Introduction to the Affordable Care Act Subsidies Expiration
Millions of Americans are bracing for higher health care costs in 2026 as subsidies that help them pay for their health insurance under the Affordable Care Act expire on Dec. 31. Experts warn that a failure by Congress to extend the tax credits could be financially devastating for individual policyholders while driving up overall health care costs. About 22 million Americans receive the ACA subsidies, which were introduced in 2021 to reduce households’ monthly premiums.
Potential Impact on Health Care Costs
New data predicts how much people in the U.S. with an ACA plan would have paid on average for coverage in 2025 had they not received the expanded subsidies. As the analysis shows, monthly premiums for public health insurance would have been hundreds of dollars higher. In Mississippi, where about 11% of residents are enrolled in an ACA plan, enrollees’ average monthly premiums would have risen from $41 to $605, a 1,376% increase. In West Virginia, enrollees’ premiums would have increased by an average of 1,058%.
Calculation of ACA Plan Costs
The analysis used public records from the Centers for Medicare and Medicaid Services’ Marketplace Open Enrollment Period 2025 to calculate the average cost of ACA plans. The exact price increases people could see next will depend on a number of factors, including their insurance plan, age, household income, health status, and where they live. The Health Policy Group estimates that annual out-of-pocket premium costs will increase by an average of 114% for the 22 million ACA members who rely on the subsidies.
Status of the ACA Tax Credits
The tax credits are scheduled to expire at the end of the year. Democratic lawmakers have pushed for an extension, but they lack sufficient support in the Republican-led Congress. While the House of Representatives passed a health bill this week that includes several policies favored by Republicans, it rules out an extension of tax credits and faces hurdles in the Senate. Both houses of Congress are out of Washington until early next year, making it all but certain that the tax credits will expire on December 31st.
Consequences of Failing to Extend Tax Credits
If Congress fails to resolve the tax credit issue, some participants will be eligible for a smaller subsidy, while others could potentially lose their eligibility entirely. According to the Congressional Budget Office, around 4 million people could give up their health insurance altogether. Experts say this could lead to higher costs for people with other health insurance, as hospitals will have to offer more uncompensated care to those without insurance. As a result, hospitals may raise their prices for everyone to reconcile the increased costs.
