Portside

Within the next 90 days, the 24 million enrollees in Affordable Care Act (ACA) health insurance exchanges will get notices about massive new cost burdens to renew their coverage. This will be perceived as a direct result of the policies of the Trump administration and congressional Republicans. That perception has the benefit of being accurate.

The combination of the One Big Beautiful Bill Act’s (OBBBA) cuts to Medicaid (and, unless Congress does something about it, to Medicare) and the failure to extend enhanced ACA tax credits for exchange participants will cause roughly 15 million Americans to lose their health insurance, according to the latest estimates. Those who hang on to pay the higher rates are disproportionately likely to really need insurance due to medical conditions. This will tend to create sicker insurance pools, meaning more claims payouts by insurers.

The expectation of higher costs for insured customers, along with the pullback of trillions of dollars from the health system, has triggered insurers’ need for higher premium rates, in a kind of upward death spiral. Those who remain insured may have to choose between staying covered and other critical items in their family budgets.

“I don’t think many members of Congress have yet focused on these big health insurance premium increases coming,” said Larry Levitt, executive vice president for health policy at KFF. “When they do, especially for Republicans, it may make them nervous at the prospect of going before voters right after many of their constituents have been hit with big premium increases.”

An analysis of proposed premium changes for 2026 submitted by health insurers this spring and summer reveals the largest rate hikes since 2018, which were also driven by disruptive conservative changes, like the active attempt to repeal the ACA entirely. More than one-quarter of all insurers are requesting increases above 20 percent, and only five of the 105 exchange insurers are seeking increases below 5 percent. The median increase is around 15 percent, more than double the median increase of one year ago and more than double the underlying increase in the cost of medical care.

The Peterson-KFF Health System Tracker performed this analysis. The proposals must be approved by state insurance regulators, who can reject “excessive” charges. The final changes will be available by the end of the summer. Enrollees will be informed of these changes in late October and early November, which will undoubtedly create major sticker shock.

The changes can be primarily attributed to the loss of enhanced ACA tax credits, which most enrollees (close to 20 million) will feel far more than the more general increase to insurance rates. “Out-of-pocket premiums will increase by an average of more than 75 percent,” Levitt said. These enhanced tax credits, initially instituted four years ago in the American Rescue Plan and extended by the Inflation Reduction Act, finally made insurance relatively affordable for most people. Health insurance was kept to about 8.5 percent of household income or less because of the new tax credits.

When the tax credits go away in December, the 2026 premiums will snap back to the old levels, which created a “subsidy cliff” at around 400 percent of the federal poverty level. Those households with incomes above that cutoff will no longer qualify for premium tax credits. As Levitt explains, that will create a “double whammy” for these households. They will receive “no assistance with their premiums at all if the enhanced tax credits expire, plus a big increase in the underlying premium,” Levitt said.

Levitt added that the premium increases will be most felt in red states in the South that did not expand Medicaid, and therefore have more people on the ACA exchanges.

There are smaller factors also creating upward pressure on health insurance premiums, including tariff changes that could make the cost of medical equipment and prescription drugs higher. But many of the proposed insurance increases were submitted before the president signed the OBBBA, with its trillion dollars in cuts and near-term damage to the health system. In addition, the Trump administration’s new “marketplace integrity” rule, with its many enrollment changes, was only finalized in June, meaning that insurers may not have taken that into account when setting rates for 2026 either. That could portend even higher increases in the future as those changes become more visible.

Even before the OBBBA, insurance companies have been warning all year about needing rate hikes, withdrawing financial guidance, replacing CEOs, and telling investors about hits to earnings. (This hasn’t stopped insurers from delivering billions to shareholders in dividends and stock buybacks, of course.) CVS-owned Aetna plans to leave the ACA exchanges entirely next year.

The other lever that insurance companies can pull besides hiking premiums is denying expensive treatment, which is also happening. Prescription drug denials, for example, have shot up 25 percent in the last decade.

It’s unclear whether this huge cost shift will spur Republicans to extend the ACA subsidies into 2026. That would be a simple way to eliminate what will otherwise be a massive cost burden that millions will receive notification about in just a few months from today.

President Trump’s own pollster found harsh outcomes for Republicans if they let the premium tax credits expire, with enormous bipartisan support for them (79-11 in favor of them among all voters, including 68-19 in favor from Trump voters). In the battleground districts surveyed, support for Democrats jumps from three points to 15 points if the tax credits expire. But House Ways and Means Committee chair Jason Smith (R-MO) recently called an extension a “big problem for a lot of my members.”

An end-of-year health care package that has been floated could include a pharmacy benefit manager crackdown that has been stalled for a year after both parties agreed to it. But Democrats would demand at least the extension of the tax credits in order to cooperate.

“Republicans may be loath to vote in support of Obamacare,” Levitt said. “But the alternative is big premium increases for over 20 million people.”

===

David Dayen is the Prospect’s executive editor. His work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, the Los Angeles Times, and more. His most recent book is ‘Monopolized: Life in the Age of Corporate Power.’

Portside Moderator's note: Why does David Dayen not write about the obvious solution that the Democrats at the Federal and State level have refused to put forward, that is, Medicare for All or by it's other name, Single Payer Health Care? Obamacare was written to keep the insurance companies in the health care business. We don't need them. They don't provide health care.