Household spending on health care costs to rise if ACA credits expire

Monthly out-of-pocket spending on healthcare premiums will skyrocket for millions of people if Congress allows the Affordable Care Act’s enhanced premium tax credits to expire in 2025, according to a new analysis prepared by researchers at the Urban Institute with support from the Robert Wood Johnson Foundation that includes results by state. Researchers say allowing the credits to expire will increase out-of-pocket healthcare spending across all states, income groups, ages, and races and ethnicities.

Congress approved enhanced premium tax credits in 2021 to help people maintain their healthcare coverage. The credits were renewed by federal lawmakers in 2022 but are set to expire at the end of 2025.

Key findings show:

• Out-of-pocket spending across all income groups will increase if the credits expire.

Premiums will rise for consumers in all 50 states but there will be variation from state to state. For example: For people with incomes below 250% of the federal poverty level (FPL) (approximately $37,000 in annual income), the average annual increase in premiums will range from $193 in New Mexico to $924 in Alaska.

For people who earn more than roughly $37,000 in annual income, premiums will increase from $119 per year in West Virginia to $1,434 in California.

People with incomes above 400% FPL (roughly $60,000 for an individual or $125,000 for a family of four) will lose all subsidies if the enhanced PTCs expire, resulting in premiums rising by more than $2,900 per person annually.

“The Marketplace has come to serve as a reliable and stable source of affordable health coverage for those who do not have access to employer-sponsored insurance and are not eligible for Medicaid,” said Jessica Banthin, senior fellow at the Urban Institute. “Our analysis finds that if enhanced premium tax credits expire, household spending on premiums would surge and Marketplace enrollment would shrink.”

“Research continues to show the profound health and economic fallout that will occur if Congress allows these tax credits to expire in 2025,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “At a time of persistent elevated prices and tight household budgets, allowing the credits to expire will further force families to make difficult choices between healthcare coverage, housing, food, and transportation.”\

Read the full analysis “Household Spending on Premiums Would Surge if Enhanced Premium Tax Credits Expire” here.