Washington at odds over insurance

With enhanced Affordable Care Act subsidies set to expire at the end of the year, millions of US citizens who rely on marketplace coverage are facing significantly higher health insurance costs in 2026, as Washington remains divided over whether to extend the assistance.

The enhanced premium subsidies were introduced in 2021 as part of a COVID-19 relief package and later extended through 2025. Unless Congress acts, they will lapse at year's end.

Nonpartisan estimates show that about 22 million people currently benefit from the enhanced aid, accounting for more than 90 percent of all ACA marketplace enrollees. Without it, average premiums are projected to more than double.

For many small businesses and self-employed workers, the ACA has served as an alternative to employer-sponsored insurance, which is often unavailable or unaffordable for small firms. Data from the Kaiser Family Foundation, or KFF, a nonpartisan health policy research group, show that nearly half of adults under age 65 enrolled in marketplace plans are self-employed, own a small business or work for one with fewer than 25 employees, accounting for a far higher share than in the overall workforce.

That reliance leaves small businesses especially exposed to policy changes. In interviews with US media, some owners said projected premium increases of $1,000 to $2,000 a month would force them to drop coverage despite the financial and health risks.

"We are healthcare providers who cannot afford benefits. Oh, the irony," Lisa Frankenfeld, who helps run a chiropractic practice in New Jersey, told CNN, describing her family's decision to go uninsured as their monthly premium was set to rise nearly sixfold.

The pressure is expected to intensify as the so-called "subsidy cliff" returns. Under the enhanced rules, households' insurance premiums were capped at 8.5 percent of income, and financial assistance was extended beyond the previous cutoff of 400 percent of the federal poverty level. With the expiration, people earning just above that threshold — roughly $63,000 for an individual — would again lose all subsidy support, even if their incomes are insufficient to absorb full, unsubsidized premiums.

An expiration would "affect anyone getting those subsidies", said Nick Fabrizio, a health policy expert and professor at Cornell University. "Then it's a question of who's in those groups: Who are the most vulnerable?" he told CNBC.

At the same time, prospects for a legislative extension remain uncertain amid divisions in Congress. "It's virtually guaranteed at this point the subsidies will expire" at the end of 2025, said Emma Wager, a senior policy analyst at KFF who specializes in the ACA. "What happens (in Congress) in January remains to be seen," she told CNBC.

Age further compounds the challenge. Early retirees who are not yet eligible for Medicare often face much higher insurance prices, as US insurers are permitted to charge older adults more than younger consumers. The KFF estimates that a 60-year-old earning slightly above the subsidy threshold could see health premiums rise from about 8.5 percent of income to more than 20 percent if the enhanced aid disappears.

Already strained

The potential loss of coverage has increased anxiety among households already strained by higher costs for housing, food and energy. Kathy Many, who runs a small garage-door installation and repair business in Vermont with her husband, said the family fears financial ruin if a serious accident or illness occurs while uninsured."Everything that I've worked my whole life for could be lost to bankruptcy," she told CNN.

The impact is also uneven geographically and demographically. According to KFF and the Bipartisan Policy Center, most of the growth in ACA enrollment since 2020 has occurred in states that voted for Donald Trump in the 2024 election; many of them are in the US South.

These states also have larger Black and Latino populations, groups that saw notable gains in coverage after the enhanced subsidies were introduced.

Although a small group of Republicans has joined Democrats in the House of Representatives to push for a vote on extending the subsidies, similar legislation has already failed in the Senate, underscoring the political hurdles ahead.

Analysts say even a short lapse in subsidies could lead to people losing coverage, as households react quickly to higher premiums. Policy observers note that for small businesses and self-employed workers, the potential expiration is more than a technical change.

Analysts said it raises the question of whether the US health insurance system can provide stable and affordable coverage to a significant part of the economy that contributes to jobs and local communities, while often operating with limited financial resources.

Agencies contributed to this story.

renali@chinadailyusa.com