Introduction to the Affordable Care Act Crisis
Mahwah, New Jersey, resident Tina Jump recently learned that under the Affordable Care Act, her health insurance premium will rise from about $400 a month to more than $1,100 starting in January — a nearly three-fold increase that she said left her panicked. Jump, who makes about $72,000 a year as a real estate agent, already feels financially overwhelmed as she has to cover both her Blue Cross Blue Shield plan and the roughly $415 a month she pays for a prescription drug for Type 2 diabetes.
The Financial Burden
“I don’t know how I’m going to pay for this,” Jump, 59, said. Her boss has offered to contribute, but she said the higher bonus would still put a big strain on her budget. “I just have to cut back on everything else I can,” she added. "It’s just crazy. What’s going to happen in the next few years? Is it going to keep going up?" With two health bills not progressing in the Senate, the ACA’s expanded premium tax credits – which 90% of participants in the government health program rely on to reduce the cost of financing health insurance – will almost certainly expire on December 31st.
Impact on Americans
That leaves Jump and the roughly 22 million other Americans who are now eligible for the tax credits facing some difficult financial decisions. Out-of-pocket premium costs will increase by an average of 114% for ACA participants currently receiving the subsidies, increasing their annual health insurance costs by $1,016. “This is a huge financial burden for most families,” Emma Wager, senior policy analyst, said. “There aren’t many people who can afford it.” Some households could experience even larger spikes. A family of four making $75,000 a year would see their insurance premiums increase by an additional $3,368 without the tax credits.
A Tsunami of Health Care Costs
Some ACA participants are considering going without health insurance next year if their monthly premiums go up. Others are opting for cheaper plans with less coverage, potentially exposing them to higher costs and medical debt. “We are going to see a tsunami of rising health care costs,” said Michelle Sternthal, director of government affairs at the health care advocacy group. “Right now we are hearing from families who are facing a shocking increase.” According to the Congressional Budget Office, about 4 million people could lose their health insurance because of higher ACA premiums.
The Reason Behind the Subsidies
The ACA tax credits were introduced in 2021 to reduce households’ monthly health insurance costs. The subsidies were later extended under the Biden-era Inflation Reduction Act. With the loans set to expire this year, Democratic lawmakers pushed for an extension in the fall, a dispute in Congress that became the main sticking point in the 43-day government shutdown. As part of the deal to end the funding crisis, Republicans promised to vote on extending ACA loans by mid-December.
The Future of Health Care
The GOP also introduced its own measure to reduce health care costs, sending money directly to consumers rather than expanding ACA subsidies. However, both health care proposals failed in the Senate. Some legislators remain optimistic that they can reach a cross-party agreement. But any agreement would likely include reforms to the ACA to combat income caps and fraud, as well as a phase-out of increased subsidies. Community Catalyst’s Sternthal expects Congress will face political pressure to address the expired tax credits once millions of families face sticker shock in January. Meanwhile, Americans who get their health insurance through an employer-based plan could also be affected by the higher ACA costs.
