As millions of Americans brace for dramatically higher health care costs come January 2026 after enhanced Affordable Care Act (ACA) subsidies expire, the White House is expected to propose a two-year extension to prevent a massive spike in premiums.
The Committee for a Responsible Federal Budget (CRFB), the nonpartisan budget watchdog that regularly crunches numbers on policy impacts on the $38 trillion national debt, included this as one estimate in a series of projections published in early November.
An extension could cost roughly $50 billion over the first two years, according to a CRFB statement issued to Fortune, although details continue to trickle in from various reports. It could be roughly cost-neutral over a decade if cost-sharing reductions (CSR) and other reforms being considered are made permanent. Costs could differ significantly depending on how the details play out. The Congressional Budget Office (CBO) has estimated that extending the enhanced subsidies in full would cost $350 billion over a decade.
The political pressure stems from the scheduled end of temporary, generous subsidies that were established by the American Rescue Plan Act and the Inflation Reduction Act. These enhanced subsidies are set to expire at the end of 2025, which will cause the system to revert to the original, less generous ACA subsidy structure.
Doubling of health insurance costs projected
The ACA, established in 2014, created exchanges for individuals without employer-based coverage and instituted income-based subsidies pegged to the cost of the second lowest-cost “silver” plan. Subsidies are generally paid on a sliding-scale basis for those making between 100% and 400% of Federal Poverty Level (FPL). This schedule caps premiums for the benchmark plan at 2% of income for those at 100% FPL, rising to 9.96% of income for those approaching 400% FPL.
The temporary enhanced subsidies were significantly more generous, covering the full benchmark premium cost for those between 100% and 150% of FPL, and limiting premiums to 8.5% of income for all beneficiaries at 400% of FPL or more, theoretically extending availability to very high-income enrollees.
If the enhanced subsidies don’t get extended, the average premium enrollees would pay is projected to more than double. For a family of four at 250% of the FPL, premiums would grow from $268 to $565 a month. Those above 400% of the FPL, they could pay $2,000 per month.
Ultimately, the choice facing lawmakers is primarily about who pays. Extending subsidies shifts the burden from enrollees to taxpayers and, if deficit-financed, future generations.
As CRFB President Maya MacGuineas advises, given the nation’s “unsustainable fiscal situation,” any extension should be accompanied by reforms and offsets.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
