The US health insurance market is bracing for upheaval. After nearly five years of expanded subsidies, the scheduled end of enhanced advanced premium tax credits (eAPTCs) in 2025 threatens to raise premiums for millions, pressure insurers, and trigger economic aftershocks well beyond the Affordable Care Act (ACA) marketplace.
First introduced in 2021 under the Biden administration’s COVID relief bill – the American Rescue Plan Act – the eAPTCs lowered the share of household income Americans were expected to spend on coverage. For the first time, subsidies were extended to middle-income Americans earning 400-600% of the federal poverty level.
The impact was immediate. Enrollment in ACA plans surged as more people qualified for help, while existing enrollees saw their subsidies grow. By some estimates, eligibility expanded by 20% – to roughly 21.8 million Americans – and the average ACA enrollee’s monthly premium dropped sharply.
However, this benefit came with an expiration date. While tax credits would remain if the subsidies expire, their value would shrink, driving premiums higher for millions. As it stands today, Congress would need to act to preserve the current subsidy levels. The looming question is whether lawmakers will extend the eAPTCs and, if they don’t, what ripple effects could follow for the healthcare market and the economy at large?
Will Congress extend the eAPTCs?
While an extension of the enhanced premium tax credits remains possible, the political outlook is far from encouraging. For starters, Republicans currently control both chambers of Congress and have shown little appetite for maintaining the subsidies.
Also, President Trump has been an outspoken critic of the Affordable Care Act, and the Congressional Budget Office estimates that continuing the program could add roughly $335 billion to the deficit by 2034.
Concerns among Republicans extend beyond cost. Many in the party argue that the program is vulnerable to fraud and believe that a large share of current enrollees could transition into employer-based insurance if the subsidies were allowed to lapse.
The politics aren’t entirely straightforward. Several Republican-led states have become heavily dependent on the eAPTCs, creating some tension within the party. In Florida, for example, ACA exchange enrollment has jumped around 150% since 2020 to 4.7 million residents – the highest in the nation – with much of that surge tied to the availability of the enhanced subsidies. Other Republican-leaning states such as Texas, Georgia, North Carolina, and Ohio also rank among the top ten in total enrollment.
This reliance complicates the narrative. Healthcare consistently polls as a top issue for voters, and with midterm elections looming, Democrats could attempt to use the subsidies as a bargaining chip. In theory, a temporary extension might allow Republicans to soften voter backlash in closely contested races.
Still, this scenario looks optimistic. Despite narrow margins in Congress, Republican leadership is unlikely to need Democratic votes to move forward, and fiscal hawks within the party remain committed to curbing federal spending. Against this backdrop, the chances of another costly extension appear slim.
Could Consumers Transition to Other Plans?
If Congress allows the enhanced premium tax credits to expire, the impact on coverage would be significant. The Congressional Budget Office estimates by 2033, nearly 30% of current marketplace enrollees would lose coverage, with 4.2 million people projected to become uninsured by 2034.
While the full impact of such an abrupt insurance shift is uncertain, most affected consumers would not qualify for Medicaid. Eligibility restrictions in most states mean the bulk of displaced consumers would face two choices: move to an employer-sponsored plan or drop coverage altogether. Those who transition to employer-based insurance often end up with leaner benefits than they enjoyed on the exchanges.
Take a service industry worker who relies on subsidized coverage, for example. Without the eAPTCs, they may be pushed into a lower-quality employer plan with higher deductibles, narrower networks, and fewer protections against unexpected costs.
However, the shift would not be uniform. Many consumers on ACA plans would maintain coverage, likely by downgrading to lower-tier exchange plans, moving into employer-sponsored insurance, or transitioning to Medicare. In total, about 2.6 million members are projected to find alternative coverage, softening but not eliminating the fallout.
Unsubsidized enrollment is also expected to rise 40% to 2.1 million by 2033, a partial offset that highlights the reality – coverage without federal support is thinner and less affordable.
The Effect on the Economy
The expiration of the eAPTCs would ripple well beyond individual households, reshaping the insurance markets and the broader healthcare economy. Before the subsidies were introduced, enrollees near the poverty line were still required to devote a share of their income toward coverage. The eAPTCs reshaped affordability by making zero-dollar silver plans available to millions of low-income Americans.
If the subsidies expire, these households will face the steepest premium hikes. For example, a 45-year-old earning $25,000 a year – roughly 166% of the federal poverty line – currently pays just $160 annually for a silver plan with subsidies. Without subsidies, the cost would rise to $1,077 – a whopping 573% increase.
Insurers and regulators are already bracing for volatility. Many states have required carriers to submit dual rate filings – one assuming the subsidies remain in place, another assuming they disappear. Should the credits lapse, premiums in the individual market could rise by double-digits, eroding affordability and weakening the stability of the exchanges. Lower enrollment would likely follow.
Reduced affordability also changes behavior. More consumers would forgo routine care and defer procedures, while hospitals and providers would likely see an increase in uncompensated care as uninsured patients turn to emergency rooms for treatment. Meanwhile, employer-based fallback plans often carry higher deductibles and copays, discouraging utilization among those who remain insured.
In the absence of subsidies, the U.S. healthcare system will confront lower volumes, tighter margins, and renewed financial pressure across the board. For a sector already navigating demographic shifts, labor shortages, and cost inflation, the withdrawal of federal support could prove a defining headwind in the years ahead.