Update 913 — December ACA Debate:
Premium Costs to Jump for 20 Million+
Congress will devote much of its attention this month to the Affordable Care Act (or Obamacare) enhanced premium tax credits, which are scheduled to expire at the end of the year. More than 22 million marketplace enrollees rely on these subsidies to afford their monthly health care premiums. Marketplace premiums will more than double if enhancements are not extended, making health care coverage simply too expensive for an estimated 4 to 5 million people. But attention is one thing, action another.
The debate over extending these tax credits is sharply divided, with Democrats pushing for a clean extension to the credits while Republicans stand in disarray over the path forward – weighing the popularity of the credits against their broader disdain for the ACA. The fallout from this conflict will not only affect health care affordability but could influence the balance of power in Washington given the preeminence of affordability as an issue in the midterm elections next November.
Best,
Dana
For the millions of Americans who purchase health care coverage through the Affordable Care Act (ACA) marketplaces, the next few weeks will determine whether or not the enhanced premium tax credits (PTCs) that keep health care affordable will expire at the end of this year. These enhancements, first enacted in the American Rescue Plan Act of 2021 (ARPA) and subsequently extended in the Inflation Reduction Act of 2022 (IRA), are the main reason why marketplace enrollment has more than doubled since 2020, now standing at over 24 million people.
If Congress fails to pass an extension of the enhanced credits by the end of this year, health insurance premiums for ACA marketplace enrollees will more than double on average, causing millions of Americans to choose lower-quality plans or to forgo coverage altogether. This pivotal legislative moment comes as Americans grow increasingly burdened by the rising cost of living. Further increases to health insurance premiums will only exacerbate affordability concerns ahead of next year’s midterm elections. While Democrats push for an extension, Republicans are in disarray about how to address the issue, forced to square their hatred for the ACA (commonly known as Obamacare) with the electoral consequences of allowing the premiums to skyrocket.
Primer on Affordable Care Act Premium Tax Credits
PTCs play a central role in lowering monthly premiums for those who get health insurance coverage through ACA marketplaces. These credits can be claimed as a lump sum when filing a tax return, but more than 90 percent of recipients opt to have advance payments sent directly to their insurers to lower monthly premiums.
Originally, PTCs were available to people between 100 and 400 percent of the federal poverty level (FPL), with the subsidies covering a larger share of premiums for enrollees on the lower end of this scale. While people under 100 percent of the FPL are generally able to receive health care through Medicaid in expansion states, this structure created a “subsidy cliff” for people at or near 400 percent of the FPL who were often forced to pay upward of 20 percent of their income for health insurance. Through ARPA, Democrats temporarily enhanced PTCs to eliminate the subsidy cliff by increasing the value of the credits and allowing people above 400 percent of the FPL to qualify if their benchmark premium exceeded 8.5 percent of their income.
These changes, which Democrats extended through the end of 2025 in the IRA (reconciliation rules prevented a permanent extension), dramatically expanded ACA marketplace enrollment and lowered the uninsured rate. Since the enhancements were implemented, ACA enrollment has more than doubled, increasing from around 11 million in 2020 to over 24 million in 2025. More than 22 million (93 percent) of the current enrollees rely on PTCs to afford their health insurance premiums.
Without congressional action, premiums paid by all marketplace enrollees are set to skyrocket upon the expiration of PTC enhancements at the end of this year. According to the Kaiser Family Foundation, marketplace premiums – which insurers are already separately increasing by an average of 26 percent in 2026 – will be an average of 114 percent more expensive for current PTC recipients. For example, a family of four making around $130,000 (404 percent of the FPL) would see an increase in monthly premiums from $921 to $1,998 – an annual increase of almost $13,000. The graphic below shows how the expiration of the PTC enhancements will affect enrollees across various income levels:
Source: CBPP
These price increases are expected to leave 4 to 5 million more Americans uninsured than if the enhanced premium tax credits were extended, as enrollees choose to drop unaffordable health care coverage. Those who remain insured through the ACA marketplace will have to choose between premiums that are no longer affordable or a lower-quality plan with higher out-of-pocket costs. Furthermore, as healthier individuals forgo coverage and enrollees become sicker (and more expensive for insurers to cover) on average, insurers will likely raise prices across other health care offerings, affecting everyone – not just marketplace enrollees.
While the 10-year cost of extending the enhanced PTCs is high at around $350 billion, this policy has driven significant gains in marketplace coverage and reductions in the uninsured population, demonstrating a proven return on investment in addressing the health care affordability crisis.
Current Debate Surrounding PTC Extension
Republicans had the chance to extend the expiring enhancements to PTCs through their reconciliation bill passed this summer (One Big Beautiful Bill Act), which addressed both health care spending and taxes. Instead, they ignored the expiring PTC enhancements and cut an additional $1 trillion in federal health care spending to pay for trillions in tax cuts skewed towards the ultra wealthy, while still adding more than $4 trillion to the deficit over the next 10 years.
In an attempt to reverse these health care cuts, Democrats withheld their votes on government funding legislation at the start of the 2026 fiscal year (FY26) on October 1, leading to a 43-day government shutdown – the longest in U.S. history. Over the course of the shutdown, an extension of expiring PTC enhancements became the central demand of Democrats in exchange for their votes on shutdown-ending legislation. But Republican leadership refused to negotiate with Democrats on an extension of the enhanced credits, arguing they would only do so following the end of the shutdown.
