Health Insurance Costs: New Year’s Shock for Millions

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ACA Subsidies Set to Expire: Millions Face Higher Healthcare Costs

WASHINGTON, April 26, 2024 – Millions of Americans could soon face sharply higher health insurance premiums as enhanced subsidies enacted during the pandemic-and extended by the Biden administration-are set to expire. The looming changes, which will take effect in January 2025, threaten to unravel some of the Affordable Care Act’s (ACA) biggest successes, potentially leaving many uninsured or underinsured.

Subsidy Cliffs and Coverage Concerns

The expiration of these subsidies will likely lead to increased premiums and decreased enrollment in ACA marketplaces.

• Enhanced subsidies, introduced during the pandemic, significantly lowered ACA premiums.
• These subsidies are scheduled to expire at the end of 2024, impacting millions.
• The congressional Budget Office projects a ample increase in uninsured individuals.
• The Biden administration has proposed extending the subsidies, but faces political hurdles.

The subsidies for another year would cost around $74 billion.

Projected ACA marketplace enrollment with and without the extended subsidies.

Rapid fact: The Inflation Reduction Act extended the enhanced subsidies through December 31, 2025.

State-Level Actions and Mitigation Efforts

Some states are taking steps to mitigate the impact of the expiring subsidies. Several states, including California and New York, have established their own state-based marketplaces and are offering additional financial assistance to residents. These state-level efforts, however, are unlikely to fully offset the loss of federal subsidies.

Distribution of ACA marketplace enrollees receiving subsidies by income level.

Projected impact of subsidy expiration on enrollment by demographic group.

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