Moderates on both sides of the aisle are quietly talking about ways to keep the ehancements at least for some time
Despite what appears to be a government shutdown hurtling forward with little end in sight, a number of articles suggest that a compromise could be in the making to extend the enhanced premium subsidies in the Exchanges. Now, nothing is by any means certain for several reasons, but progress here or a deal itself could potentially be a basis for passing a bill to reopen government.
Let’s give you some background and dive into the players, politics, and possibilities.
The types of subsidies
As part of the Affordable Care Act (ACA) of 2010, the state and federal Exchanges were set up to offer subsidized and unsubsidized coverage in the newly formed Marketplaces for those without consistent access to healthcare or who may need temporary access.
For lower-income and some more moderate-income individuals, there are two types of subsidies to lower healthcare costs. Under the permanent law, premium subsidies are given to people and families on a sliding scale based on their income as a percentage of the federal poverty level (FPL). Those below 400% of poverty receive premium subsidies. Generally speaking, these subsidies kick in at 100% as it is assumed in the law that those up to 100% will be on the Medicaid expansion under the ACA. Premium subsidies kick in at 2% of income at the lowest income levels and at almost 10% at the 400% level. These premium subsidies can be used for any of the so-called “metal benefit designs” – Bronze, Silver, Gold, and Platinum (not catastrophic).
Second, there are cost-sharing subsidies for those between 100% and 250% of poverty. For those wanting such assistance with out-of-pocket costs, they must enroll in one of three special Silver-tier cost-sharing plans based on income.
The COVID pandemic enhancements
Under the Biden administration, the Exchange premium subsidies were enhanced and remain in effect until the end of this year. A COVID pandemic bill in 2021 enhanced them for 2021 and 2022. The Inflation Reduction Act in 2022 extended them for 2023, 2024, and 2025. The cost-sharing subsidies remained unchanged.
The bills meaningfully enhanced the subsidies as you can see in the following chart, which compares the permanent and enhanced premium subsidy levels by income group.
| Premanent Law To Enhanced Law Premium Subsidy Comparison | ||
| Permanent Law 2026 (% of income paid toward premium based on FPL by family size) | Enhanced Law 2025 (% of income paid toward premium based on FPL by family size) | |
| Up to 150% of FPL | 2% to 4% | 0% |
| 150% to up 200% of FPL | 4% to 6.3% | 0% to 2% |
| 200% to up to 250% of FPL | 6.3% to 8.05% | 2% to 4% |
| 250% to up to 300% of FPL | 8.05% to 9.5% | 4% to 6% |
| 300% to up to 400% of FPL | 9.5% | 6% to 8.5% |
| Over 400% | NA | 8.5% |
The negotiations
Various media outlets report that a number of parties are negotiating very quietly on a possible compromise to extend or make permanent the enhanced premium subsidies. President Donald Trump is known to be somewhat sympathetic to some sort of compromise, although he is tending to leave any settlement to congressional GOP leaders. But the White House Office of Legislative Affairs and the Domestic Policy Council have been involved in talks with GOP leaders. To be arm-in-arm with the GOP, Trump is now saying that any compromise should be independent of a bill to fund the government and reopen it.
Democrats in both chambers are universally in favor of making the enhancements permanent and are making this a condition of reopening the government and passage of a funding bill. Some more moderate Democrats are talking to moderates in the GOP on potential compromises that do not stick strictly to the current subsidy enhancements.
The GOP in Congress has less consensus. A number of moderate Republicans in each chamber, especially those in swing districts and states, are championing some sort of extension — under the current framework or with some tweaks. Now, the vast majority of House Republicans as well as most GOP senators do not favor any kind of extension. This serves as a major barrier to any compromise. House Speaker Mike Johnson, R-LA, and Senate Majority Leader John Thune, R-SD, are less than enthusiastic to extend the credits as well – Johnson less so than Thune, who signaled he might be willing to somewhat tie the government shutdown and a compromise together. But both leaders might be forced to bow to the desires of several dozen House GOP moderates and a number of moderate and pragmatic conservatives in the Senate. House contol hinges on the results of the 2026 midterm elections.
The importance and concerns about the enhancements
Democrats argue that the original premium subsidies were just not generous enough to ensure true affordability for the uninsured. Enhancements were always in the long-term plan they say. They point to the fact that once the enhancements went into effect, enrollment surged from 11.4 million in 2020 to 24.3 million in 2025. While a good deal of credit for increased enrollment goes to the Biden administration for reinvesting in marketing and outreach and liberalizing certain rules, the lion’s share of the growth comes from the enhancements. They did in fact make things far more affordable. The enhancements also have helped bring major stability to the Marketplace, including drops or modest premium hikes, more health plan participation, more access to providers, and better health plan financial stability.
