Enhanced subsidies for Affordable Care Act (ACA) plans are currently set to expire after 2025, and a new analysis from the Congressional Budget Office (CBO) estimates that their expiry could drive up premiums across the individual market.
Key legislators asked the CBO to analyze the impact the end of the subsidies could have, and the organization projects that failing to extend the premium subsidies, whether they end temporarily or permanently, will have a notable impact on benchmark premiums.
The CBO estimates (PDF) that without an extension past 2026, there would be a 4.3% increase on average in gross benchmark premiums for that year.
If the subsidies are not extended permanently, gross benchmark premiums could rise by 7.7% in 2027 and by an average of 7.9% between 2026 and 2034.
The report also estimates that ending the premium tax credits would increase the number of people who are uninsured. In 2026 alone, the uninsured population would increase by 2.2 million without an extension.
The agency expects the number of people without coverage would increase by 3.7 million in 2027 and grow by 3.8 million on average each year from 2026 to 2034.
"The initial increase is significantly smaller because CBO expects that some people will remain temporarily enrolled after the expanded credits expire at the end of 2025," CBO Director Phillip Swagel wrote in the letter. "CBO assumes enrollees would need time to fully respond to the expiration, for example, because of automatic renewal policies."
The enhanced subsidies were first rolled out as part of the American Rescue Plan Act in response to the COVID-19 pandemic. They were then extended through the end of 2025 as part of a 2022 reconciliation bill.
The fate of the enhanced tax credits is unclear given the significant changes coming to the White House and Congress in January. Former President Donald Trump will reassume the role, and Congress will make a shift to Republican control.
A new analysis from the Urban Institute also echoes the CBO's findings. The left-leaning think tank estimated that premiums would rise for people across all 50 states, though the increase would vary.
For example, for those living below 250% of the federal poverty level, annual increases would range from $193 in New Mexico to $924 in Alaska. For people who earn about $37,000 each year, premium increases would likely span $119 annually in West Virginia to $1,434 in California.
And finally, for those earning 400% of the federal poverty level, premiums could increase by more than $2,900 per person each year, according to the report.