Health Care Premiums Could Go Up Fast If Republicans Don’t Act

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Donald Trump and his fellow Republicans made the high cost of living a major focus of their campaigns in 2024. And for all of their vitriolic attacks on Democrats over issues like crime and immigration, it may have been their promise to reduce everyday prices that allowed them to win control of the White House and Congress.

But governing is harder than campaigning. The president-elect and other Republicans are likely to see this firsthand when their commitment to lower prices runs smack into their opposition to government spending on health care — and, no less important, to their antipathy toward so-called Obamacare.

It’s going to happen sometime in the next few months, or maybe even the next few weeks. A finding that the Congressional Budget Office released Thursday shows why.

The finding was about the cost of health insurance for people who buy private coverage through the Affordable Care Act, the landmark legislation that Democrats passed and then-President Barack Obama signed in 2010. The short version of CBO’s conclusion is that insurance for millions of Americans will get more expensive if the Republicans don’t act.

The long version goes like this: These millions are the people who buy insurance directly through the Affordable Care Act marketplaces, HealthCare.gov and its state-run analogues like Covered California, because they make too much money to qualify for government programs like Medicaid and can’t get coverage through their jobs.

When they buy through the marketplaces, they can qualify for tax credits that effectively discount premiums by hundreds and frequently thousands of dollars annually. But in the Affordable Care Act’s early years, those tax credits were smaller than the law’s architects had hoped, because there weren’t enough votes in Congress to fund more generous assistance. It’s a big reason that so many people continued to struggle with high costs, or simply didn’t get insurance at all, in the program’s initial years.

All of that changed in 2021, when President Joe Biden and the Democrats temporarily boosted the subsidies with extra money. The initial impetus was the COVID-19 pandemic; doing whatever it took to help people pay medical bills seemed like an especially good idea in the middle of a public health crisis. But there was always a second motive: trying to make insurance available through the Affordable Care Act more affordable.

The effects of the bigger tax credits have been clear. With cheaper insurance at the marketplaces, enrollment has surged to record levels. But the extra subsidies are set to vanish after 2025. And while Democrats have called for extending them, it would be up to Trump and Republicans in Congress to do so.

That’s not the sort of thing they’re inclined to do ― although, with Thursday’s CBO finding, they have a new reason to think about it.

In response to an inquiry from four Capitol Hill Democrats, CBO’s analysts determined that allowing the extra subsidies to lapse would cause premiums to rise by 4% in 2026 and by close to 8% in each of the years afterward. (CBO analysts predict the change will need two years to take full effect.)

Because of the way premiums and the tax credits interact, that increase would work out to “about an extra $700 a year per person in out-of-pocket costs” for those buying coverage through the marketplaces, Gideon Lukens, a senior fellow at the Center on Budget and Policy Priorities, told HuffPost.

While some buyers would simply pay the higher costs or shift into less generous insurance plans, others would drop their coverage altogether. That is why, according to CBO estimates, the number of uninsured Americans would rise by 2.2 million in 2026 and then by nearly 4 million in each of the following years.

CBO predictions can be wrong, as any predictions can be. But they are consistent with other, independent estimates. And there’s every reason to think that the gist of these analyses is correct.

Allowing the extra subsidies to lapse would effectively reverse the changes that Biden and other Democrats have made to the Affordable Care Act, so that people would have to pay more for coverage and some would drop insurance entirely.

To be clear, Republicans have plenty of reasons to live with those consequences.

They believe the regulation, spending and taxes behind big government health care programs do more harm than good, and they believe these newly generous tax credits increase opportunities for fraud. They’ve never made their peace with the Affordable Care Act, even if they have learned to downplay their opposition as the program has become more popular. Trump in particular has made no secret of his personal hostility to what is widely seen as Obama’s biggest legislative legacy.

And then there is the considerable cost of extending the subsidies. The net 10-year cost would be more than $300 billion, according to an earlier CBO estimate. If Republicans are going to add new claims to the federal treasury, they’ve made clear that they’d rather put that money into the large tax cuts they want to pass.

But if premiums jump on the Republicans’ watch, they’re going to have to explain that to the voters ― including, it turns out, quite a few in their own states and districts. A case in point is West Virginia, which for a combination of demographic and economic reasons has an unusually large number of people who qualify for big tax credits.

“A 60-year-old West Virginia couple with moderate income would have to pay an extra $40,000 per year out of pocket if they want to keep their coverage,” said Lukens, who directs research and data analysis for the Center on Budget and Policy Priorities’ health team. “And people with low incomes, who now have no out-of-pocket premium costs, would be charged hundreds of dollars.”

Explaining higher premiums could be even more challenging if Republicans are already having to defend a jump in prices for consumer goods, something most economists predict will take place if Trump follows through on his promises for large new tariffs that would affect not just China but also Mexico.

And it could be especially tough if Democrats highlight the choice Republicans are making ― namely, to reject an extension of health insurance assistance for millions of mostly working- and middle-class Americans, even as they push to enact tax cuts that would disproportionately benefit corporations and cost the federal government far more money.

The total 10-year cost of tax cuts that Trump has promised would run into the trillions of dollars, dwarfing the cost of extending the extra health insurance subsidies.

Even now, Democrats like Sen. Jeanne Shaheen (D-N.H.) are making this argument. “At a time when Americans are already facing higher prices, we should do everything we can to lower costs when and where we can,” Shaheen said in a press release Thursday, after the CBO released its finding.

Senate Finance Committee Chair Ron Wyden (D-Ore.), a party leader on health care issues, added that “Republicans have an opportunity to end their ideological crusade against the Affordable Care Act and work in a bipartisan manner to make health care more affordable for working families, but instead they seem poised to hand another big tax break to corporations and the wealthy.”

Shaheen and Wyden were two of the lawmakers who requested this week’s CBO analysis. The others were Reps. Richard Neal (D-Mass.) and Lauren Underwood (D-Ill.).

They are among the Democrats in Congress who, according to The Washington Post, recently approached Republican leaders about including a one-year extension of the extra tax credits in the broad, end-of-year spending bill now in the works.

The future of that proposal ― and of the extra tax credits more generally ― is impossible to tell at the moment. But for Republicans, the question isn’t whether their choice will have big consequences. It’s which big consequences they prefer.