Insurers Warn Against Delay in Extending Obamacare Subsidies

The debate over extending a set of higher Obamacare premium subsidies is leaving consumers and the industry in limbo, with insurers warning that lawmakers won’t be able to reverse the damage after open enrollment starts Nov. 1.

The enhanced subsidies—in the form of advance tax credits—were enacted under President Joe Biden as a temporary measure during the Covid-19 pandemic, but have become a political flashpoint amid concerns around the high cost of living and the broader economy.

Premiums on the Affordable Care Act exchanges are set to spike by a median of 18% if the enhanced subsidies aren’t extended, and could damage Republicans’ chances in the competitive 2026 midterm elections.

Multiple lobbyists said the urgency on extending the tax credits before open enrollment isn’t getting through to lawmakers. Heather Foster, vice president of marketplace policy for the Association for Community Affiliated Plans, said the prospect of a December extension is her “biggest concern,” aside from no extension at all.

Insurers work all year to design plans and calculate rates. Revising those calculations will take time, even though insurers have been watching the debate unfold in Washington.

Open enrollment runs from Nov. 1 to Jan. 15. Enrollment starts earlier in some states like Idaho, where it kicks off Oct. 15.

But Congress looks likely to punt a spending deal past the Sept. 30 appropriations deadline, and the industry warns that kicking the can to November or December could be too late.

“I think that there is an assumption within Congress that if they do it whenever, we will figure out how to make it work,” Foster said. “And as much as that might be true, operationally, it is not true for consumer behavior.”

People could need another enrollment period to shop and switch plans if the credits are extended late, she said, adding that Congress should also fund community health insurance navigators to find and help eligible individuals enroll. Even then, the sticker shock will likely scare off some people permanently.

“Many of those consumers will be lost, period,” she said. “They’re never going to go back.”

Costs could increase unexpectedly for people if they’re auto-enrolled and the credits aren’t extended in time, said Justin Giovannelli, project director at the Center on Health Insurance Reforms at Georgetown University.

“It may lead them to not pay the bill because they can’t,” he said. “It certainly puts them in a bind.”

If Congress does extend the credits in the middle of open enrollment, the Trump administration could automatically apply them to plans like the Biden administration did when they were first enacted, he said. But that won’t rewind the clock to recapture people spooked by the initial prices.

Uncertain Outlook

Key GOP leaders threw cold water this week on the prospect of extending the subsidies. Senate Majority Leader John Thune (R-S.D.) said Tuesday that Democrats have a “responsibility to come forward with a solution,” arguing Democrats created the problem by setting up the expiration date in budget bills passed under Biden.

Senate Health, Education, Labor and Pensions Committee Chair Bill Cassidy (R-La.) said he was examining the issue, and that states were making their own preparations to mitigate the uncertainty in the meantime.

“You want to do it right,” he said. “We can spend a lot of money around here and not accomplish anything.”

The Congressional Budget Office estimates that extending the pandemic-era tax credits could cost $335 billion over 10 years. Republicans have also cited evidence of fraud from the CBO and think tank Paragon Health Institute as reason to let them expire.

Some Republicans are voicing support for a compromise.

A bipartisan group of lawmakers led by Rep. Jen Kiggans (R-Va.) recently introduced a one-year extension of the enhanced credits earlier this month. The legislation would likely tee up a similar fight next fall at the height of the midterm elections.