Mahwah, New Jersey, resident Tina Jump recently learned that the premium for her Affordable Care Act health insurance is set to surge from about $400 a month to more than $1,100 starting in January — a nearly threefold increase that she said left her in a state of panic.
Jump, who earns about $72,000 a year as a real estate title officer, already feels financially stretched by the need to cover both her Blue Cross Blue Shield plan and the roughly $415 a month she pays for a prescription drug for type 2 diabetes.
“I don’t know how I’m going to pay for this,” Jump, 59, told CBS News. Her boss has offered to chip in, but she said the higher premium would still be a major strain on her budget.
“I’m just going to have to cut back on whatever else I can,” she added. “It’s just insane. What’s going to happen in the next couple of years? Is it going to continue to go up?”
With two health care bills failing to advance in the Senate on Thursday, the ACA’s enhanced premium tax credits — which 90% of enrollees in the government health program rely on to ease the cost of affording health insurance — are almost certain to expire on Dec. 31. That will leave Jump and the roughly 22 million other Americans who now qualify for the tax credits facing some tough financial decisions.
Out-of-pocket premium costs will increase 114% on average for ACA participants who currently receive the subsidies, hiking their annual costs for medical insurance by $1,016, according to health policy group KFF.
“That’s a huge financial burden for most families,” Emma Wager, a senior policy analyst at KFF, told CBS News. “There’s not a lot of people who can afford that.”
Some households could see even larger spikes. A family of four earning $75,000 per year is likely to see their insurance premiums rise by an additional $3,368 without the tax credits, the group estimated.
Such a drastic increase in ACA costs would arrive as Americans are already struggling to afford groceries, rent, utilities and other essentials, leaving many financially pinched.
“Tsunami of health costs”
Some ACA participants told CBS News they are considering going without health insurance next year if their monthly premiums spike. Others are opting for cheaper plans with less coverage, potentially exposing them to higher costs and medical debt, Michelle Sternthal, director of government affairs at health care advocacy group Community Catalyst, told CBS News.
“We are going to see a tsunami of health costs increasing” on January 1, Sternthal said. “Right now, we’re hearing about families facing shocking increases.”
About 4 million people could drop their health insurance due to the higher ACA premiums, the Congressional Budget Office has estimated.
The rising costs could hit some Americans harder than others, with small business owners and self-employed workers particularly vulnerable, Sternthal noted. Many such workers have turned to the ACA for health coverage because they lack employer-based insurance. About half of adults enrolled in the ACA are small business owners, employed by a company with fewer than 25 workers or are self-employed, according to KFF.
That group includes Aaron Lehman, an Iowa farmer who grows corn, soybeans and other crops on his family’s farm. In testimony before a Dec. 10 Senate hearing, he said the enhanced premium tax credits have allowed him to work full-time on his farm.
“But unfortunately, my wife and I have learned that in order to keep a similar policy for 2026, our health insurance costs will more than double,” Lehman told the committee.
Why the subsidies were created
The ACA tax credits were established in 2021, as the U.S. was reeling from the pandemic, to lower households’ monthly health plan costs; the subsidies were later extended under the Biden-era Inflation Reduction Act. With the credits set to expire this year, Democratic lawmakers this fall pushed for an extension, a congressional fight that became the main sticking point in the 43-day government shutdown that ended in November.
As part of the deal to end the funding impasse, Republicans vowed to hold a vote on whether to extend the ACA credits by mid-December. The GOP also introduced its own measure to address health care costs, which involved sending funds directly to consumers rather than extending the ACA subsidies.
However, votes on both health care proposals failed in the Senate on Thursday. Some lawmakers remain optimistic they can strike a bipartisan deal. But any agreement would likely involve reforms to the ACA to address income caps and fraud, along with a gradual phasing out of the enhanced subsidies.
Sternthal of Community Catalyst thinks Congress will face political pressure to address the expired tax credits once once millions of families face sticker shock in January.
In the meantime, Americans who get their health insurance through an employer-based plan could also be impacted by the higher ACA costs, she added.
The reason: If millions drop coverage, as the CBO has predicted, it would likely destabilize the health care market because more people would need to rely on emergency rooms for treatment. Because hospitals, by law, must treat uninsured patients, they typically recoup the costs by hiking treatment costs for others.
“If you have fewer people covered, that means there will be more uncompensated care, and people will go to the ER — and that will trickle down into providers and insurance companies,” Sternthal said. “It’s an economy-wide problem.”
