Rising Premiums and Uninsured Rates Loom as Obamacare Subsidy Expiry Nears, CBO Warns

If lawmakers fail to extend enhanced subsidies for health plans under the Affordable Care Act (ACA), premiums will rise, and millions more Americans will find themselves uninsured, warns a new estimate from the Congressional Budget Office (CBO).

Without permanent extension of the expanded premium tax credits, which are set to expire in 2025, the CBO predicts that 3.8 million Americans will lose coverage each year between 2026 and 2034. Additionally, those who remain enrolled in ACA plans will face increased costs, with benchmark premiums projected to rise by an average of 7.9% over the same period.

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Key Takeaways:

• Expiring subsidies could cause 3.8 million Americans to lose coverage annually.

• ACA premiums are expected to increase by nearly 8% on average.

• GOP opposition suggests financial concerns and potential fraud, while Democrats argue for the subsidies’ role in reducing costs and increasing marketplace enrollment.

Context: During the COVID-19 pandemic, the Biden administration introduced temporary enhancements to ACA subsidies, expanding eligibility to a larger group of Americans, including those earning above 400% of the federal poverty level. These enhancements were extended through the end of 2025. While Democrats are advocating for the continuation of these subsidies, Republicans have raised concerns about the cost and potential misuse, with the possibility that they may be cut in 2026 under a new administration.

If the subsidies expire, the uninsured rate could increase significantly, with 2.2 million uninsured in 2026 and 3.7 million by 2027, the CBO estimates. The impact on premiums will be gradual, with benchmark premiums expected to rise by 4.3% in 2026 and 7.7% by 2027, as insurers raise prices due to a smaller, less healthy pool of enrollees.

A recent report by the Robert Wood Johnson Foundation and the Urban Institute also found that household premium costs would surge if the subsidies end. For instance, the lowest-income beneficiaries could see their premiums increase from $0 to $387 annually, while those with higher incomes may face increases exceeding $2,900 a year.

With millions at risk of losing coverage and premiums climbing, the debate over extending these subsidies is critical to the future of the ACA and affordable health care in the U.S.