Loss of Affordable Care Act tax credits would affect East Texans, but critics push other reforms

The loss of federal health insurance tax credits could have an outsized impact on East Texas, where enrollment in the Affordable Care Act is high. But there are other alternatives to reduce healthcare costs – and do so without enriching insurance companies, the region’s congressman and a doctor say.

The ongoing government shutdown centers around healthcare – specifically the debate over whether to extend tax credits that reduce people’s insurance premiums through the Affordable Care Act, informally known as Obamacare. About 24 million Americans use those tax credits.

If the credits aren’t renewed, the average annual premium payment for ACA enrollees could nearly double, and East Texans could have some of the highest rate increases in the state, the Kaiser Family Foundation reported.

Most Republicans in Congress don’t want to extend the tax credits because they say the credits actually cause health insurance costs to rise by subsidizing the insurance industry. Democrats, meanwhile, insist on extending the credits because Americans already are facing higher health insurance premiums.

How the tax credits work

Premium tax credits are part of the Affordable Care Act, which was signed into law in 2010. The tax credits make up for the difference between what an insured person has to pay based on income and what the cost of his healthcare plan is. The tax credit amount is paid to the insurance companies that people use for their ACA plan, thus reducing or eliminating the amount the insured person has to pay.

The tax credits were expanded in 2021 as part of the American Rescue Plan Act, allowing more people to receive those credits. They were extended again in 2022.

The credits never were intended to become permanent, Republicans have said, though Democrats now want to make them permanent. That’s the issue at hand in the shutdown. Thus far, Republicans and Democrats have not reached a compromise, and Democrats have not accepted Republican proposals to reopen the government without extending the tax credits.

In East Texas, the enhanced tax credits have made a noticeable difference in the number of people who have health insurance. Chad Jones, CEO of the Wellness Pointe clinics in East Texas, said the number of people without public or private health insurance who receive care at the clinics fell from 47% to 37% after the enhanced tax credits were enacted.

“The ACA and enhanced premium tax credits have had an impact on decreasing the number of uninsured individuals in the area," Jones said.

Why do Democrats, Republicans disagree?

For the most part, Democrats want to extend the tax credits because they say they will keep people’s health insurance costs from rising dramatically. Some Republicans, such as U.S. Rep. Marjorie Taylor Greene of Georgia, agree for the same reason.

Most Republicans, however, say the tax credits might lower costs for insured people in the short-term, but they ultimately enrich insurance companies without driving down the actual cost of healthcare.

The latter is what Dr. Clifford Porter, a physician who discusses healthcare policy issues for the conservative Texas Public Policy Foundation, told the News-Journal.

“The subsidies were basically subsidizing the insurance companies who are managing these ACA plans, and they were making bank on it," Porter said. Those subsidies incentivize health insurance companies to drive up the cost of their plans, resulting in larger subsidies.

How many East Texans are affected?

Tens of thousands of East Texans use the ACA, and East Texas’ second congressional district – represented by U.S. Rep. Nathaniel Moran, R-Tyler – could have the second-highest premium rate increase of any district in the state, the Texas Tribune recently reported.

The Episcopal Health Foundation compiled ACA enrollment data from 2024 and produced a map showing how many people are enrolled in the ACA by county in Texas:. Here’s the data for East Texas counties:

Gregg County: 18,276 enrollees, 15% of county population;

Smith County: 25,619 enrollees, 11% of county population;

Rusk County: 5,655 enrollees, 11% of county population;

Panola County: 3,232 enrollees, 14% of county population;

Harrison County: 8,739 enrollees, 13% of county population;

Marion County: 1,195 enrollees, 12% of county population; and

Upshur County: 7,686 enrollees, 18% of county population.

Texas has the second-largest ACA enrollment of all states, according to a Texas A&M University analysis. Under expanded tax credits, that figure ballooned from roughly 1.3 million enrollees in 2021 to almost 4 million in 2025.

If the credits aren’t renewed, Texas A&M researchers say the state’s ACA enrollment could drop by as much as 1.45 million people, some of whom will find insurance through their place of work or with a family member. But as many as 800,000 are likely to lose all health insurance, researchers Benjamin Ukert and Laura Dague said.

Jones said Wellness Pointe clinic leaders are worried that the expiration of the credits could lead to a higher number of people being uninsured. Roughly 100,000 Wellness Pointe patients are likely eligible for premium tax credits.

“One estimate we have seen is that almost 50% of privately insured health center patients will either lose coverage or need to find other coverage in 2026 without being able to utilize the enhanced premium tax credits," Jones said in an email. “Losing access to affordable plans could lead to delays in care, increased uncompensated care, and strain local health safety net resources."

Moran’s view

Moran and fellow congressional Republicans oppose renewing the tax credits. In a statement, he said the tax credits were created to be temporary pandemic relief measures that Democrats set to expire in 2025, and allowing them to expire is fiscally responsible.

“Extending them indefinitely would cost taxpayers nearly $400 billion over the next decade and continue to enrich big insurance companies through waste, fraud, and so-called ‘phantom enrollments,’ where millions of plans were never used or were created fraudulently," Moran said.

He also said: “East Texans deserve health care that is accessible, innovative, and accountable. While Democrats forced the Schumer Shutdown to advance their partisan wish list, Republicans are focused on keeping care local, strengthening rural hospitals, and ensuring taxpayer dollars are spent where they matter most — on real patients, not bureaucracy."

Alternatives

Conservatives say extending tax credits aren’t the only ways to drive down healthcare costs, and other methods could do so without enriching major insurance providers. (The left-leaning Every Texan policy organization was asked for comment but did not respond.)

Porter, with the conservative public policy foundation, recommends expanding healthcare savings accounts, which are essentially 401Ks for medical care. Businesses can fund these accounts to pay for a person’s direct primary care. Direct primary care is an emerging healthcare model in which people pay a membership fee to visit a clinic, where 90% of a person’s healthcare needs can be met for a lower cost, Porter said. People could use the money in their HSAs to pay for a direct primary care membership.

“You switch someone over to a high-deductible [health insurance] plan with an HSA, you can actually get a whole lot better medical care for a whole lot less money," Porter said. (As a sidenote, Porter said the direct primary care model could help rural areas have better healthcare access. Clinics are able to survive on the direct primary care model; meanwhile, insurance providers continue to reduce what they pay clinics for services.)

Porter also recommends expanding Individual Coverage Health Reimbursement Arrangements. These are employer-sponsored plans that give employees a stipend to spend on health plans they choose. The business doesn’t have to manage the plan, Porter said.

“If they (Congress) expand it and allow it with other types of health plans like major medical or catastrophic-only plans, you can have much better health care for a fraction of the cost," Porter said.

People who use direct primary care have 90% fewer emergency room visits because direct primary care clinics can operate as urgent care clinics as well, Porter said.

Direct primary care clinics also can charge considerably less for their services. Monthly memberships cost between $50 and $150, according to the Christian Healthcare Centers. Porter said direct primary care clinics also can charge considerably less for services such as testosterone checks, and X-rays and MRIs cost less when paid in cash.

“A lot of people who have insurance, and they use the high-deductible plan for basically catastrophic (events), but are also using direct primary care for their families, find they save money overall by using an HSA," Porter said.

Moran said he supported the Working Families Tax Cut Act, which he said made various “common sense" reforms to Medicaid and the ACA.

“Rather than subsidizing health insurance companies, we should be supporting patients and policies that give individuals and small businesses the power to choose coverage that works best for them, increases competition in the market to drive down costs, and transparency so people have price certainty," Moran said.