Competing Claims on Who Benefits from ACA Subsidies

In the shutdown standoff over expiring Affordable Care Act tax credits, Democrats emphasize thousand-dollar premium increases for middle- or “working-class” Americans, while Republicans say people who are well-off unfairly benefit from the subsidies. Some higher-income earners could qualify for subsidies if they live in areas with high insurance premiums, but about 95% of those receiving subsidies in 2024 earned less than 400% of the poverty level.

And while there are cases where out-of-pocket costs are set to increase by $1,000 or $2,000 a month if the expanded tax credits are allowed to expire as scheduled, the average increase is $1,016 for the year —a 114% rise —according to estimates from the health policy research organization KFF.

(KFF’s estimate includes a median 18% increase in premiums by insurers, who have cited rising health care costs and government policies for the increase, including the expiration of the expanded subsidies, which is expected to cause some healthier enrollees to drop their coverage, according to the Peterson-KFF Health System Tracker. Having fewer healthier enrollees in a risk pool results in higher rates for the remaining policyholders.)

(PICTURED RIGHT: The homepage of HealthCare.gov, the federal government’s health insurance exchange website, as seen on a laptop computer. Photo by Tada Images – stock.adobe.com)

The impact of the expiration can vary greatly, depending on age, income, family size, and location. Those earning above 400% of poverty (that’s above $84,600 for a couple, $128,600 for a family of four) would experience the high-dollar increases in out-of-pocket costs, because they wouldn’t get any tax credits if the expanded subsidies expire. And the increase would be particularly high for older enrollees, whose premiums can be three times those of younger enrollees.