I’m surprised insurance companies don’t seem to be trying to get ahead of what will certainly be backlash directed at them.
I get that the situation may still be considered too fluid for them to comment on. OTOH the ACA vote today seems to guarantee that health insurance premiums are going to skyrocket.
Should I be expecting a flurry of emails from my advantage insurance any day now?
Disclaimer: I work in advertising, and my client is a health insurance company which offers ACA-compliant insurance plans.
There are a couple of conflated things in your post.
First, the first part of the title of your topic – “ACA goes away” – isn’t accurate. The ACA, and health insurance policies for individuals and families which comply with the ACA, have not gone away in the slightest – even though Trump and many Republicans would love to kill the ACA.
What is going away, barring any eleventh-hour movement by Congress (which seems unlikely) is that the expanded subsidies for people on ACA plans, which began in 2021, and continued through this year, are ending at the end of this month. The net of that is that a lot of people who are on ACA plans this year, with low premiums (thanks to the expanded subsidies) will be having to pay a lot more next year for the same coverage.
This has been a known thing, and an expected outcome, for insurers which offer these plans, since the start of this year; in my professional case, it’s been a conversation which I’ve had with my clients all year. Open Enrollment for those plans for 2026 started six weeks ago, and insurers have baked in that assumption in their communications, both to current policyholders who are looking to renew, as well as for prospective policyholders, because those communications have been being sent to people for weeks.
If the subsidies had, somehow, gotten extended, then insurers would have been sending out new/revised communications about them. Insurers and their ad agencies have already likely game-planned what sort of last-minute communications they would send out if the subsidies were renewed, but they have, all along, had to operate under the assumption that they won’t be in effect for 2026.
Also:
What is “advantage insurance?” Are you on a Medicare Advantage plan? If so, you aren’t on an ACA plan (which are really only for people age 64 and younger), and you’re completely unaffected by the lapsing subsidies for ACA plans.
Note also that from the insurer’s POV they’ve been getting the same per-policy premium income all along since before 2021. The difference has been consumers pay less to the insurers and the government has been shipping the insurers a check for the difference.
If the subsidies end, then the government checks stop flowing to the insurers, and the premiums return (net of inflation and flummery) to the pre-subsidy numbers. Anyone who had ACA insurance prior to the subsidies will go back to paying familiar, much higher, premiums. Assuming of course they can afford them.
There are many people who only got ACA insurance once the big subsidies were enacted because that was the first time the premiums got cheap enough for them.
Said another way, ACA was “sorta universal health care for the reasonably well-off”, while ACA with the big subsidies was “sorta universal health care for the reasonably well-off and the working class”. Still nothing for the poors. And if the subsidies disappear, the working class will once again be priced out.
Not entirely.
There have been subsidies available to help pay for ACA coverage since the beginning (2014), but the only people who qualified for them were ones with fairly low incomes (though too high to qualify for Medicaid).
The “expanded subsidies,” as first instituted in 2021, raised the income level for qualifying for a subsidy, and increased how much of the monthly premium was being covered for many people (even those who had been getting an “original” subsidy). Due to this, the number of people who could afford to buy coverage grew, and enrollment grew substantially over the past few years.
It’s the expanded subsidies which are going to go away. “The poors” likely still are going to get some help via the original subsidies, which still exist (though they may still actually wind up paying more per month, because the subsidy expansion helped them, too); it’s the lower-middle-class to middle-class who are getting kicked in the teeth by this.
Thanks for the more detailed, and more accurate explanation.
The “working class” in my words or “lower middle class” in your words were the big beneficiaries of the expanded subsidy in that those subsidies took their premiums from simply unaffordable to probably affordable. Converting legions of the uninsured into the insured. And those are the folks about to be thrown back into the ranks of the uninsured.
Yes, plenty of folks a bit farther up the food chain were very grateful when the expanded subsidies came in and their insurance went from being a huge part of their budget to a much smaller part. Those folks will also lose, and greatly miss, their expanded subsidies. Whether that’s enough to cause most of them to drop the insurance or instead squeeze some other part of their budget & pay the higher premiums remains to be seen. There’ll certainly be a bunch of both, but it’s way beyond my ken to predict how much of each.
This is not an easy week to be an insurance exec.
I heard something on NPR today that said the White House is considering some action. Can the White House somehow extend the subsidies, assuming they wanted to, without Congress approving? If they can, that’s news to me.
They (the WH = criminal trump) sure can claim they can. And did. And take credit for it. And throw shade at Congress no matter which way they vote.
Which is the only thing that matters to trump. Looking good and sounding in charge.
I’m not sure that they can. The expanded subsidies exist under a Biden-era law, the Inflation Reduction Act, which expires on 12/31/25.
My understanding is that executive orders can affect how an existing law is interpreted or enforced, but can’t make new law. I don’t believe that an EO can be used to change the expiration date of a program which was established under law, and in which the expiration is part of the law. But, hey, I could be wrong.
This is what will come next. First, the impacted people need to feel the sting of the subsidy lapse. Then, Republicans in Congress will start to feel the heat. After some pressure, they will put forth a bill re-instating the subsidies and sent it to the Executive, who will sign it immediately and provide relief for the American workers, while claiming the pain just felt is the fault of Democrats, and then take credit for taming the insurance companies and bringing prices down (and again blaming the Democrats). Maybe the timing will be sometime just before next year’s elections.
Never pass-up an opportunity to “win”!
