The enhanced subsidies available for Affordable Care Act plans have been the key to driving massive enrollment growth, and rolling them back would likely lead to a massive spike in premium payments, according to a new report.
Analysts at KFF found that premium costs have decreased by 44%, or $705 per year, over time for those who receive the enhanced subsidies. If the subsidies were eliminated, premiums would double or more on average in 12 states offering plans through Healthcare.gov.
At present, the enhanced subsidies are set to expire at the end of 2025, and both payers and policymakers will want to have that expiration set in stone early enough to set accurate premiums for 2026, the researchers note.
Insurers will begin to submit bids for 2026 in early 2025 to be finalized by August.
“Millions of enrollees have come to rely on the enhanced subsidies, with more people gaining Marketplace coverage since President Biden took office than had signed up for ACA Marketplace when the markets first launched in 2014,” the researchers wrote. “If the enhanced subsidies expire, almost all ACA Marketplace enrollees will experience steep increases in premium payments in 2026.”
For the 2024 plan year, 21.4 million people enrolled in coverage on the exchanges, according to the report. Of that number, 19.7 million receive premium tax credits.
The study estimates that without the subsidies in place annual premiums would rise on average by $624, or 93%. Three states are likely to see the steepest increases: Alaska, West Virginia and Wyoming.
In Wyoming, annual premiums could increase by 195%, or $1,872. Alaskans would see an increase of $1,836, or 125%. Annual premiums would rise by 133%, or $1,404, in the Mountain State, according to the report.
Beyond the 12 states that would see likely increases of 100% or more, 13 states would see annual premiums rise by between 80% and 99%. Just seven states on Healthcare.gov would see premium increases of less than 80%, the analysts project.
Perhaps unsurprisingly, the study found that low-income enrollees would see the strongest hikes in premium costs. In one example, a 45-year-old person who earns $25,000 per year would see an average premium increase of 573%, or $917, for a benchmark silver plan.
That person’s costs would rise from $160 per year with the subsidies to $1,077, according to the report.
The upcoming presidential election will have a significant impact on the fate of these subsidies, as they were established by the Biden administration as part of the COVID-19 response and have been extended since.
Critics of the enhanced subsidies note that the Congressional Budget Office estimates that making them permanent would cost $335 billion over the next decade, the researchers said.