Tax credits at center of budget impasse reduced health insurance costs

If enhanced tax credits at the center of a federal government shutdown expire at the end of the year, costs for health insurance offered through the Affordable Care Act will increase an average of 82%, according to Pennie, the online marketplace for health plans in Pennsylvania.

Many Pennsylvanians, Pennie says, will pay double, triple or quadruple their current costs with the loss of tax credits falling hardest on couples in their early 60s but not quite old enough for Medicare.

The government shut down on Wednesday when Democrats in the Senate declined to vote for a bill that continues funding at existing levels unless Republicans renew the tax credits. Democrats also want to undo cuts to Medicaid and food assistance contained in this summer's budget reconciliation package known as the Big Beautiful Bill.

The tax credits began in 2021 when many Americans were laid off because of the pandemic and needed help to purchase health insurance.

Since then, the number of Americans buying insurance through the marketplace climbed to 24 million from 11 million. In Pennsylvania, enrollees rose to nearly 500,000 from 337,722.

With the end of tax credits and cuts to Medicaid, another 10 million people could become uninsured by 2034, according to an analysis by KFF, a provider of health information formerly known as Kaiser Family Foundation.

KFF estimates between 290,000 and 490,000 Pennsylvanians could lose insurance by then, with Medicaid changes accounting for 340,000 people who leave the rolls and 38,000 leaving because of changes in tax credits through the Affordable Care Act.

"I don't know what people are going to do now. Affordable was not affordable. What is going to happen now is even worse," John Reviello of Reviello's Insurance Agency at the Laurel Mall near Hazleton said.

Reviello preferred the healthcare system before the Affordable Care Act started in 2010. Customers could buy insurance from private carriers like Geisinger and Blue Cross/Blue Shield any time of the year instead of during an eligibility period which starts Nov. 1 for next year.

Short-term policies were available, Reviello said, that Pennsylvanians in their early 60s could buy until they turned 65 and qualified for Medicare.

Bob Parker, an agent for HealthMarkets in Wilkes-Barre Twp., said he planned to look for a new line of work when several companies he represented went out of business. Then the Affordable Care Act took effect, and he changed his mind.

"It was pretty good then," said Parker, an agent for 43 years.

He said enhanced tax credits started because of COVID-19.

"Many were out of work. I thought it was a great idea," said Parker, who pointed out that COVID has become less disruptive and the lawmakers who started the subsidies gave the program an expiration date.

The subsidies allow some low-income earners to obtain healthcare coverage at no cost and limit the cost for high earners to 8.5% of income.

Without subsidies, premiums nationally will increase by 114% or an average of $1,016 next year, an analysis by KFF found.

Next year, prices also will increase for two other reasons: The Trump administration raised contribution levels for enrollees, and insurance companies plan to raise premiums 18%, KFF said.

A KFF calculator that computes the costs of health insurance with and without enhanced subsidies based on family size, age, income and Zip code provides the following examples. They list monthly premiums for families in Hazleton who are nonsmokers and buy a silver plan, which has moderate premiums and moderate costs for health care.

A couple ages 33 and 35 who earn $50,000 pay $144 with subsidies and $331 without them.

A couple the same age who have children 4 and 8 years old but earn $80,000 pay $263 with subsidies and $560 without them.

A single parent, 38, with a 7-year-old child and an income of $32,000 pays only $1 a month with subsidies, but would pay $113 without them.

Two adults, ages 60 and 62, with total income of $85,000 or just over the threshold of 400% of poverty level would see the costs for their silver plan increase from $602 to $2,127 if subsidies end.