Iowa Faces Rising ACA Premiums as Enhanced Tax Credits Near Expiration

The enhanced premium tax credits under the Affordable Care Act (ACA), which have made health insurance more affordable for many Americans, including Iowa residents like Lori Hunt, are set to expire at the end of 2025 unless Congress extends them.

These expanded subsidies, introduced during the COVID-19 pandemic, increased ACA Marketplace enrollment significantly, from 12 million in 2021 to 24.2 million in 2025, by making premiums more affordable for low- to moderate-income individuals and even those with incomes above 400% of the federal poverty level. Without an extension, many will face steep premium increases, pricing out middle-income households and increasing the uninsured population nationally and in Iowa. Insurance companies in Iowa, including Wellmark, UnitedHealthcare, Oscar Insurance, Iowa Total Care, and Medica, have requested state approval to raise ACA individual health insurance premiums for 2026, citing the impending loss of these premium tax credits as a key factor. The Congressional Budget Office projects that recent tax legislation, dubbed the One Big, Beautiful Act, will reduce Medicaid spending by $911 billion over ten years and result in millions losing coverage, compounding the impact of the tax credit expiration. Health care advocates warn that these federal changes will raise insurance costs and reduce access to coverage, with healthier individuals possibly leaving the ACA market, leading to a risk pool with higher average costs.

Political debate surrounds the subsidy extension; Republicans express concern the credits discourage insurer cost reductions and were intended as temporary pandemic measures, while Democrats and advocacy groups emphasize the potential coverage losses and premium hikes. The Kaiser Family Foundation estimates that without extension of the credits and with current federal policies, the uninsured population could increase by over 14 million nationally by 2034, including roughly 110,000 more in Iowa. State insurance officials are preparing for higher premiums, with consumers expected to experience sticker shock during open enrollment for 2026 coverage. The cost of extending the subsidies is significant, with a three-year extension projected to cost over $64 billion and a permanent extension increasing the federal deficit substantially. Insurers note rising drug and behavioral health costs as additional pressure points driving premium increases. Policy analysts highlight the risk that those leaving the market will be healthier individuals, degrading the risk pool and raising costs for those remaining.

Both political parties in Iowa face potential voter backlash connected to this issue in upcoming elections, with incumbents defending their records and challengers criticizing federal policy choices. The situation underscores the complex interplay between federal health policy, insurance market dynamics, and political considerations affecting access and affordability of health coverage in the U.S.