The Outlook For Affordable Care Act Subsidies

0:07The longest government shutdown in U.S. history ended two and a half weeks ago. Federal workers are back on the job. but one of the biggest fights that fueled that shutdown remains unresolved. The enhanced subsidies that help millions of people afford health plans on the Affordable Care Act marketplaces are set to expire at the end of this year. Meanwhile, open enrollment for 2026 coverage is underway. The deadline for the start of the new year is December 15th, and many of you say your health insurance costs are on the rise. I currently use the ACA for my health insurance as I have no other options and I have many chronic conditions which require health insurance.

0:46I currently pay under$500 a month, but if all subsidies are ended starting in January, 2026, I will be paying over$2 ,100 a month. This is appalling and I need some help with this as do millions of other Americans. My husband and I have this insurance and we absolutely love it. It's the only way we can do what we love to do. I'm a sign language interpreter, and he is a stained glass artist. We are unable to sign up for healthcare at the moment because when you look, right now our prices have doubled, actually tripled. We can't afford to keep it, so we're waiting to see what it's going to be after they decide what to do in a week or two.

1:34Honestly, I'm just looking for jobs online, getting ready to get some menial job where it offers insurance because we have no other option. And that's our story. Thanks for those calls. As part of the shutdown deal, Republican Senate leaders promised Democrats a vote on extending health care tax credits by mid-December. But the politics haven't changed. So what's the likelihood that the extension will get through the Senate, clear the House, or get President Trump's signature? Today, a check-in on the ACA's health insurance marketplaces and what happens next. I'm Jen White. You're listening to the 1A podcast.

2:10Stay with us. We've got a lot to get to.

2:17Let's meet our panel. Joining us is Julie Rovner. She's Chief Washington Correspondent for KFF Health News. Julie, great to have you back. Nice to be here. Also with us is Linda Blumberg. She's a research professor at Georgetown University's Center on Health Insurance Reforms and an Institute Fellow at the Urban Institute. Linda, welcome. Thanks so much for having me. So, Julie, let's just start with the shutdown deal. When were these subsidies that were up for debate implemented and how do they work in practice? So they were originally implemented during COVID in 2021 when President Biden took over.

2:49Congress passed it. They were renewed then the following year. The Democrats, you know, the votes to make them go any further than 2025. So they were hoping, the Democrats who would like to continue the subsidies, that the Republicans would join them in renewing them. The Republicans, at least so far, have not. And that's what sort of led us to the shutdown and led us to where we are now. In exchange for reopening the government, for Democrats, enough Democrats voting to reopen the government, Senate Majority Leader John Thune promised to vote no later than basically the end of next week. Republicans are scrambling in the meantime to come up with some kind of alternative to a simple extension of the tax credits, which is what they will vote on.

3:38So you said they're scrambling to come up with a plan, but are there any negotiations happening right now between Republicans and Democrats? The president keeps saying he's talking to Democrats. No one has found a Democrat that the president is talking to. So hard to know whether these are like super secret negotiations, whether they're really happening, we'll have to see. Well, Senator Amy Klobuchar, a Democrat representing Minnesota, spoke to CNN over the weekend. Either we're going to pass this by forcing this vote, or we are going to get this on legislation, or we are going to march into the midterms and beat them despite their resistance.

4:14If they don't want to do anything about people's costs and their grocery bills and their health care and pummel them with these punishing Trump tariffs, then we will simply have to beat them in the midterms. We have no other choice. What are Democrats and Republicans trying to get out of this moment, Julie? Well, Democrats are trying to get the subsidies renewed. I mean, as you pointed out in your intro, a lot of people are seeing a lot of sticker shock. And there are estimates of, you know, millions of people basically having to drop their health insurance because they can no longer afford these premiums without the additional help.

