Congressional Budget Office: Permanent health tax credit extension would insure 3.8 million

WASHINGTON — The Congressional Budget Office estimated on Thursday that permanently extending premium health subsidies would increase the number of insured people 3.8 million by 2035 while also increasing the deficit by $349.8 billion over 10 years.

The analysis was requested by Democrats who are looking to avoid the year-end expiration of expanded subsidies for buying health insurance on government-run exchanges and persuade Republicans to negotiate on an extension.

They also requested estimates of the effect of rolling back other changes to the individual market under President Donald Trump: repealing a Trump administration final marketplace rule and repealing portions of the GOP reconciliation law.

Jointly, all three actions would increase the number of insured people by 7 million while increasing the federal deficit by $662 billion over 10 years, CBO said.

The analysis arrives as the House is expected to vote on its stopgap measure Friday. Democrats in both chambers have lamented that it won't include an extension of the premium subsidies, also described as tax credits, or other health priorities. Some have threatened to vote against it.

The health tax credits were originally created through the 2010 health law. Congress loosened income eligibility for the credits during the COVID-19 pandemic in 2021 and extended them in 2022. The premium subsidies are set to expire Dec. 31 without congressional action.

Democrats introduced a counter stopgap Thursday that includes language permanently extending the credits and rolling back health provisions of the reconciliation law. Lawmakers of both parties have floated ideas for or are working on extensions of various lengths, with some Republicans saying they should lapse.

"The cost of inaction outlined in this analysis is a stark contrast with Republican leaders' complete lack of urgency to stop the premium spikes and coverage loss facing millions of Americans," Senate Finance ranking member Ron Wyden, D-Ore., said in a statement.

House Budget Chairman Jodey C. Arrington, R-Texas, argued in an op-ed in the Washington Examiner Thursday that the credits "subsidize wealthy individuals on the backs of taxpayers, are a poor stewardship of taxpayer dollars, and made a broken health care system worse. They should not be extended, let alone made permanent. Congress should abide by the expiration date of this misguided COVID-19-era policy Democrats set and get to work on real solutions."

CBO estimates that gross premiums for marketplace "benchmark plans" would be lower by an average of 7.6 percent each year between 2026 to 2035 compared with its baseline projections if the subsidies are permanently extended.

But the time Congress takes before acting will have a profound effect, it said.

If Congress acts on Sept. 30, that would result in premiums that were 2.4 percent lower than the baseline for 2026, because insurers typically have already set their rates, so they won't be adjusted to reflect projected changes to risk pools.

If a permanent extension were enacted after the start of open enrollment on Nov. 1, CBO predicts premiums for 2026 won't be adjusted downward at all. Action after Sept. 30 would mitigate CBO's estimates on the cost to the federal government and enrollment numbers, it said.

For the other provisions, CBO estimated that rolling back a June marketplace final rule that tightens eligibility requirements and limits enrollment periods for registering for plans on the individual market would increase the number of insured individuals by 300,000 and increase the deficit by $40.3 billion over 10 years. That rule is currently being litigated, which CBO said affects how it calculates the rule's effects. Last month, a Maryland district judge delayed portions of the rule from taking effect.

Democrats sought a similar CBO estimate on the effects of letting the tax subsidies lapse while implementing the final marketplace rule earlier this year.

Repealing sections of the reconciliation law related to health care marketplaces would boost the number of insured by 2.9 million while increasing the deficit by $271.9 billion over 10 years.

The calculation looks at reversing policies under the July law, including limitations on coverage for some immigrants and the eligibility of individuals signing up for coverage during an income-based special enrollment period for the premium tax credits, as well as changes to caps on repayments of the premium tax credits and changes to eligibility verification.

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