and labor costs coupled with increased usage of healthcare services. Insurers are not only seeking to adjust their premiums to account for these factors but are also adding extra percentage points to their rate proposals for 2026. This adjustment is in response to policy changes initiated during the Trump administration and the Republican-controlled Congress.
A critical factor influencing these premium increases is the uncertainty surrounding the future of COVID-era ACA tax subsidies. These enhanced subsidies, which have provided essential financial support to many consumers, are set to expire at the end of December unless Congress intervenes. JoAnn Volk, co-director of the Center on Health Insurance Reforms at Georgetown University, warns that if these higher subsidies are allowed to lapse, many individuals will struggle to afford their premiums, leading to an increase in the uninsured population.
The rising ACA premiums are expected to stir political responses, especially as the nation approaches pivotal midterm elections. Some congressional members are actively exploring strategies to mitigate subsidy reductions. Pennsylvania-based insurance broker Joshua Brooker notes that both Republicans and Democrats on Capitol Hill are considering various options to ease the burden on consumers.
According to an analysis by the Peterson-KFF Health System Tracker, insurers nationwide are proposing a median rate increase of 15% for the upcoming plan year, marking a stark rise from the 7% median proposed increase observed for the 2025 plan year. Chris Bond, a spokesperson for AHIP, the health insurance industry's lobbying group, emphasized the need for legislative action to extend the health care tax credits to prevent these drastic cost increases.
Premium rate variations are anticipated based on geographic locations, plan types, and insurers. For instance, in Maryland, insurers have requested increases ranging from 8.1% to 18.7%, while New York shows a wider disparity with one insurer proposing less than a 1% increase and another seeking a staggering 66% increase. Maryland's rate filings indicate that the average statewide increase could decrease to 7.9% if the ACA's enhanced tax credits are extended.
Several factors are contributing to these premium increases. Insurers attribute approximately 8% of the increase to underlying medical costs, including the rising use of expensive obesity medications. Furthermore, most insurers are adding an additional 4% increase to account for the anticipated expiration of enhanced tax credits. If Congress does not act to extend these subsidies, policy experts predict that the average premium payments could rise by over 75% across the board, with some states potentially witnessing a doubling of ACA premiums.
The potential expiration of these subsidies could lead to a sharp decline in ACA enrollment. The Wakely Consulting Group estimates that a combination of expiring tax credits and new requirements could result in a 57% drop in enrollees. Insurers, concerned about the implications of lowering enrollment numbers, state that a smaller, less healthy risk pool would ultimately increase costs further.
As consumers await their new premium prices, expected to be revealed during the ACA's open enrollment period starting on November 1, discussions in Congress continue. Some lawmakers are considering alternatives to the existing subsidies, such as extending eligibility to families earning up to five or six times the federal poverty level. However, any proposed changes face potential resistance, particularly from conservative think tanks that argue for the necessity of stringent measures to prevent fraud.
Ultimately, the fate of the ACA's enhanced subsidies remains uncertain, with significant implications for millions of Americans. The decision to extend these tax credits will not only affect premiums but could also reshape the entire healthcare landscape, impacting consumers' choices and financial burdens in the years to come.