4:46In 2021, there were always subsidies with the Affordable Care Act. They just weren't that generous. When they were made more generous, enrollment doubled in the Affordable Care Act marketplaces, went from about$12 million to about$24 million. So presumably it will fall back if these additional subsidies go away. Republicans are trying not to sort of get the blame for what's happening. They don't like the ACA. They have voted against it many, many, many dozens of times now. So they don't really want to, you know, continue the subsidies, but they also don't want to be blamed for all of these people who are going to lose their health insurance, many of them in very Republican places.

5:26So a lot of red states, a lot of small businesses, a lot of people in sort of, you know, more Republican-dominated professions, people who work for themselves. So it's a real tightrope for the Republicans, too. Well, premiums for people on the ACA marketplace are already rising sharply this year. Linda, what's driving those increases even before the enhanced tax credits expire? Well, there's a combination of issues. So first of all, there's the regular trend in healthcare spending, which goes up every year with higher prices of care and sometimes increased use of care, right? There's also general inflation that is adding to operating expense costs.

6:04And then we've got over the last 15 years, we've seen very substantial increases in consolidation in health insurance markets, both on the insurer side, the provider side, and with this mix of financially connected profit-making middlemen that are working on both sides of that equation. And then we have certain things that are being done outside of the marketplace, but changes that are being done through policymaking. So, So, for example, the tariffs that the Trump administration has put in place are increasing prices for pharmaceuticals and medical devices that are being made abroad. We have the expiration of the enhanced premium tax credits.

6:47While they haven't hit yet, that mere change in policy that the insurers see going forward is causing them to increase their premiums as well. But what's the connection there? So the ACA subsidies going away, why would that cause health insurance companies to increase their costs? So great question. What happens when the cost facing consumers goes up and what they're doing is they're increasing the cost facing anyone who's going to enroll or the vast majority of people who are going to enroll. And so people are not going to be able to afford insurance as they had before. And the first people to exit an insurance product or pool when that happens are the healthiest people, right?

7:30If I have serious health conditions, then I'm going to do everything I can. I'm going to scramble for cash in order to come up with for even a higher price because I know my life depends on it. Healthier people will say, listen, you know, I don't expect to need a lot of medical care. And so I'm going to drop out because the price is too much for me. Well, when you start doing that, what it does is it degrades the insurance pool. The average cost of the people that are left go up because they're sicker. And the average premium then goes up with it. Well, let's go back to our voicemail box. My husband and I pay about$800 a month right now, plus a$17 ,000 out-of-pocket annual.

8:11So our premiums are going up to$2 ,000 a month, and the out-of-pocket is staying the same. So that's quite a bit of money. And on top of that, I pay about$450 a month in medications. that's out of my out-of-pocket, and that will stay the same. I'm a retired teacher. We make a decent income, but still, that's a lot of money for medical. Thanks for that message. Linda, what do we understand about what all of these rising costs mean for the percentage of Americans who are insured nationwide? So what we know is that as the costs go up, more people are going to become uninsured. As Julia has said, what we saw was as the subsidies increase starting in 2021, the number of people insured through these plans increased.

8:56The number of uninsured went down. According to my colleagues at the Urban Institute, they estimate that in 2026, without the enhanced subsidies, close to an additional 5 million people will be uninsured. And that is, you know, a very substantial increase. It's, you know, basically over 20 percent increase in the uninsured nationwide. So it's going to have very significant impact. Julie, the Trump administration says it's working up its own plan. Do we have any details? No. The title of my podcast the week before last was Trump almost releases a health care plan, because, of course, he's been promising one since 2015.

9:37They did float an idea that included a two year sort of continuation of these subsidies. And that was met with a lot of pushback on Capitol Hill, as I said, from a lot of Republicans who spent a lot of time saying how much they hate the Affordable Care Act. So that kind of got shelved for the moment. You know, Trump has since said that, well, we may have to extend the subsidies at least temporarily. Hard to know. You know, we've talked about this vote that's coming in the Senate. There is not really any sort of thoughts about a vote in the House, even if the Senate were to pass an extension of the subsidies, that nothing in the House was any part of the promise to reopen the government.

