Map Shows How Much Health Insurance Premiums Will Go Up i...

By Aliss Higham

US News Reporter

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Millions of Americans could face dramatically higher health insurance bills next year as enhanced Affordable Care Act (ACA) premium tax credits are set to run out.

Why It Matters

The enhanced subsidies, which lower monthly premiums for people across income levels, expire at the end of the year, raising the prospect of substantial increases for enrollees, unless Congress intervenes.

The ACA marketplace, established in 2010, offers health insurance to people who don’t qualify for Medicaid and aren’t covered through an employer. In 2020, Congress introduced the Enhanced Premium Tax Credit to help lower costs during the COVID-19 pandemic. The expanded subsidies significantly reduced monthly premiums—and for some low-income enrollees, brought them down to $0.

According to the Congressional Budget Office, letting the subsidies lapse would cause next year’s premiums to more than double for many enrollees and leave an estimated 2 million additional people uninsured.

States Facing Highest Increases

According to analysis by KFF Health, the financial shock will be sharpest for older adults at middle incomes—particularly those just above the previous eligibility cutoff for ACA subsidies. Among all income tiers examined, the current enhanced credits yield the biggest benefit for those at 401 percent of the federal poverty level, which is equal to $62,757 for an individual in the contiguous U.S. (with higher thresholds in Alaska and Hawaii).

For a 60-year-old at that income level, the expiration of enhanced credits would at least double average annual premiums for a benchmark silver plan in 46 states and Washington, D.C. In 19 of those states, premiums would at least triple, consuming more than a quarter of a person’s yearly income.

The steepest increases occur in:

Wyoming: +$22,452 per year
West Virginia: +$22,006
Alaska: +$19,636

On why premiums will rise the most in these states, Professor Stacey B. Lee, professor at Johns Hopkins University and CEO of Praxis Pacisci, a negotiations training institute, told Newsweek: "These states have limited insurer competition, older and smaller populations, high provider prices, and geographic challenges that make delivering care more expensive. In these markets, the gross premiums, meaning the price before subsidies, can exceed $30,000 a year for a 60-year-old. The enhanced credits did more than reduce premiums. In many cases, they made coverage mathematically possible for middle-income residents."

States Facing Lowest Increases

The smallest increases listed are still substantial:

New York: +$4,469
Massachusetts: +$4,728
New Hampshire: +$4,877

"States such as New York, Massachusetts, and New Hampshire entered the ACA with long-standing rules that stabilized their individual markets, including community rating, guaranteed issue, and strong oversight," Lee said. "These states already had deeper risk pools and more predictable pricing. The enhanced tax credits lowered costs, but the underlying markets were relatively functional before the federal dollars arrived."

As income rises, the number of states where premiums double narrows. At 501 percent of poverty (about $78,407 for an individual in most states), premiums would at least double for a 60-year-old in 37 states and D.C. At 601 percent, that figure drops to 19 states; at 701 percent, five states. Premium increases for 40-year-olds are described as “more modest” at all income levels.

What Happens Next

President Donald Trump said Tuesday that he does not want to extend the expiring subsidies under the ACA (also known as Obamacare) which would mean sharp premium increases for enrollees next year.

"I’d rather not. Somebody said I want to extend them for two years. I don’t want to extend them for two years. I’d rather not extend them at all," Trump told reporters on Air Force One as he traveled to Florida, responding to a question about whether he plans to continue the funding. He added that "some kind of extension may be necessary to get something else done, because the unaffordable care act has been a disaster".

The Trump administration has said it is working to prevent substantial premium hikes triggered by the looming expiration of the ACA subsidies.

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