Most Republicans argue that the enhancements are a boondoggle and were meant as a short-term additional safety net during the COVID pandemic. The conservative think tank Paragon Institute points to what is calls “phantom enrollees” with zero claims and allege that brokers and agents have been fraudulently enrolling Americans without their knowledge to gain commissions. The fraud was enabled by the fact that millions of Americans now have to pay little or nothing at all for their healthcare, which runs contrary to conservatives’ message of personal responsibility. The One Big Beautiful Bill Act (OBBBA) makes a number of reforms to reduce fraud and improper enrollment, but Republicans say the subsidy enhancement extension will continue the fraud. Some conservatives also oppose the fact that subsidies (that kick in after 8.5% of family income at 400% of FPL) are now uncapped regardless of income.
The impacts if the enhancements sunset
Premiums for subsidized individuals will surge in 2026 vs. 2025. About 90% of all enrollees are subsidized in some form. Healthcare policy group KFF says subsidized enrollees would see an average increase of 114%, from an average premium of $888 a year in 2025 to $1,904 a year in 2026. So, extending subsidies would save on average $1,016 in 2026.
KFF says individuals making $18,000 would pay $378 more a year, with individuals making $55,000 paying $1,469 more a year. KFF says a family of four making $40,000 would pay $840 more a year, with a family of four making $110,000 paying $3,201 more a year. Older, middle- to high-income adults are expected to face the largest dollar increases in premiums because premiums are higher at older ages. Hikes will also vary in each state. The premium hike is driven by a few issues – inflation, utilization, the loss of the subsidy enhancements, and rate assumptions about enrollment losses and greater risk in the program when the subsidies expire.
Given the huge lift in enrollment when the enhancements came in, it is fair to say millions will leave as they will be unable to afford the hikes. We already see some health plan contraction for 2026. Over time, we will migrate back to a Marketplace of high premiums, smaller plan and provider footprints, and poor access. The Congressional Budget Office says over 2 million will lose coverage in 2026 if the enhancements expire, growing to almost 4 million in 2034. Several million more will lose coverage due to other changes in the Exchange from regulations and the OBBBA.
The real problem is that November 1 is fast approaching. Why is that date important? Insurers have legitimately hiked premiums (with state insurance agency approval) due to greater risk related to the enhancements expiring and expected drops in enrollment and changes in risk selection. That damge is done. But the problems will be compounded if open enrollment begins on November 1 and those seeking to keep coverage see epic premium hikes on the enrollment portal. They might simply turn off their computers and move on, giving up coverage because the hikes are unaffordable. This would compound enrollment losses and further increase risk and destabilize the program.
What could the compromise look like
Several items are being discussed to tweak the current enhancements and allow them to stay in place at least for some time.
Short-term extension: Democrats might have to settle for some reasonable extension despite their public position to the contrary. There are signs now that they would agree to a multi-year extension, but likely not a one-year one. Some Republicans are amenable to a two-year extension to get past the midterms. Some conservative GOPers might get comfortable with that, but the hard-right Freedom Caucus likely will oppose any extension.
Income caps: Some Republicans want subsidies to go back to no more than 400% of FPL, but ohers are saying they feel for some middle-income earners over 400% (about $130,000 per year for a family of four) who would be cut off from subsidies altogether again. Some centrists from both parties are looking at an income cap of $200,000.
Minimum premium payments: Some Republicans who want a compromise want everyone to pay minimum premium payments in return for some enhancement to subsidies for most enrollees. Republicans more than Democrats support this option. Other Republicans suggest some additional cost-sharing increases as well.
Grandfathering the enhanced subsidies: Still others are arguing that existing enrollees should be grandfathered into the subsidy enhancements, but new enrollees as of January 1, 2026 would only be eligible for the permanent law subsidies. This has more support among Republicans than Democrats. The grandfathering could be permanent or be for a set extended period of time after which the enhancements would expire.
Conclusion
The parties should get together and broker a compromise, linked or not to reopening government. Whether I personally favor or oppose everything about the enhancements, they did drive enrollment and created greater stability for the Marketplace for insurers and consumers. It did not make the Marketpace particulary affordable for many, but it made things far better than before and what will arise again if the enhancements go away. Republicans are not unreasonable to demand that more changes be made to rein in fraud and ensure families have reasonable skin in the game. But middle-income earners with little or no subsidy under the permanent law should keep important premium relief.
#exchanges #healthcare #coverage
— Marc S. Ryan