10:17So we're still kind of in limbo here. Well, let's head to a quick break. Coming up, we hear from the man running the Center for Medicare and Medicaid Services, Dr. Mehmet Oz, about Medicaid, enrollment drops, and the administration's vision. That's coming up next.

10:35Let's get back to the conversation and add another voice. Ricardo Nuala is an internal medicine doctor at Ben Taub Hospital in Houston, Texas. Ricardo, welcome to the program. Happy to be here. So you work in a safety net hospital. You see many people who've lost coverage or can't afford private insurance. How does that show up in diagnoses or delayed care? Well, it shows up how people come to the hospital later. People just can't get processed through, their healthcare problems can't get processed. It creates backlogs because the emergency rooms are filled, all of the elective surgeries are, you know, all of the workings for a hospital and clinics so that people can get their health and proceed on through.

11:22it gets clogged up because people wait to get their care taken care of and go to the emergency room. And we've seen this time and again, and it just keeps on happening when these things change. Linda, what does the research show about how loss of coverage translates into measurable outcomes? There's quite a bit of research that has shown that the coverage expansions, both Medicaid and through the Affordable Care Act marketplaces, have improved health, both self-reported health, which is very highly associated with actual physical health, by also reducing psychological stress, by early diagnosis of chronic conditions, of reducing the likelihood of preterm labor.

12:11There's a whole array of medical evidence that health has improved as a result of insurance expansion. In addition, you know, it reduces financial stress on families so that they are less likely to be insecure in terms of their ability to obtain food and housing, etc. So lots and lots of both primary and secondary effects of health insurance coverage. Now, Julie, the Trump administration already implemented rules that cut people from the ACA marketplace, including DACA recipients, certain refugees and asylees and other people legally present in the country, they're losing eligibility for subsidized coverage.

12:51Who else has been pushed out this year and why? That's most of the list. We're also seeing people being pushed off of Medicaid for similar reasons. A lot of people, a lot of immigrants who are here legally, illegal immigrants have never been eligible either for the ACA or for ACA subsidies or for Medicaid. But there are, you know, they're trying to cut money out of these programs, make it less expensive for the federal government, both in terms of the ACA and in terms of Medicaid. The big budget bill that was passed last summer includes the biggest cuts to Medicaid in the history of the program.

13:26You know, the administration is saying this is just getting at waste and fraud and abuse and people who shouldn't be there. But there are certainly a lot of estimates that a lot of people are going to get pushed off the program and simply have no place else to turn. Well, earlier we spoke to Dr. Mehmet Oz. He's the administrator for the Centers for Medicare and Medicaid Services. We started by asking him about this. Starting in 2027, millions of low-income adults on Medicaid will have to prove they are working in school or volunteering at least 80 hours a month to keep coverage. The Congressional Budget Office estimates nearly 5 million people will lose Medicaid because of these new work rules.

14:03A research has shown that many eligible people will lose benefits because they won't be able to meet paperwork burdens, and past state-level experiments showed coverage losses without any measurable increase in employment. So I asked Dr. Oz, why push ahead with this work requirement when the best evidence so far suggests it will mostly drop eligible people, not move more people into jobs? Jen, I love your question, but let me attack the premise of it. There is no credible evidence about what work requirements have done. It's never been done. There was a several-month trial in Arkansas in 2018 at a time when we had very different digital technology.

14:37There's never been a serious effort to impose a work requirement in Medicaid. But I should point out that every Democratic president and every Republican president has reiterated that work is the foundation of any social safety program. When President Clinton, a Democrat, put work requirements in place for working for families on temporary assistance, food support and housing support, it worked. The number of people working in these programs actually went up. But, Jen, this is a bigger question here. This is not just a mathy question. This is a broader morality question. What's the purpose of being on Earth?

