‘More than our mortgage’: Texans weigh insurance options as premiums rise, federal subsidies expire

At the Prosper Health Coverage Center off Interstate 35 in south Austin, volunteers and specialists are busy manning the phones and meeting in person with Texans throughout the month of November. Clients who walk through the nondescript office's doors seek free assistance enrolling in health insurance through the Affordable Care Act marketplace.

Around 4 million Texans are currently enrolled in marketplace plans, often because they are self-employed or work for a small employer that does not offer insurance. This year, many of these customers — like Britta Lee, who asked to be referred to by her first and middle name due to privacy concerns — are being confronted with higher premiums.

"We had to scramble to find a plan that even gives me close to the amount of coverage I had before, which means half of my doctors I have now I won't be able to go to next year," Lee said after her Prosper Health appointment.

After Lee learned her 2025 plan wouldn't be affordable for next year, she searched the marketplace for a plan she could afford. She was able to find one, partly due to premium assistance she receives as a resident of affordable housing operated by Foundation Communities, the organization that oversees Prosper Health Coverage.

But her monthly payment will still be higher. She said that will mean trimming an already tight household budget — from eating less meat to forgoing the occasional night at the movies.

"Anything fun that we want to do, it has to be free, and we cannot travel at all," she said.

Expiring federal subsidies

Lee isn't alone. In states like Texas that use healthcare.gov, insurers are charging around 30% more next year, according to an analysis from the nonpartisan health policy organization KFF.

Most Americans have their ACA insurance costs offset to some extent by federal subsidies called premium tax credits, depending on their household income. Back in 2021, the Biden administration enhanced those tax credits, giving poorer households more support and giving some middle-income earners a subsidy for the first time.

But that pandemic-era enhancement is set to expire in January. That means higher costs — more than double for many folks, according to KFF.

Erika Leos, the director of Prosper Programs at Foundation Communities, has fielded a lot of questions from clients about these changes.

"People were worried and just had questions, [like] 'How does this affect my plan and my situation?'" she said.

The answer is that it depends on the client. Factors like age and household income affect how much each person pays. Many of them will still get a tax credit of some amount, with the exception of households that earn more than 400% of the federal poverty level. Still, Leos said, clients are seeing increased costs across the board; she puts it at around $100 more per month for the average Central Texas client.

Higher premiums or higher deductibles?

Ashley Velasquez, a self-employed nonprofit consultant in Austin, has purchased marketplace insurance for her family of five since 2020. She would have to pay around $1,000 more a month to keep the same Blue Cross and Blue Shield insurance plan next year — a total of more than $1,700 per month.

"I don't see how we could do that," she said. "It is more than our mortgage."

When searching the marketplace for a less expensive plan, Velasquez found that some lower-cost plans wouldn't be accepted by her primary care provider or her kids' pediatrician. After recently experiencing a nine-month wait to establish care with a new OB-GYN, she said she is reluctant to give up seeing trusted providers.

There are other tradeoffs, too. One plan Velasquez is considering has a monthly premium under $100 per month, but it comes with an out-of-pocket maximum of $20,000 for the family.

"When you start looking at the total cost, it's really hard to compare apples to apples," she said.

That's why Velasquez is also considering a plan that would cost just shy of $1,000 per month. It's about $200 more than she's used to, but she would get similar benefits to what she currently has — and peace of mind should one of her three kids get sick or hurt.

"If somebody falls off the monkey bars and breaks an arm, we need to be able to take them to the emergency room and know that they're going to get care that's going to be covered by a health insurer," she said.

Ongoing federal uncertainty

There is still a chance Congress could vote to extend the enhanced premium credits in December. Getting that vote on the Senate docket was part of the deal Democrats made to end the federal government shutdown earlier this month. But many Republicans are still resistant, citing the estimated $350 billion the enhanced tax credits would add to the national deficit over the next decade.

Heading into enrollment season, Leos was concerned that all this uncertainty at the federal level would result in a lot of folks forgoing health insurance altogether. Researchers at Texas A&M have estimated hundreds of thousands of Texans might do so.

"That was one of the things we were kind of worried about, that people might choose either not to enroll at all or … decide before even checking for prices and plans," she said.

Leos said so far, most of her clients at Prosper Health are choosing a plan — even if their budget takes a hit. As of Monday, she said the organization had helped to enroll around 1,370. The staff, which is supplemented by more volunteers this year due to federal funding cuts, hopes to enroll at least 5,000.

Texans have until Jan. 15 to enroll but must enroll by Dec. 15 to have benefits kick in at the start of the year.