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Permanently extending the Affordable Care Act's marketplace enhanced premium tax credits in this month's funding legislation would increase the federal deficit by an estimated $350 billion by 2035, but also increase the number of Americans with health insurance by about 3.8 million, according to a new analysis from the Congressional Budget Office.
The expanded premium tax credit – introduced in the American Rescue Plan Act of 2021 and later extended through calendar year 2025 in the 2022 reconciliation act – is an advanceable and refundable credit that reduces enrollees out-of-pocket costs for the premiums they pay for health insurance obtained through the marketplaces.
In addition to increasing both the deficit and the number of insured Americans, the CBO estimates that gross premiums for benchmark plans in the marketplaces would be 7.6% lower, on average, in each year from 2026 to 2035, compared with baseline projections.
Also, if the permanent expansion were enacted, premiums for the 2026 plan year would be 2.4% lower than baseline projections, the CBO estimated.
The agency said that enacting these changes later than Sept. 30 would result in lower costs to the federal government but also smaller increases in 2026 enrollment.
Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement that the average New Yorker could see their monthly costs spike by nearly 40%, and many more will lose their healthcare entirely if the ACA tax credits expire.
Senate Democrats have tried to pass legislation to extend the tax credits three times, said Schumer, but have been blocked by Republicans on each attempt.
"We don’t have time to waste," said Schumer. "We are already seeing layoffs at local hospitals citing Trump's cuts, and this healthcare tax credit cliff will spike health premiums and send many families over the edge."
WHAT'S THE IMPACT
Separately, the Urban Institute released its own projections, estimating that 7.3 million fewer people will receive subsidized Marketplace coverage in 2026 if the premium tax credits revert to their standard levels.
Eight states – Georgia, Louisiana, Mississippi, Oregon, South Carolina, Tennessee, Texas and West Virginia – would see their subsidized Marketplace enrollment fall by more than half, that analysis projected.
Without the enhanced premium tax credits, the Urban Institute estimated that 4.8 million more people will be uninsured in 2026, with non-Hispanic Black people, non-Hispanic white people, and young adults seeing the largest increases in uninsurance.
Also in 2026, the report predicts that average net premiums – the portion paid by individuals or households after premium tax credits – will be more than four times as large ($919 vs. $169) for people with subsidized Marketplace coverage and incomes below 250% of the federal poverty level (FPL) under the standard tax credits.
Net premiums will more than double, from $1,171 to $2,455, for people with incomes between 250% and 400% of the FPL, the report said. And they would nearly double, from $4,436 to $8,471, for people with incomes above 400% of the FPL who receive subsidized Marketplace coverage under enhanced premium tax credits, but who would pay the full premium were they to expire.
THE LARGER TREND
AHIP reacted to the potential, impending end of enhanced premium tax credits with its own analysis, finding that 4.8 million adults aged 50-64 – or 92% of those enrolled in Marketplace coverage – will face higher premiums if the tax credits expire.
The burden of letting the tax credits expire will fall hardest on those least able to absorb the costs, AHIP said. Half of affected consumers aged 50-64, about 2.4 million people, have household incomes below 150% of the FPL. These Americans, according to the report, often lack access to affordable employer-sponsored insurance, and don't qualify for Medicaid and Medicare. At that income level in 2025, an individual would be earning less than $23,475 per year, or a couple below $30,660.
“Congress must act as quickly as possible to prevent these steep healthcare cost increases from making healthcare coverage unaffordable for millions of middle-income Americans,” wrote AHIP.