15:15Why were you made? You were made to go out there and change the world, to play an active role, to be the best you can be. And so when you put people on Medicaid and other social network programs and don't find ways of encouraging them to work, getting them to realize that they just shouldn't be sitting around all day long, which the best data we have is folks who are able-bodied on Medicaid spend over six hours a day, six hours a day watching television or just hanging out. No one wants to do that. You all want to have a job. So the purpose of the work requirement is to use modern technology. These all can be done digitally to both figure out if you're working, but more importantly, connect you to work.

15:57So briefly, Dr. Oz, the CBO again, these estimates of nearly 5 million people losing Medicaid because of these new work rules. What I'm hearing you say is that you have counter evidence saying that people are spending time at home watching TV. Where are you drawing that research from? There are several different large foundations. I think Kaiser Family had some data. Heritage had data. This has been widely reported, and I've looked at the raw data. That part's not disputable. People, able-bodied individuals who are on Medicaid, who are never supposed to be on Medicaid, 60 years ago when the program was created, it had 11 million people in it.

16:32It was designed for folks who are vulnerable, children, 53 % of kids are born into Medicaid, folks with disabilities, older folks who are poor and destitute. You don't want them in the street. So the programs were designed for those folks. It wasn't designed for able-bodied individuals who could work or get educated or go volunteer in their communities. So, and the 5 million number is actually, I'm not sure that's accurate either, but what is accurate is you don't want to be on Medicaid. Who wants to live on Medicaid? You want to get off Medicaid, get a job, and go out there and make a difference.

17:06And so, if you have agency over your future and we're helping you by saying, okay, last year, you're, you know, last week, rather, you're an Uber driver. You worked 18 hours, right? You need to work two more hours. We know you drive because you're an Uber driver. So here's your state employment agency is offering you five driving jobs that you can take this week to get two more hours of credit. So now you're eligible for free health insurance. Jen, you work a job. Your company probably pays for your health insurance. I bet they're paying about$25 ,000 a year for health insurance. Why would you now also pay$25 ,000 to give someone else health insurance if they're not trying to work as well?

17:43Now, if they can't work or, again, they're disabled, that's different. So I just want to first point out that I have employer-subsidized health care. I pay my health care as well. But, Julie, we heard Dr. Oz there cite statistics from the Kaiser Family Foundation. He also mentioned the Heritage Foundation. I would just love your response. Well, one of the things I will say from my colleagues on the analysis side at KFF is that the vast majority of people who are on Medicaid either work or can't work or are caregiving. It's not people who are sitting around watching TV. Sometimes it's people who can't find jobs.

18:23I think the difference between, and I covered the 1988 welfare bill and the 1996 welfare bill, so I understand sort of what that work requirement was. And that was about getting people training mostly so they could get better paying jobs So they wouldn't need assistance like housing assistance and food assistance and health care assistance. Right now, a lot of people who have full-time jobs still need this help because they don't earn enough. Remember, this is all about affordability right now. Medicaid has never had a work requirement before, except for, as Dr. Oz mentioned, that brief period in Arkansas where 18 ,000 people were kicked off the rolls, most of whom were still eligible.

19:03so that his premise, respectfully, is not correct either. Congress passed the Medicaid expansion as part of the Affordable Care Act in 2010. The vast majority, if you look at how Medicaid funding is distributed, the vast majority of spending are for two categories of people, people who are completely disabled and cannot work and people who are very elderly and obviously are not expected to work. That is, they are a small portion in terms of numbers. They are a huge portion in terms of actual Medicaid spending. So kicking all of these people off Medicaid is not going to save a ton of money. Ricardo, I'm curious to hear from you what stood out in terms of what Medicaid work requirements or marketplace changes could mean for the patients you see.

