Americans brace for higher health care premiums amid uncertainty over ACA subsidies

Americans are bracing for an increase in their health care premiums in 2026, amid uncertainty over whether Affordable Care Act (ACA) subsidies, set to expire at the end of 2025, will receive an extension.

Those shopping in the ACA market are already expected to face a 26% price increase in 2026, and if potential government subsidies expire, monthly payments for subsidized patients could increase by 114%, according to a Kaiser Family Foundation analysis released in October.

But the possible discontinuation of government subsidies, which aim to reduce patients’ monthly payments, is not the only reason for rising premium prices. At the heart of the problem is that the ACA’s foundation includes several inflationary provisions that drive up health care costs, experts say.

“Obamacare is doing more to raise prices,” Michael Cannon, director of health policy studies at the libertarian-leaning, Washington-based think tank Cato Institute, told Fox News Digital on Monday.

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“It raises prices for healthy people by forcing them to pay double or triple what they should pay for health insurance, and it forces everyone who signs up for Obamacare to buy more comprehensive coverage than they probably would have done if you gave them the money.”

The possible discontinuation of government subsidies, which aim to reduce patients’ monthly payments, is not the only reason for rising premium prices. (Nathan Posner/Anadolu via Getty Images)

1. Guaranteed coverage

One of the provisions included in the ACA is guaranteed issuance, which requires insurers to provide coverage to any person without regard to their health or age.

That’s a factor that drives up the cost of premiums, according to Sally Pipes, president of the free-market think tank Pacific Policy Institute.

“As older patients use much more health care than younger people and cost insurers much more in claims, premiums must increase to cover their losses on older enrollees,” Pipes said in a statement to Fox News Digital on Monday.

2. Community Grading Rule

Added to this provision is the community pricing rule, which prohibits insurers from charging older people more than three times what they charge younger people, regardless of their state of health.

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This essentially amounts to a system of government price control because it forces insurance companies to charge the same premium to two people of the same age on the same health care plan, even if one is healthy and the other is sick, according to Cannon.

“It’s a floor price for the healthy person because the price can’t go below what you charge the sick person, and it’s a price ceiling for the sick person because the price can’t go above what you charge the healthy person,” Cannon said. “And so the centerpiece of Obamacare is really just price controls, where you set the price too high in one area and too low in the other.”

3. Mandatory service coverage

Additionally, the ACA imposes an “essential” health benefits requirement that says health insurance plans must cover certain services, including inpatient and outpatient hospital care, mental health services, prescription drug coverage and more.

Senate Minority Leader Chuck Schumer, D-N.Y., accompanied by Sen. Cory Booker, D-N.J., shows a poster depicting rising medical costs if Congress allows Affordable Care Act tax credits to expire in December. (Andrew Harnik/Getty Images)

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“This means enrollees must enroll in a plan that covers each benefit, whether they want that benefit or not,” Pipes said. “If a family wants to benefit from a plan that does not cover alcohol rehabilitation or hair replacement, they still have to pay to cover these benefits. They greatly increase the cost of coverage.”

Meanwhile, Republicans and Democrats disagreed over extending ACA subsidies, ultimately causing the government shutdown, which lasted more than 40 days and was the longest in U.S. history. Democrats have refused for weeks to support a measure without a provision to permanently extend the ACA subsidies, which expire at the end of 2025.

Republicans and Democrats are at odds over expanding Affordable Care Act subsidies. (Anna Moneymaker/Getty Images)

But ultimately, Democrats backed a short-term spending bill that does not extend those subsidies through the end of the year. Despite this, Senate Majority Leader John Thune, R-S.D., agreed to vote in December on legislation that would continue these credits.

The Biden administration first introduced COVID-era grants as part of the American Rescue Plan Act passed in March 2021, which was then extended the following year as part of the Inflation Reduction Act.

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Meanwhile, Trump has indicated he would not support continuing the subsidies and said in a social media post Tuesday that Congress should not “waste” its time negotiating an extension.

“THE ONLY HEALTH CARE I SUPPORT OR APPROVE IS GIVING THE MONEY DIRECTLY TO THE PEOPLE,” Trump said in his message.