Illinois consumers face high health insurance prices, with Obamacare subsidies still in limbo after shutdown

Selling a car. Moving homes. Cutting back on grocery spending.

They’re among the options Ross and Paula Fortini are considering if they have to pay for health insurance next year without subsidies from the federal government. The Libertyville couple’s health insurance through the Affordable Care Act exchange is set to more than triple — to more than $2,200 a month — if enhanced subsidies aren’t extended beyond the end of this year.

“I don’t think there’s anything that wouldn’t be on the chopping block,” Ross Fortini, 60, said of the couple’s expenses. “It’s not sustainable.”

The Fortinis are among scores of Illinoisans whose health insurance costs are set to skyrocket next year. Like the Fortinis, hundreds of thousands of Illinois residents will face higher costs if the federal government doesn’t extend enhanced tax credits that reduce the monthly costs of insurance bought through the Affordable Care Act exchange. The issue was at the heart of the government shutdown, and though the shutdown is over, the fate of the enhanced subsidies remains in limbo.

Meanwhile, many other Illinoisans are also facing higher prices for the insurance they get through employers. Across the country, the cost of health benefits per employee is expected to rise 6.5% on average next year, the highest increase since 2010, according to responses from more than 1,700 employers surveyed by consulting firm Mercer.

For exchange plans, the rising costs are due largely to assumptions that the enhanced subsidies won’t be extended. Other factors, however, are also to blame for the increasing costs of both exchange plans and employer-based insurance, including increases in the use of health care, higher costs for health care services and medications, as well as inflation and tariffs.

“Some people feel like this is a real inflection point where prices are rising a ton and all the markets are stressed,” said Katherine Hempstead, a senior policy officer at the Robert Wood Johnson Foundation. “You probably can’t find anyone who feels like, ‘Hey, our health care system is working really well.’”

Higher costs for exchange plans

In Illinois, people with Affordable Care Act exchange plans can expect to pay 78% more, on average, next year across the state if the enhanced subsidies aren’t extended, according to the Illinois Department of Insurance. That increase would be due to less generous subsidies as well as increases in the costs of plans.

In Illinois, about 550,000 people are enrolled in exchange plans, and 91% of them get the enhanced premium tax credits.

“Everybody is going to be hit by this,” said Ann Gillespie, director of the state Insurance Department, during an October news conference.

Insurance industry group AHIP blamed drugmakers and hospitals for the higher prices, and said in a statement that health insurers are “doing everything in their power to shield Americans from the full impact of rising costs.” The group has been urging Congress to extend the enhanced subsidies.

Subsidies have long been part of Affordable Care Act exchange plans, helping to offset the monthly costs of coverage. In 2021, amid the COVID-19 pandemic, a bill was signed into law to make the subsidies more generous and to expand them to more people. The Inflation Reduction Act then extended the more generous subsidies through 2025.

During most of the recent government shutdown, Democrats refused to pass a funding bill to reopen the government unless Republicans agreed to extend the enhanced subsidies past this year. Last week, however, a group of Democrats agreed to vote to reopen the government without extending the enhanced subsidies.

A Senate vote on extending the subsidies is expected in December, but it’s unclear how that vote will go, with many Republicans still adamantly against extending the subsidies. Republican House Speaker Mike Johnson has called the enhanced credits “a boondoggle” that is subsidizing “bad policy,” and President Donald Trump has proposed no longer funding the subsidies and instead sending that money directly to Americans.

If the enhanced credits aren’t extended, many of the hardest-hit people will likely be those at the lower and higher ends of the income spectrum, Hempstead said. Many people will still get subsidies, but they won’t be as generous.

Individuals with lower incomes, for example, may go from paying nothing each month to more than $60 a month for a mid-level plan, according to an online calculator from KFF, a nonprofit organization focused on health policy.

“To a low-income person, that is a lot,” Hempstead said. “We anticipate a lot of those people will drop coverage because they feel like they can’t shoulder that expenditure.”

People at the higher end of the income spectrum will face some of the most dramatic increases. People who make more than 400% of the federal poverty level would no longer be eligible for any subsidy, if the enhanced tax credits aren’t extended.

Four-hundred percent of the federal poverty level may sound like a big number, but it’s far from wealthy. For a single person, 400% of the federal poverty level is an annual income of $62,600, and for a two-person household, it’s $84,600 this year.

That’s part of the reason the Fortinis are bracing themselves for a giant increase in the cost of their exchange plan health coverage next year. They’re above the 400% poverty level, so they would no longer get any subsidy at all, if the enhanced subsidies aren’t extended.

The couple knows that they’re relatively lucky. They decided to retire early a few years ago, in large part to help care for their elderly parents. They planned carefully for their retirement, and they understood that the costs of their health insurance coverage would likely rise each year.

But they didn’t account for this much of a jump. If they have to pay $2,200 a month for exchange coverage, their money won’t last as long as they need it to, Ross Fortini said.

