Health Insurance Subsidies Hang In The Balance Amid Federal Shutdown

As the first government shutdown since 2019 takes hold, one of the biggest unresolved questions centers on health care: the future of enhanced subsidies for Affordable Care Act (ACA) marketplace plans. More than 22 million Americans depend on these expanded tax credits, but without congressional action, they are set to expire at the end of 2025.

Republican leaders say they will not consider extending the subsidies until at least mid-November. "We are not going to be held hostage for over $1 trillion in new spending on a continuing resolution," Senate Majority Leader John Thune (R-S.D.) said earlier this week, underscoring the party's resistance to linking health care subsidies with short-term funding legislation.

The enhanced subsidies were introduced during the COVID-19 pandemic as part of relief measures aimed at keeping coverage affordable. They dramatically lowered monthly premiums for most enrollees in ACA plans, with savings averaging $705 annually per customer, according to KFF, a nonpartisan health policy organization. Nearly 90 percent of people in ACA plans currently receive some level of federal assistance to reduce premiums.

Without the extension, premiums for subsidized enrollees could more than double in 2026. Experts warn that the timing of congressional action is critical. Open enrollment for ACA plans begins Nov. 1, and if no extension is passed before then, millions of customers will face higher sticker prices when choosing their coverage for next year.

"Once people start seeing premiums that they cannot afford, that are not within reach, a lot of those people will turn away," Audrey Morse Gasteier, executive director of the Massachusetts Health Connector, told The Hill. "They will decide to either drop coverage if they already have it, or people who are intending to sign up will not do so."

According to the Congressional Budget Office (CBO), if the extra subsidies are discontinued, about 4 million people would leave the ACA marketplaces in the first year alone. Those who drop coverage are likely to be younger and healthier, leaving behind a pool of sicker and more expensive patients. That imbalance could trigger even higher premiums in the future, creating a spiral that makes marketplace coverage increasingly difficult to sustain.

The uncertainty also complicates enrollment logistics. If subsidies are reinstated midway through enrollment, the administration could try to extend the sign-up period or create a special enrollment window. However, experts such as Cynthia Cox, vice president at KFF, caution that it would still be difficult to bring consumers back once they have already dropped coverage due to unaffordable costs.

The Trump administration's own policy decisions add another wrinkle. Earlier this year, officials proposed ending the 2025 open enrollment period a month earlier than usual, on Dec. 15. That plan was eventually delayed until 2026, but it reflects a broader skepticism toward the ACA that has shaped the administration's approach.

Democrats have pressed for months to make the subsidies permanent, but so far those efforts have stalled. The Congressional Budget Office estimates a permanent extension would cost $358 billion over the next decade. Republicans have argued that the price tag is too high, and that the issue should not be tied to short-term spending bills.

Leighton Ku, a health policy professor at George Washington University, told The Hill that lawmakers had ample opportunity to address the issue earlier. "They could have discussed this at any point in the past year," Ku said. "Republicans took the effort to extend the 2017 tax cuts ... they could have put the same sort of thought and attention to extending the Obamacare subsidies. They chose not to."

For now, the subsidies remain in limbo. If no resolution is reached before open enrollment begins, millions of Americans could face steep premium increases, with long-term consequences for the stability of the ACA marketplaces.

Originally published on IBTimes