ACA Premiums Soar: A Looming Crisis

By Darius Spearman (africanelements)

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Understanding ACA Premiums

The Affordable Care Act, often called Obamacare, was designed to make health insurance more accessible and affordable for millions of Americans. However, recent developments indicate a significant shift, with many enrollees facing substantial increases in their monthly payments. These payments, known as premiums, are the recurring costs individuals pay to maintain their health insurance coverage. Insurers are now proposing a median premium increase of 15% for 2026, marking the largest hike since 2018 (KFF). This means that for many, the cost of staying insured under the ACA is about to climb dramatically.

More than a quarter of insurers are proposing increases of 20% or more, signaling a widespread trend of rising costs (KFF Health News). These proposed increases are not arbitrary; they reflect a complex interplay of factors, including rising medical and labor costs. However, a significant driver behind these proposed hikes is the uncertainty surrounding policy changes, particularly those advanced by the current administration and the Republican-controlled Congress. This environment of policy flux is forcing insurers to adjust their rates to account for potential financial risks, ultimately impacting the pockets of everyday Americans.

The Impact of Expiring Subsidies

A significant factor contributing to the projected cost increases is the impending expiration of enhanced premium tax credits. These tax credits are financial assistance provided to eligible individuals and families, designed to help them afford their health insurance premiums under the ACA. They effectively reduce the amount consumers pay out-of-pocket for their monthly premiums. These enhanced subsidies, initially implemented during the COVID-19 pandemic to make coverage more affordable and accessible, are set to expire at the end of 2025 (KFF Health News).

The expiration of these subsidies is expected to have a profound impact on consumers. On average, out-of-pocket premium payments are projected to increase by more than 75% (KFF). For a family of three earning $110,000 annually and enrolled in a silver ACA plan, their monthly cost could jump from $779 this year to $1,446 in 2026 if the enhanced subsidies expire. If insurers also implement the proposed 15% premium increase, that monthly bill could climb even higher, reaching $1,662 (NBC News). This dramatic increase in cost could force many healthier enrollees to drop their coverage, which in turn could destabilize the insurance market by leaving a higher proportion of older and sicker individuals in the risk pool (KFF).

Policy Shifts and Their Consequences

The current administration and Republican-controlled Congress are advancing policy changes that are directly contributing to insurers’ requests for higher premiums. Insurers are adding extra percentage point increases to their 2026 rate proposals specifically to account for the effects of these policy shifts (KFF Health News). A key factor in these filings is the uncertainty surrounding whether Congress will allow the more generous, COVID-era ACA tax subsidies to expire at the end of the year (KFF Health News). The domestic policy bill signed into law by President Donald Trump earlier this month did not extend these subsidies further (NBC News).

Beyond the subsidies, other proposed changes could significantly increase administrative burdens for ACA enrollees. One proposal aims to end automatic reenrollment for most ACA policyholders each year, starting in 2028 (KFF Health News). This means that instead of their plans automatically renewing, every new or returning policyholder would be required to provide detailed information annually on income, household size, immigration status, and other factors (KFF Health News). Failure to provide this documentation could result in the loss of premium tax credits, making coverage unaffordable for many (KFF Health News). Policy experts fear that many consumers will become uninsured because they do not understand these new requirements or find them too burdensome (NPR).

The Burden on Vulnerable Communities

The premium increases and policy changes are expected to disproportionately affect vulnerable populations, especially those who rely heavily on subsidies to afford coverage. For African American communities and other marginalized groups, who often face systemic barriers to healthcare access and economic stability, these changes could be particularly devastating. The proposed changes to provisional eligibility for tax credits, which would require upfront documentation, could create significant hardship for individuals who experience life changes and need immediate access to affordable coverage (KFF Health News).

For example, new parents might struggle to confirm their baby’s eligibility for premium subsidies until they receive a Social Security number, which can take weeks after birth (KFF Health News). This delay could leave families without crucial financial assistance when they need it most. If too many young and healthy people find these new requirements burdensome and decide to drop their coverage, it could leave a higher proportion of older and sicker individuals in the ACA risk pool. This shift could further drive up premiums for everyone, creating a vicious cycle of increasing costs and decreasing affordability (NPR). The very intent of the Affordable Care Act, to provide affordable healthcare, is being undermined by these policy decisions.

The Role of Tariffs and Market Stability

In addition to the expiration of subsidies and administrative changes, tariffs on medical goods are also contributing to the rising cost of healthcare. Some insurers estimate that tariffs on certain drugs, medical equipment, and supplies could increase premiums by an average of 3% more than they otherwise would have (KFF). These tariffs, essentially taxes on imported goods, drive up the cost of essential medical components, and these increased costs are then passed on to consumers through higher insurance premiums. This adds another layer of financial burden to individuals and families already struggling with rising healthcare expenses.

The potential for healthier enrollees to drop coverage due to higher costs also poses a significant threat to the stability of the insurance market. While the exact number of individuals who might drop coverage is not quantified, policy experts are concerned that burdensome new requirements and higher costs could lead to a substantial number of people becoming uninsured (NPR). This could negatively impact the insurance risk pool by leaving a higher proportion of older and sicker individuals, potentially leading to further premium increases and market instability. The overall effect is a less robust and less inclusive healthcare system, which moves away from the ACA’s original goals of broad access and affordability.

Political Ramifications and the Future of ACA

The potential premium hikes and policy changes are expected to have significant political implications. As the nation heads into key midterm elections, spiking ACA premiums are likely to invite considerable political pushback (KFF Health News). The expiration of higher subsidies would be among the first financial pains felt by healthcare consumers after policy priorities put forward by President Donald Trump and the Republican Party (KFF Health News). This could lead to increased scrutiny of healthcare policies and potentially influence voter behavior, as citizens grapple with the tangible impact on their household budgets.

While these moves are not an outright repeal of the ACA, they are seen by many as an attempt to dismantle its core principles. Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy, noted that while it is not a repeal, it is “certainly an attempt to move in that direction” (NBC News). The rising costs will make it much more difficult for people to purchase or renew their coverage, effectively making the “Affordable Care Act” less affordable. This shift could lead to worse healthcare outcomes and place undue financial strain on millions of Americans, especially those who can least afford it. The very foundation of the ACA, designed to expand access to affordable healthcare, appears to be under significant threat.

ABOUT THE AUTHOR

Darius Spearman has been a professor of Black Studies at San Diego City College since 2007. He is the author of several books, including Between The Color Lines: A History of African Americans on the California Frontier Through 1890. You can visit Darius online at africanelements.org.