ACA Premiums Could Surge 75% in 2026 Without Subsidy Extension
The Affordable Care Act (ACA) insurance premiums are projected to increase significantly in 2026 if Congress does not act to extend the enhanced premium tax credits currently set to expire after 2025. These credits, introduced under the American Rescue Plan Act and extended by the Inflation Reduction Act, have substantially lowered premiums for about 22 million enrollees, representing the majority of ACA marketplace participants. Without these subsidies, average premiums could jump approximately 75%, equating to over $700 more per year per enrollee, according to the Kaiser Family Foundation (KFF).
The premium tax credits have been pivotal in improving ACA marketplace affordability and reducing uninsured rates, contributing to a historical low of 7.9% uninsured in 2023 compared to 9.2% in 2019. However, the Congressional Budget Office (CBO) estimates that if these enhancements lapse, over 4 million Americans could lose coverage within a decade, reversing recent gains in health insurance accessibility. The ACA's premium tax credits were initially available to households with incomes up to 400% of the federal poverty level, but the enhanced credits broadened eligibility and capped premium payments at 8.5% of household income.
Legislative negotiations remain uncertain as Congress approaches a critical deadline. The Republican-led House has not incorporated subsidy extensions into its fiscal legislation, and there is a partisan divide over continuing the credits. Nonetheless, there is some bipartisan interest in preventing significant premium increases before upcoming elections, as the cost to extend the subsidies in 2026 is estimated at $25 billion. Open enrollment for ACA plans begins November 1, and failure to extend these subsidies beforehand could lead to substantial premium hikes.
Insurers are already reacting to the anticipated expiration by proposing higher premium increases for 2026, averaging an 18% hike, the largest since 2018. The market uncertainty surrounding the subsidy cliff may affect insurer pricing strategies and consumer enrollment decisions. Policy decisions in the next few weeks will thus have significant implications for ACA marketplace dynamics, coverage rates, and overall healthcare affordability for millions of Americans.