Starting this Saturday (November 1st), some American citizens will log onto the federal Affordable Care Act (ACA, commonly known as Obamacare) insurance marketplace website to choose their health insurance plans for next year.
November 1st also marks a crucial date in the ongoing standoff between the federal government. Democrats have issued a threat that if the federal subsidies are not extended, millions of people will face significant premium increases and severe financial impacts.
In reality, even with an extension of the federal subsidies, health insurance premiums are still expected to rise. Insurance companies have already submitted and approved premium rates earlier this year, locking them in. Any agreement to extend tax credits will not change the upward trend in premiums.
According to an analysis by the health research organization KFF, the average premium increase in 2026 is projected to be 18%, with 22 million subsidized enrollees facing an average increase of 114% in their out-of-pocket insurance costs by 2026.
The Washington Post, citing internal government documents, reported that the average premium for the mid-level “silver” insurance plans under Obamacare will rise by 30%.
Jessica Altman, head of California’s health insurance marketplace, stated that the average monthly payment for individuals will increase by 97% next year.
Insurance companies cite the expiration of enhanced tax credits as one of the reasons for premium increases. They anticipate that high costs will cause healthier individuals to drop coverage, leading to a smaller pool of insured individuals with deteriorating health conditions and ultimately increasing the insurers’ underwriting costs.
Furthermore, rising prescription drug prices, hospital costs, and overall medical inflation are also driving up insurance premiums. Altman mentioned that healthcare cost increases contribute to around 7% to 8% of the average 10% premium rise in California.
Premiums for employer-sponsored plans are also skyrocketing due to increased utilization, rising labor costs, and soaring drug prices, especially for popular medications like GLP-1 agonists.
While extending subsidies may not prevent premium hikes, it could temporarily alleviate financial strains, as most consumers are primarily concerned about their out-of-pocket expenses.
Many ACA enrollees qualify for financial assistance, thus not having to pay full price. Even if the additional subsidies expire at the year-end, most enrollees can still lower their monthly premiums through these subsidies.
The enhanced premiums make insurance more affordable. For individuals below the poverty line (earning between $15,000 and $20,000 annually), they are exempt from paying 2% to 3% of their income and may qualify for a “zero premium” plan instead.
For individuals earning $28,000 annually, the current benchmark plan costs about $27 per month; without additional tax credits, premiums in 2026 could soar to over $130 per month.
On Tuesday (October 28th), the federal government shutdown entered its 28th day, as the Senate failed to pass a temporary funding bill, keeping the government shut down. Concerns about the future among federal employees who aren’t receiving salaries and low-income individuals relying on benefits are increasing.
Senate Republicans advocate for a simple extension of the current federal funding to sustain government operations until the spending bill passes legislation in 2026. Democrats demand that Republicans revoke the cuts of up to $1 trillion in healthcare aid (Medicaid) under the “Big and Beautiful Bill,” and extend the Affordable Care Act premium subsidies expiring at the end of this year before agreeing to reopen the government.
(Credit: Information sourced from The Hill)