19:44Well, it's just an attitude that Dr. Oz expressed, that, you know, the attitude being that you have to work in order to get health care. That's just been, that's one of the reasons really why we don't have a healthcare system in this country that hasn't been created for years, since our inception. What I see is that I see people who do work. I see people who do work, but they might work in different ways. Like I have a family friend who just contacted me. He was working, and his employer still gave him like handwritten checks. And I was thinking when he needed medical care, I was thinking, well, how is he going to prove that?

20:24He does work, but there are certain ways that people are employed. And it doesn't change that he is still going to need health care when he gets sick. I'm curious what you think, Julie, the administration misses when it comes to this analysis of how all of these changes are going to play out. Well, I think one of the things that I mentioned it before that the administration is missing is that a lot of people who are going to be impacted this are Republican voters in Republican states. I think there are some Republicans on Capitol Hill that recognize this, but still not that many. But, yeah, it's you know, the health system is both fragmented and interconnected, which is incredibly frustrating.

21:03It's certainly frustrating if you're trying to study it. But everything impacts everything else. I think that what the listener is talking about is when the subsidies were expanded, before that there had been a cap of 400 percent of poverty. If you earned more than four times the poverty line, it's about$60 ,000. You didn't get any help. And those are the people – because if the subsidies revert back to what they were, those people will be basically cut off from getting any help. And those are the ones who were seeing their premiums double and triple and quadruple. So that's one of the big things that's happening.

21:38here. And Lyndon, just a couple of sentences. I'd love to hear from you what you think the administration is missing in its analysis. Well, I think it's the combination of not understanding that people who have not consistent work, who have very low incomes, have essentially little to nothing left over in their budgets to contribute to medical care. And without them having their own access to care, that not only harms them, but it harms all the people around them in various different ways, both in terms of productivity, child care, and the well-being of others in their family. I also think some of it is not missing the point, but maybe that is the point that, you know, they're not worried about people who are vulnerable losing their access to adequate and necessary care.

22:21Let's take a quick pause here. We'll be back with more of the conversation in just a moment.

22:29We got this question from Simon who says, I always thought that the ACA subsidies were due to expire around now as they were only a COVID action. What if we never had the COVID pandemic? Wouldn't we have been paying the higher ACA premiums for a while? What's different now? Julie? That's right. I mean, they would have it. But I think, and yes, originally in 2021, the argument was that it's dangerous to have COVID running around and so many people without health insurance. So let's make it easier for people to be able to get health insurance. But obviously, that's been a goal of Democrats in general.

23:00That was one of the goals of the ACA. When the ACA started, it had, you know, the individual mandate where people were supposed to either buy health insurance or pay a tax penalty. That didn't work very well. It was repealed effectively in Trump's first term. But what they discovered is if you make insurance more affordable, then people will buy it. People actually want health insurance. So that's where we are now. And I think the Democrats did sort of set this up for where we are now, that if these extra subsidies go away, people are going to see these shocking increases that we are hearing about here this morning, and they're going to, you know, to react to their elected officials about it.

23:38Well, during our brief conversation with Dr. Oz earlier, we played him a message from one of you. Here's Liza. Since we've left our jobs that provided health insurance, we're farmers and work for ourselves, it often seems like we shouldn't make over a certain amount of money or our health insurance costs so much more. And it seems silly that a system is promoting that type of mentality. I'm curious how we play that game and get good insurance and make a good income without having to pay too much. So Dr. Oz, how would you respond to Liza? She's absolutely right. We've created this moral hazard where if you make more than a certain amount of money, you lose your free insurance.

24:23So let's take what happened with Medicaid. When the Medicaid expansion program was offered, it meant that if you made more than 138 % of the poverty level, which is not a lot of money, let's say it's$22 ,000,$23 ,000 a year. If you make more than that, you lose your free health insurance. Now you actually have to pay to buy insurance, which is much more expensive for you. So the better way of doing this is to help everybody move off Medicaid, move into the workforce, drive down the actual overall cost of care, but have an obligation, a responsibility that's yours, that if you're going to get free or discounted health care, that you should have to work in return.