Subsidy Expiry Drives Up Health Insurance Costs for Millions

The enhanced tax credits that lowered health insurance costs for the majority of Affordable Care Act (ACA) enrollees have expired overnight. This sudden expiration will result in significantly higher health insurance premiums for millions of Americans as the new year begins.

Democrats tried to extend these subsidies during a 43-day government shutdown, while moderate Republicans pushed for a resolution to protect their 2026 election prospects. Former President Donald Trump briefly proposed a solution but withdrew following conservative opposition. Ultimately, no agreement was reached before the deadline.

A House vote in January could provide another chance to restore the subsidies, but its outcome remains uncertain.

Who Is Affected?

The expired subsidies impact a broad group of Americans who purchase health insurance independently, excluding those covered by employer plans, Medicaid, or Medicare. This group includes self-employed individuals, small business owners, farmers, and ranchers.

Rising Health Costs and Premium Increases

Initially introduced in 2021 as a temporary relief during the COVID-19 pandemic, these expanded subsidies helped many Americans afford health insurance. Some low-income enrollees paid no premiums, and others paid a maximum of 8.5% of their income. The eligibility for middle-income individuals was also expanded.

Now, without these subsidies, premiums for more than 20 million ACA enrollees are expected to increase by an average of 114% in 2026, according to the Kaiser Family Foundation (KFF). This surge coincides with rising overall healthcare costs in the U.S., further increasing out-of-pocket expenses.

For example, freelance filmmaker Stan Clawson from Salt Lake City will see his monthly premium rise from under $350 to nearly $500. Katelin Provost, a social worker and single mother, faces an even steeper jump — from $85 to almost $750 monthly.

Potential Impact on Enrollment

Health experts warn that soaring premiums may lead many, especially younger and healthier individuals, to drop their insurance coverage. This could increase costs for older, sicker enrollees who remain in the program.

A study by the Urban Institute and Commonwealth Fund estimated that nearly 4.8 million Americans could lose coverage in 2026 due to the subsidy expiration. However, enrollment windows remain open in most states until January 15, so the final impact is still unclear.

Political Stalemate and Calls for Action

Despite repeated calls from Democrats for subsidy extensions, Republicans delayed voting on the matter. The Senate rejected both a Democratic proposal to extend subsidies for three years and a Republican plan favoring health savings accounts.

In the House, some centrist Republicans have joined Democrats to push for a three-year subsidy extension vote, but Senate opposition clouds the plan's prospects.

Affected Americans express frustration with lawmakers’ inaction amid rising costs. Many urge restoration of subsidies alongside broader healthcare reforms to improve affordability.

Chad Bruns, an ACA enrollee from Wisconsin, summed up the frustration: “Both Republicans and Democrats have been saying for years, ‘We need to fix it.’ Then do it. They need to get to the root cause, and no political party ever does that.”