Millions of Americans Risk Healthcare Cost Spike in January
On Thursday, the U.S. Senate failed to pass two competing proposals aimed at extending COVID-era Affordable Care Act (Obamacare) subsidies. If alternative proposals are not passed before Congress enters its holiday recess, millions of Americans will face increased healthcare premiums starting January 1, 2026. But what exactly are these subsidies? Who will see price increases? Let’s get into it.
The Affordable Care Act system is designed to include premium tax credits, which is a way for the government to help pay for your healthcare if you meet income requirements. During COVID the amount these tax credits cover, and the income requirements for them, were expanded to help more Americans pay for healthcare. When these enhanced premium tax credits were initially introduced they were set to expire in 2022, in 2022 they were extended to December 31, 2025. Now, if Congress doesn’t extend them again, millions of Americans will either lose eligibility for premium tax credits entirely, or have the percent of the premium they’re expected to pay increase. Here’s an income by income breakdown of how Americans will be affected if the enhanced tax credits are not extended:
$14k-$22k: Premiums will rise but remain low, at around $30-$60/month. Current: $0-$20/month.
$22k–$29k: Premiums will rise could remain relatively low at around $50-$100. Current: $0-$40
$29k–$43k: Premiums will increase significantly to around $200–$400/month. Current: $30–$120/month
$43k–$58k: Premiums will increase very significantly to around $400-$750/month. Current: $250-$400.
$58k+: Individuals in this income range will loose subsidies altogether, and must pay full price for coverage.
The Congressional Budget Office projects 24 million Americans are expected to see premiums rise, with 3-5 million expected to lose coverage altogether due to costs. So why did the Senate fail to extend these enhanced tax credits? Let’s cover the Democrat plan, and the Republican plan, and what could come next:
Senate Democrats wanted to extend the enhanced tax credits to around 2028, without changing how the system worked. The rules would stay the same, and premiums would remain stable. Many Republicans opposed this, mostly due to fears that the increased subsidies cost the federal government too much money. The enhanced tax credits, if extended, are projected to cost the government $350 billion or more over the next decade.
Senate Republicans supported various proposals that changed the structure of the enhanced tax credits, while maintaining increased subsidies compared to pre-COVID levels. For example, some proposals suggested including some form of income cap. Republican proposals failed to garner Democrat support.
With Congress entering its holiday recess in mid-December, it’s becoming increasingly unlikely, though not impossible, that the enhanced premium tax credits will be extended past December 31st. If they’re not, healthcare will likely remain an important issue in 2026, and even a priority once Congress returns in January.