Here is what is likely to happen – and what the insurance companies have been planning for:
All of the above is what the insurance companies have assumed will happen; when they published their 2026 rates for ACA plans last summer, the average premium increase was around +25% nationally – they had to factor in that the young and healthy would be dropping out of their risk pools, and that it was going to cost more to insure those who remain.
Honestly, this past week represented a Hail Mary in Congress that the industry really didn’t expect would come through anyway. All of this is an oncoming train that the insurance industry has seen on the tracks since January.
And, as I noted above, Open Enrollment has been going on since November 1st; the “main OEP” deadline – to sign up or renew your coverage for January 1st – is this upcoming Monday (December 15th). The vast majority of people who are on these plans, and those getting subsidies, are already well aware of what’s happening, and just how much more their insurance is going to cost for January.
Great summary! I think the health insurance companies need to lock-in their 2026 rates before open enrollment, correct? And those rates are already published on the exchanges, right? So did they already bake-in the expected drop in young insured, drop in enrollment/higher costs for everyone else in the risk pool? Or will they be able to adjust rates before coverage begins on 1/1/2026? Essentially giving recent enrollees a nice Christmas surprise.
Correct; it all had to be locked in (and approved by the insurance commissions at the state level, as well as by CMS) this past summer.
In the case of my client, which operates in Alabama, the Alabama state insurance commission approved the rates for them, and their competitors, in late August, which means that rates would have been due to be submitted to the commission weeks prior to that.
Yes, and yes.
It’d be logistically improbable, if not impossible, to turn around such adjustments and get them approved in such a short time frame.
Also, FWIW, any eleventh-hour changes to the subsidy situation would probably also require actual changes to the law regarding the enrollment period, in order to help people get coverage for 2026.
“Main OEP” ends at midnight Monday (December 15th) – in order to have coverage on January 1st, you must sign up for coverage by that date. if you don’t buy coverage by then, you won’t be covered on January 1st. That’s in the law.
However, there is a “Late OEP”* period, which extends from December 16th until January 15th. During that period, you can still buy coverage, but it won’t be effective until February 1st. That, too, is in the law.
Open Enrollment ends on January 15th. Full stop, that’s the law right now. If you don’t buy insurance by then, you are out of luck until next year’s Open Enrollment, unless you experience a “qualifying life event” (e.g., getting married, having a baby, changing jobs, moving), which opens up a short “Special Enrollment Period” for you, to buy or change insurance.
If Trump tries something next week, it won’t be able to affect people who haven’t signed up yet, as far as being covered in January, because the deadline for Jan 1 coverage, as defined in the law, will have passed. And, unless the subsidies get re-instituted by early January, it won’t enable people who are currently opting out of buying insurance, at all, for 2026 – again, unless the law actually gets changed to address this.
*- “Late OEP,” as I understand it, has always been optional, but the government has annually included it in Open Enrollment. However, my understanding is that the Trump Administration has already decided to shorten the late OEP for next year.
Great explanation, @kenobi_65.
Do you (or anybody else) have any idea how many people will be dropping their insurance because of the increased expense? Will the reduced numbers of clients cause harm to the insurers, to the point where some will have to close up shop?
Thanks for that. Ignorance fought. I did receive a letter with rates for 2026. There were some increases but nothing too onerous. I thought the subsidies going away was going to change that.
Projections are that somewhere between 4 million and 5 million people will drop coverage due to this. As about 24 million people are on ACA plans this year (and about 22 million are getting some level of subsidy), that’s somewhere around 17 to 20% of those currently insured who would go uninsured next year.
Well, this is why rates for ACA plans have gone up so much for 2026; the insurers had to re-do their actuarial numbers to account for the loss of a lot of their younger, healthier insurees. It’s not likely that insurers are going to be losing money on ACA plans for '26, but maybe some will. A lot of the companies which offer ACA plans – UnitedHealthcare, the various Blue Cross and Blue Shields, etc. – offer other sorts of health insurance, too (group/employer, Medicare, etc.), and it’s unlikely that losing some money on their ACA plans will make them shut down.
However, there are some insurance brands – Ambetter and Oscar, to name two – for which ACA plans are a big part of their portfolio, and it’s possible that this may hurt them a lot.
The more likely effect is that insurers will stop offering ACA plans in some states, and in some counties within states, where they won’t be making money now. Heck, in my state (Illinois), Aetna CVS already stopped offering ACA plans in the state entirely for 2026, and Cigna stopped offering them in Cook County.
Wow, thanks again for the detailed explanation!
One more question: are premiums actually rising, or is just loss of subsidies that are causing people to drop coverage?
Isn’t it the case that congress gets to allocate money and low it to be spent? I thought the president has not power to simply decde “I’ve decided to spend billions extra” without congress passing the appropriate legislation.
As Kenobi says, executive orders just declare how the executive intends to interpret and enforce existing laws.
Premiums are actually rising, in the absolute, by a lot. As I noted upthread, this is largely because the insurers have had to assume that a good chunk of their current customers for these products will drop them for next year (because of the lost subsidies), and the people who drop coverage are likely to be the young and healthy (who are less expensive to insure).
On average, they’re going up by about 20% (source), though this varies by state, as insurance companies determine their rates for ACA plans at the state, and even county, level.
Would premiums have gone up in 2026 even if the subsidies had been renewed? I think that they absolutely would have; health insurance premiums across the board have been rising for years, and the rates for ACA plans were no different – rates for 2024 and 2025 rose by about 7% in each of those years.
My Kaiser Senior Advantage Medicare premium is going up to $15 (from $0)