- The so-called “big beautiful bill” that President Donald Trump signed on July 4 cut taxes for many households.
- However, the law didn’t extend an enhanced premium tax credit that has lowered health insurance premiums for millions of Affordable Care Act enrollees in recent years.
- The tax break is slated to end after 2025, which is expected to raise premiums by an average 75% and lead about 4 million people to lose health insurance.
In the so-called “big beautiful bill” that President Donald Trump signed into law last week, Republicans extended a number of tax policies that were set to expire next year, giving Americans a tax cut of about $4 trillion.
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Health policy specialists point out that a significant omission was the provision of increased premium tax credits.
For people who purchase health insurance through the Affordable Care Act marketplace, the increased credits, which have been in effect since 2021, have reduced the cost of premiums. (Enrollee can use these to collect the credits at tax time or to reduce their premium costs up front.) Their expiration date is after 2025.
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According to KFF, a nonpartisan health policy research firm, almost 22 million people—roughly 92% of ACA enrollees—received a federal subsidy this year that lowered their insurance rates.
Cynthia Cox, the group’s ACA program director, stated in a webinar on Wednesday that those recipients would experience a “sharp premium increase” on January 1.
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According to a November analysis by the Center on Budget and Policy Priorities, the improved tax credits resulted in a 44% drop in premium costs, with the average marketplace enrollee saving $705 in 2024.
During the webinar, Larry Levitt, executive vice president for health policy at KFF, stated that the average out-of-pocket premiums in 2026 would increase by over 75% in the absence of the credits.
Additionally, the Congressional Budget Office estimates that 4.2 million Americans will lose their insurance over the course of the following ten years if the expanded subsidies expire.
This increase in the number of uninsured people comes on top of the approximately 12 million people who were predicted to lose their health insurance due to the more than $1 trillion in expenditure cutbacks Republicans made to the ACA and Medicaid to help pay for the law.
According to Levitt, the expenditure cut is the biggest reversal of federal healthcare assistance in history.
“The scale of the change to the healthcare system is staggering,” he stated.
The Affordable Care Act created premium tax credits, which were initially accessible to those earning between 100% and 400% of the federal poverty threshold.
After former President Joe Biden signed the American Rescue Plan, a stimulus package designed to combat the pandemic, in 2021, enhanced credits were made available.
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According to The Peterson Center on Healthcare and KFF, the law temporarily raised the premium tax credit’s value and extended eligibility to households earning more than 400% of the federal poverty level ($103,280 for a family of three in 2025). According to the statute, out-of-pocket premiums for specific plans were likewise limited to 8.5% of income.
In 2022, Biden signed the Inflation Reduction Act, which extended the programs through 2025.
According to experts, more Americans now have health insurance because the increased subsidies made it more affordable.
According to figures compiled by KFF and The Peterson Center on Healthcare, the number of people enrolled in the Affordable Care Act more than doubled, from approximately 11 million in 2020 to about 24 million in 2025.
All premium tax credit holders would be impacted by the expiration of enhanced subsidies, but some groups would be more affected than others, according to health experts.
According to the Center on Budget and Policy Priorities, for instance, the improvements have been “especially critical” for boosting participation among Black and Latino people. They have also encouraged registration among lower-income households, independent contractors, and small business owners.
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