Time is quickly running out to shield Obamacare customers from explosive sticker shock.
State insurance officials are warning that the longer Congress waits to extend enhanced Affordable Care Act subsidies, which help low- and middle-income people afford premiums, the more difficult it will be to update rates before consumers start shopping for 2026 coverage on Nov. 1.
As a result, they said, some enrollees — particularly young and healthy people — could be frightened off by the higher rates and drop coverage, even if the rates can be adjusted later. This would further undermine Obamacare by worsening the risk pool, driving up ACA costs even more.
The dire warnings come as no deal on the subsidies is in sight, stretching the government shutdown into a third week.
“The ship has sailed,” said Ingrid Ulrey, CEO of the Washington State Health Benefit Exchange. “Congress missed the opportunity to make this decision early enough for us to reset our markets for open enrollment, and to make it clean and easy for people to come in and see premiums that include the savings from the enhanced level of premium tax credits.”
Consumers are likely to see, on average, double-digit premium increases in 2026 plan offerings, according to an analysis from health policy research firm KFF. The hikes reflect rates insurers have filed under the assumption that the subsidies will expire at the end of the year and other factors such as increasing health costs.
Obamacare enrollees who don’t qualify for the income-based subsidies — and instead pay for their coverage fully out of pocket — could also face steep premium increases that could’ve been avoided if Congress had extended the subsidies sooner.
If a deal comes later in November or December, states might opt to not update rates because of the hassle it would create. Or it could take them weeks to update their systems with the new rates and communicate to enrollees about the change.
Even without the shutdown, the same complications likely would have occurred if Republicans had waited to extend the subsidies until closer to the end of the year, as some had discussed doing. The party, which controls both chambers of Congress, had also debated before the government closure whether they should be extended at all.
“Every single day that passes, the risk is higher [that] we will not be able to update the information in time,” said Devon Trolley, executive director of Pennsylvania’s insurance exchange. “Typically, we try to have the rates locked in [by] September.”
By the end of the year, state marketplace directors worry millions of enrollees will have decided to forego health insurance coverage altogether after seeing the initial steep price hikes.
“People will have dropped coverage, and we will work very hard to get them back, but they will not all come back,” said Jessica Altman, executive director of Covered California, the state exchange.
HHS did not return a request for comment on when it can update rates on HealthCare.gov, the federal ACA exchange used by about 75 percent of Obamacare enrollees, and how long it will take to implement a subsidy deal.
The state and insurer warnings come as lawmakers square off over an extension of the enhanced subsidies, which were created in 2021 through the American Rescue Plan Act and extended through this year in the Inflation Reduction Act of 2022.
The tax credits fueled a major boom in Obamacare enrollment signups, which surpassed 23 million this year. The nonpartisan Congressional Budget Office estimates 2.2 million people would lose coverage next year if the subsidies lapse.
The vast majority of individuals on the exchanges, which is around 23 million people, get some form of subsidy. The enhanced subsidies ensured that people who previously did not qualify for help under the ACA because they earned too much got some form of subsidy.
The ACA’s original subsidies, which will remain in place if Congress lets the enhanced version expire, had an income limit of 400 percent above the poverty level, or about about $62,000 for an individual and $128,000 for a family of four, to get some form of subsidy. Under the enhanced credits, ACA premiums for people above that threshold have been capped at no more than 8.5 percent of annual income. If those subsidies expire, they will get no help.
The enhanced credits have been attractive to individuals who work for small businesses or are self employed.
It remains unclear whether the pressing deadline of open enrollment’s start has created new urgency for a deal on the Hill.
Some lawmakers, in addition to states, say that it is already too late to get a deal and implement it before open enrollment starts. Idaho, for instance, started open enrollment on Oct. 15 but every other state signups begin on Nov. 1.
Sen. Mike Rounds (R-S.D.), who has floated a one-year extension of the subsidies, said that it will take weeks to iron out a deal – if there’s one to be had.
“By the end of October, there really is no more room to get the states the information they need to do anything different than what they are already doing,” Rounds said.
Others say there is still time.
“If we need to, we can have a one-time fix for open enrollment if it rolls into that,” said Sen. Thom Tillis (R-N.C.).
Democrats, for their part, said they have wanted to negotiate over the subsidies for months, but Republicans have stonewalled them. They say lawmakers are starting to feel the heat over that inaction.
“They are going home, and people are saying this is a huge hit on us and our ability to pay our bills,” said Sen. Ron Wyden (D-Ore.), ranking member of the Senate Finance Committee. “I think politics is all local.”
Congressional Republican leaders have said Democrats are holding the government hostage, and that they are willing to negotiate the subsidies after Senate Democrats agree to reopen the government.
Most Republicans have generally been reluctant to extend the subsidies due to concerns over fraud and say they were originally meant to be only temporary pandemic relief. However, some more vulnerable lawmakers in tough races next year have been open to an extension.
Massive confusion
Obamacare’s open enrollment for 2026 runs from Nov. 1 through Jan. 15, but may vary from state to state. Twenty ACA marketplaces are run individually by states and the District of Columbia, and the rest rely on the federally run HealthCare.gov for residents to purchase plans.
Some state exchanges have asked insurers to submit two sets of rates: one with the enhanced subsidies and one without. States have implemented the rates absent the premium subsidies.
Several state-run exchanges said they can switch to the rates with the subsidies included, but the timeframe to do that is vanishing by the day.
“The closer we get to open enrollment the clunkier it is going to get for us to operationally implement it,” said Michael Conway, Colorado’s insurance commissioner. “We are going to have to be extremely flexible and transparent and communicate with stakeholders and brokers when we get information.”
But it could take longer if Congress changes the structure of the subsidies. Several Republicans have pushed for changes to the enhanced subsidies’ income cap, which ensured that anyone could receive assistance regardless of how much they earn.
“Trying to squeeze out an extension that has a lot of different changes to the current structure at this late date, we think would be even more disruptive,” said David Merritt, senior vice president of external affairs for the Blue Cross Blue Shield Association.
Mitigating damage
State officials are in damage-control mode — trying to prevent millions of people from opting out of coverage for next year — as uncertainty lingers over what will happen with the enhanced subsidies.
“We will do whatever we need to do to move mountains,” said Michele Eberle, executive director of the Maryland Health Benefit Exchange. “The question will be, can we get them moved without causing such confusion and chaos that we lose our auto renewal consumers?”
State exchanges are printing and delivering notices to enrollees to explain that the subsidies are expiring and what that means for their premiums but also highlighting that Congress could still act to extend them. They are texting and emailing consumers and have launched social media campaigns to increase awareness of the subsidy issue.
Marketplace directors are also formulating plans to account for a range of possible scenarios, including a lapse in the subsidies or an extension that comes in November, December or even January.
The latter could mean enrollees who qualify for enhanced subsidies will be billed for coverage in January and have to pay a much higher out-of-pocket premium expense for that month, without the help of the subsidy. In that scenario, the consumer would likely be repaid in a tax refund. And depending on the timing of an extension, states may be able to pause or delay that first monthly payment. Some people will not be able to wait for a refund on the higher premiums and may be forced to drop coverage in that scenario.
“We can make these system changes, but they don’t happen when I snap my fingers,” said Altman.