Ultimately, eight Senate Democrats last month voted in favor of a deal that ended the shutdown, but did not extend the expiring enhancements. Instead, the deal included a “handshake” promise from Senate Majority Leader John Thune (R-SD) to allow a Senate vote on PTC legislation of the Democrats’ choosing in the second week of December (next week).
Many Democratic members of Congress and the Democratic base were furious with the decision to end the shutdown by caving in for such a lackluster agreement. After all, the majority of Republicans are opposed to PTCs due to their association with the ACA and COVID-era relief policy (ARPA), and a vote on even a “clean extension” – absent reforms that limit the size or scope of PTCs – would likely fail in the Senate. Speaker of the House Mike Johnson (R-LA) also made clear that Thune’s deal did not extend to the House, further muddying the road ahead for any PTC legislation that does pass the upper chamber.
President Trump, who has played an outsized role in influencing the policy stances of Republican members of Congress during his second term, has complicated the debate about an extension with a wishy-washy stance. During the shutdown, he shifted between attacking the subsidies and suggesting that a short-term extension may be necessary to prevent premium hikes. Then, last week, Trump floated a proposal for a limited, two-year extension amid pressure from voters about Trump and Republicans’ ongoing failure to address rising costs. The proposal was quickly withdrawn after receiving backlash from conservatives in Congress – especially in the House – leaving little sense of where the President will ultimately fall on the issue of an extension.
Congressional Proposals for Extension and Reform
Senate
As we look toward a promised PTC vote in the Senate next week, uncertainty remains surrounding the specific legislation that will receive a vote. Senate Democrats, led by Minority Leader Chuck Schumer (D-NY), have yet to formally coalesce around a specific proposal. While Democrats will likely offer a clean, three-year extension next week, based on recent reporting, even a proposal for a one-year extension failed to gain the necessary support when it was offered as an end to the shutdown, with Republicans dismissing it as “absurd.” A similar offer would likely suffer the same fate next week.
Senate Republicans may choose to offer their own proposal to address the expiring enhancements in a side-by-side vote next week. Senate HELP Committee Chair Bill Cassidy (R-LA) is leading negotiations on one alternative that may redirect ACA subsidies into health savings accounts (HSAs), which can be used to cover out-of-pocket medical costs, but not premiums. They are also strictly limited to high-deductible health plans, meaning Cassidy’s proposal would do little to address coverage losses and premium cost growth. This consumer-directed approach may still get the support of other Republican Senators like Finance Chair Mike Crapo (R-ID) and Rick Scott (R-LA) – who has a similar proposal for HSA-style “Health Freedom Accounts.”
Other Senate Republicans – like Josh Hawley (R-MO) – are exploring different options for addressing December’s PTC cliff and health care affordability, but these proposals are far from the clean extension of PTC enhancements sought by Democrats.
House
In the House, Democrats have filed a discharge petition for a clean, three-year extension of PTCs with the hopes that they could peel off enough votes from moderate House Republicans at risk of losing their seats next November. So far, no Republicans have signed on to the discharge petition, leaving the future of this effort unclear.
Other proposals have also circulated the House in recent weeks.
- Representative Jen Kiggans’s (R-VA) Bipartisan Premium Tax Credit Extension Act, which she introduced in September. The bill, which would extend PTC enhancements for just one year, has 28 cosponsors, including 14 Democrats and 14 Republicans.
- Separately, several other moderate members from both parties, including Representatives Don Bacon (R-NE), Brian Fitzpatrick (R-PA), Josh Gottheimer (D-NY), and Jeff Hurd (R-CO), have also been engaged in bipartisan conversations surrounding a temporary extension with income caps and anti-fraud measures. This proposal has yet to be released, but it is expected to be inspired by the proposal that was pulled back by the Trump administration last week.
Despite these various proposals, significant obstacles remain. House Speaker Mike Johnson previously declined to say whether he would allow a vote on health care legislation before changing his tune yesterday by announcing that a Republican policy “response” to the expiring PTC enhancements is in the works. But he will still need to contend with the fact that many members of his GOP conference want to see the subsidies eliminated or the underlying ACA overhauled entirely. The expiration of the enhanced credits at year’s end, combined with the December 15 enrollment deadline for 2026 coverage, leaves little time for Congress to act before millions of Americans face dramatic premium increases.
The Road Ahead
As the varied details of the policy proposals highlighted above make clear, there is anything but consensus in Congress on how to deal with the expiring PTC enhancements. Despite infighting among lawmakers, voters are very much in favor of extending the credits, with 75 percent of respondents across the political spectrum – including 44 percent of self-identified MAGA supporters – saying Congress should extend ACA tax credits in a recent KFF poll.
Popular support for more affordable health care, as well as a growing perception that Trump and Republicans are not doing enough to address the rising cost of living, led to major losses for the GOP in last month’s off-year elections. If Republicans fail to extend the credits by the end of this year, this success could very well be taken into next year’s midterm elections, where Democrats have a strong chance of putting an end to the current Republican trifecta.
Although Republicans and the Trump administration are aware that their inaction on affordability could lose them elections, and even their trifecta, they are still a long way from agreeing on a clean extension that would get the support of Democrats, instead continuing to pursue significant reforms that would still make health care less affordable for millions.
As marketplace enrollees wait anxiously for congressional action next week, 20/20 Vision calls on Congress to pass a clean extension of the enhanced ACA PTCs and prevent health insurance premiums from skyrocketing for millions of Americans. Republicans have control of Washington – now they must use it to address health care affordability, or answer to voters in next year’s midterms.