Falling off the cliff: Loss of insurance subsidies hits Durango's middle class

In January, Durango resident Paul Kersch's monthly health insurance bill jumped from $265 to more than $2,000.

He's not alone.

Millions of Americans who buy coverage on the individual insurance market – meaning they don't get insurance through an employer or government program – saw costs rise in 2026 after Congress allowed pandemic-era Affordable Care Act subsidy enhancements to expire. Premiums skyrocketed for many middle-income households that had briefly qualified for financial assistance.

In Colorado, about 225,000 people received the enhanced subsidies, according to the Division of Insurance.

Among them is Colin Shadell, a Durango-based carpenter, husband and father of two young daughters. His family's monthly premium rose by about $400 at the same time they lost their federal subsidies, sending their costs from roughly $500 to $1,800 in a single month.

"That was a huge blow," he said.

Do you really want that pay raise?

Federal premium tax credits – government subsidies that help offset monthly insurance costs – were introduced with the Affordable Care Act in 2014. They were temporarily expanded in 2021 during the COVID-19 pandemic and extended through 2025, eliminating the so-called "subsidy cliff" that had previously cut off assistance for households earning just over 400% of the federal poverty level.

That change allowed some middle-income families to qualify for partial aid for the first time.

Now, Colorado consumers buying their own insurance once again face "the cliff." Premium tax credits are now available only to people with incomes up to 400% of the federal poverty level – about $62,600 for an individual and $95,000 for a household of four, said Merida Short, health insurance broker and owner of J-Short Insurance in Durango.

Families just $1 over that line lose all federal premium subsidies.

There's this cliff, and if you go $1 over the cliff, no more tax credits," she said. "It's just another example of the squeeze on the middle class."

The cliff is so steep that some clients are forced to think twice about promotions, Short said. She now explicitly asks people who are near the threshold to run the numbers before accepting a raise.

"If you're that close to the cliff and you get offered a raise, it is worth calculating how much that raise will cost you," she said. "Is the raise more than the subsidy you qualify for? Because if it's not, you're going to shoot yourself in the foot."

In her view, the result is a system that can discourage earning more and push some middle-class Coloradans to go uninsured altogether.

In January, Short said the most recent open-enrollment period was unusually difficult, with many clients losing assistance.

"I've been doing this a long time, and this is one of the hardest open enrollments so far," she said.

Shadell, in his late 40s, said he went without insurance for nearly half his adult life because he couldn't afford it. The ACA made coverage attainable for his family – until the enhanced subsidies expired.

He describes his household as "solidly middle class," earning just over 400% of the federal poverty level, roughly $95,000 for a family of four.

"We're in that no man's land, where we make too much to qualify for any help, but we don't make enough to really afford everything that we need as a family," he said. "Those subsidies were huge."

Both he and his wife work – she is a teacher – and they pay for two day cares. When their premiums jumped, they ran the numbers to see whether one parent staying home would save money. It wouldn't.

"I chose day care instead of health care," Shadell said. "We did come up with a different solution, but it's still an unaffordable solution. We're just by the skin of our teeth every month."

The family ultimately switched to the school district's health plan administered by UMR. His wife and daughters are covered for about $600 a month, while another $600 covering Shadell is paid by relatives. Altogether, the policy costs about $1,200 monthly, replacing their former marketplace plan through Anthem.

They've cut extras, buy the cheapest groceries and rarely spend money on themselves.

"We're getting hit from all sides, as a lot of families are in America," Shadell said. "While President Bone Spurs is building a ballroom, we can't afford health insurance."

Is there an alternative to traditional health insurance?

Some residents, have responded by leaving the traditional insurance marketplace altogether.

After paying the quadruple amount in January, Paul Kersch and his wife, Catherine McCarthy, turned to CrowdHealth, a medical cost-sharing program.

The program is not insurance. Instead, it operates as a membership-based community where participants contribute monthly and help cover one another's major medical bills. It's a model similar to GoFundMe, but structured, ongoing and limited to health expenses.

"It just seemed to make a whole lot of sense for us, because we're healthy," Kersch said.

Members must meet certain eligibility standards, including basic health criteria. They pay a monthly fee – Kersch and his wife pay about $268 combined – and are responsible for the first $500 of medical costs per incident. For larger procedures, the organization negotiates prices with providers and then requests contributions from other members until the bill is covered.

The program also offers a $300 annual wellness credit for services such as physicals or screenings, though unused funds don't roll over, Kersch said. He added that the most he and his wife would pay in a month is about $680, far less than the more than $2,000 they were quoted for a traditional plan.

For Kersch, the switch reflects broader frustration with the health care system.

"I mean, the system is broken. The government can't fix it, so this is an option to say, 'To hell with you guys. I'm doing my own thing,'" he said.

For others, dissatisfaction runs even deeper, and they've chosen to go without insurance altogether, arguing that financial risk exists either way.

One Durango business owner who has been uninsured for several years said even when he previously had coverage, he struggled with delays and unexpected costs, including once paying out of pocket for a prescription while his insurer negotiated pricing.

It reinforces Shadell's point: The loss of subsidies didn't create his family's financial strain; more so, it exposed it.

Last year, for example, he said his daughter's tonsil surgery was initially estimated to cost his family $1,000. But their insurance provider ended up reneging on its promise to cover the procedure and he ended up paying $8,000 out-of-pocket unexpectedly.

"We're middle class. We make six figures between the two of us. It's that weird middle ground where you just can't get ahead," Shadell said. "It boggles my mind that we're making over $100,000 a year and we almost have to put our child care on a credit card."

As of early January, about 1.5 million people had dropped their insurance because of the expiration of enhanced subsidies. Many experts predict the final numbers will be more than triple that, but say it is too early to tell definitely.

Local providers say it's still too early to see system-wide effects. CommonSpirit Mercy Hospital CEO Josh Neff said patient patterns haven't shifted noticeably yet.

"This just happened Jan. 1, so it's still pretty early for us to understand whether we're truly seeing anything," he said.

Neff said estimates suggest roughly 75,000 to 100,000 covered individuals have dropped from insurance enrollment overall. However, he noted that many people, particularly those nearing Medicare eligibility, appear to be continuing to pay their premiums despite higher costs.

"So that, to me, tells me that the changes haven't necessarily hit the market yet," he said. "Is there potential for that? Probably so, but we haven't seen it here locally yet."

jbowman@durangoherald.com

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