“Five years of these increased premiums is enough to make our entire retirement plan fall apart,” said Ross Fortini, referring to the five years he has left until he qualifies for Medicare.

In addition to thinking about where to cut their spending, they’re also exploring other options for health care. One idea they’re considering is getting very low level health insurance coverage and then paying for a concierge doctor. With concierge doctors, people typically pay a monthly or annual fee for access to a doctor.

“If this is impacting us, who have planned as carefully as we have and have options, it scares me and worries me so much for people who don’t,” Paula Fortini said.

Natalie Roth, of Avondale, feels like she has few options for health coverage next year if the enhanced subsidies aren’t extended. She’s had an exchange plan for a couple of years — but the price of that plan is set to increase by about $150 a month.

She already has the lowest level plan offered on the exchange — a bronze level plan. She thinks she could potentially avoid additional costs by signing up for an HMO plan rather than a PPO, but she said she’d no longer be able to see her primary care doctor. She’d have to find a new doctor, and she worries about accessing other services as well.

But if she doesn’t move to an HMO, she’ll have to figure out how to cut expenses from her already lean budget.

“I don’t plan on being without insurance because if something happens that would just blow up my finances,” said Roth, 35, who is self-employed. “I want to still be responsible, and I want to take care of myself, but financially that is going to be a strain.”

‘Grave decisions’

Health insurance broker Ryan Kennelly said many of his clients are feeling sticker shock.

People who may be paying only a few dollars to $60 a month for coverage now are looking at costs of $100 or $200 a month — increases that aren’t in their budgets, he said.

He said many of his clients haven’t decided what to do.

“People who are going to the doctor a few times a year and not needing any other major services are trying to wait to see if their friends or family or someone comes up with a better option,” said Kennelly, principal and senior benefits consultant at Independent Health Agents, a Chicago-based brokerage. “As brokers we have some (options), but there’s not going to be a silver bullet.”

Chicago broker Jordan Wishner said he anticipates many people with exchange plans will drop their coverage. Many of Wishner’s clients will no longer be eligible for subsidies at all if the enhanced credits aren’t extended. While the Affordable Care Act has helped many people get insurance who otherwise might not have been able to pay for it, he said it’s been tough for middle- and higher-income people who want quality, affordable coverage.

“They have to make some grave decisions, and really the only ones I personally see that are going to pull the trigger and pay that premium are the ones that need care,” said Wishner, who is president of the Health Insurance Shoppe.

The Congressional Budget Office has estimated that an additional 4.2 million people will likely become uninsured over the next decade if the enhanced tax credits are allowed to expire.

That’s part of the reason costs would rise for people who continue to buy plans on the exchange — because the people who decide to forgo insurance would likely be healthier people whose participation in the exchange helps to offset costs for insurance companies.

Robert Kaestner, a health economist at the University of Chicago Harris School of Public Policy, thinks far fewer people would end up uninsured than 4.2 million. He thinks it would be closer to 2 million as people who don’t want to pay for exchange plans find other ways to get coverage.

Ending the enhanced subsidies would save the federal government about $350 billion over 10 years, according to the CBO.

“The debate has been ratcheted up, as usual, because of our polarization and our partisanship,” Kaestner said. “But people need to make up their own mind whether the savings for the government offsets the loss of insurance for people, and how they value that.”

Employer-based health insurance

People with exchange plans, however, aren’t the only ones bracing for higher health insurance costs next year. Illinois residents who get health insurance through their jobs are going through open enrollment in their workplaces — and often facing higher prices.

Katie Matusky, of Orland Park, said her employer-based insurance is increasing by about 10% for next year. She’s frustrated that her company isn’t absorbing more of the increase. But she feels lucky that her costs won’t be higher, given what other people, who work elsewhere or who get insurance on the exchange, are facing.

“Every company is handling it differently,” Matusky said. “It’s just this pervasive unfairness. It could impact you completely differently than your next-door neighbor.”

Over the last three years, health insurance premiums for family coverage through employers has risen by 6% or more a year on average, according to KFF. Over the last five years, the average cost of premiums for family, employer-based coverage has increased by 26% — lower than the percentage that wages have grown but higher than inflation over that time, according to KFF.

Kennelly, the Chicago-based broker, said he’s seeing increases of more than 20% for many plans for small businesses, with some increases of more than 40%. And, in many cases, employers are passing those increases along to their workers — a change from other recent years.

“In the past when the job market was tighter, (employers) were eating the costs or increasing their contributions,” Kennelly said.

Matusky has been wondering whether rates for employer-based insurance are increasing this year partly because of all the uncertainty surrounding exchange plans.

In recent months, she’s reached out to more than a dozen advocacy organizations, state agencies and lawmakers in hopes of finding out if employer-based insurance costs could be brought down if the federal government ends up extending enhanced subsidies. She’s had little success getting information.

“For me, it’s about looking out for the people who don’t have good-paying jobs, who don’t have great insurance, because we’re all in this together,” Matusky said. “We benefit from having a society where people are not sick.”

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