Health care costs could spike for millions of families

With the GOP regaining control of Congress, Republicans are looking to slash health care spending, specifically eyeing Medicaid cuts and work requirements. While those fights are almost certainly going to garner a lot of coverage, it’s important to also pay attention to some of the less splashy policies also on the chopping block.

These might not be major programs. You might not have even heard of some of them. But America’s social safety net relies on a patchwork of many different, sometimes low-profile, subsidies that many of us take for granted. Some of these programs might only appear in spending bills as a small line item that few people notice, and that makes it just that much easier for lawmakers to slowly but surely dismantle our social safety net.

Here’s one example: For millions of families, a spike in health care costs might be around the corner because crucial subsidies are set to expire at the end of next year. Some families will see their premiums rise by thousands of dollars; others might lose their insurance altogether. 

In 2021, President Joe Biden signed into law the American Rescue Plan Act, which included a provision that enhanced the premium tax credit — a piece of the Affordable Care Act (ACA) that subsidized the cost of premiums for some lower- and middle-income families. The Biden-era enhancements, which essentially expanded the number of people who qualify for the tax credit, were originally set to expire at the end of 2022, but Congress extended them through 2025 when it passed the Inflation Reduction Act. (For families at or slightly above the poverty line, the enhanced tax credit subsidizes the full premium. For people making more than 400 percent of the poverty line — people who were previously ineligible for this subsidy — it caps their premiums to 8.5 percent of their income.)

The enhanced premium tax credits contributed to a record number of insured people in the United States. In February 2021, before Congress expanded the premium tax credits, 11.2 million people were enrolled in health coverage through ACA marketplaces. By 2024, that number shot up to 20.8 million people.

There are many reasons for the dramatic increase in marketplace coverage — including the fact that millions of people were disenrolled from Medicaid coverage after Covid emergency measures lapsed and had to turn to other forms of insurance, including the marketplace — but the enhanced premium tax credit played a critical role. Its expansion was the main reason so many more people were able to enroll in health care coverage from the ACA marketplace, according to the Kaiser Family Foundation.

If Congress allows the enhanced premium tax credits to expire, millions of people will see a noticeable rise in out-of-pocket expenses. Many will likely lose their coverage, and that’s without considering how much more will be at stake if Medicaid gets slashed as well. For low-income families, particularly those who live just above the poverty line, that could be a nightmare. 

Who’s at risk of seeing higher costs?

The enhanced tax credits didn’t overhaul the health care system, and you probably don’t remember hearing candidates talk about them much, if at all, during the election. But they proved to be a crucial, if small, improvement to the system already in place, and had immediate and tangible results when it came to getting more people insured.

“The premium tax credit improvements really led to huge pocket savings for people — $700 [per year] on average,” said Gideon Lukens, a senior fellow and director of research and data analysis at the Center on Budget and Policy Priorities (CBPP). “They were really the primary reason that marketplace enrollment increased … and the uninsured rate fell to an all-time low.”

As of now, around 93 percent of people enrolled through the ACA marketplace receive a premium tax credit. But if these tax credit expansions aren’t extended or made permanent, 3.4 million people could lose their insurance, according to the Congressional Budget Office. The Urban Institute similarly estimates that 4 million people could lose their insurance if Congress doesn’t act in time.

According to the Center on Budget and Policy Priorities, Black and Latino people benefited most from the enhanced premium tax credit, so they will likely be disproportionately affected by cuts. Marketplace enrollment among Black people, for example, grew by 186 percent after the enhanced premium tax credit went into effect, and for Latino people, it grew by 158 percent. By contrast, marketplace enrollment for other racial groups grew by 63 percent during the same period. 

More than 19 million people will likely see higher premiums without the enhanced tax credit. Many families could see costs go up significantly, especially if they have moderate incomes or have older members, who already have to pay higher premiums. A 60-year-old couple making $82,000 a year, for example, could see their monthly premiums triple, which means they would owe an additional $18,400 out of pocket, according to the CBPP report.

Looking ahead

The GOP will be responsible for deciding whether the enhanced premium tax credits should expire or be extended. Given the success of the tax credits — leading to a record-high enrollment rate — it would be a mistake to let the enhancements lapse.

While the GOP might not necessarily be so eager to expand social programs — it tried and failed to repeal the Affordable Care Act during Donald Trump’s first term — the benefits of the enhanced premium tax credit are extremely tangible, and if they’re gone, millions of Americans will quickly notice. That could give Democrats room to put pressure on Republicans to strike a deal that, ideally, would make these enhancements permanent. So while lawmakers should fight tooth and nail to minimize or avoid cuts to major programs like Medicare or Medicaid, they should also remember that these small adjustments are worth fighting for as well, including things like the enhanced premium tax credit or, say, what people can buy with food stamps, these provisions still lower the cost of living for millions of families.

As Republicans regain control of Congress and the White House, it’s easy to lose hope that any meaningful antipoverty efforts will happen at the federal level. But while elections have consequences, they also aren’t permanent. That’s why, over the coming months, I’ll be focusing on what antipoverty policies states across the country are experimenting with — experiments that could one day be replicated at the federal level when it’s more politically feasible. Have you benefited from state or local programs that you think would be a good model for the rest of the country? If so, I’d love to hear from you. Please email me at abdallah.fayyad@vox.com.

One more thing

Meet the 2024 Future Perfect 50! Vox’s third annual celebration of the individuals who are imagining and building a better future includes people who are fighting global poverty.

This story was featured in the Within Our Means newsletter. Sign up here.