It’s Still Not Too Late to Do Something About Those Obamacare Premiums

People are already seeing price spikes—and many will have to give up health insurance. But Congress could enact a retroactive fix.

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CONGRESS HAS MISSED ITS CHANCE to prevent a premium spike in Affordable Care Act health insurance plans. But lawmakers still have a chance to reverse it.

Sorta.

Millions of Americans have now logged on to HealthCare.gov—or to a state-run equivalent like Covered California—to beat the December 15 deadline for selecting a plan in time for the new year. Many were surprised, even shocked by what they saw on those sites: premium increases of hundreds or thousands or (in rare, extreme cases) tens of thousands of dollars a year.

Some reacted by eating the extra cost, others by choosing a cheaper-but-less generous plan. Some just opted out of coverage altogether. And while it’s going to take a while to sort through the enrollment data, it’s virtually certain the net result will be fewer Americans with health insurance—quite possibly by the millions.

The reason for the price hike is the looming expiration of those temporary Affordable Care Act subsidies that have been making so much news for the last few months. Those subsidies are the extra financial assistance that Democrats enacted back in 2021, which neither President Donald Trump nor the Republicans in Congress have been willing to extend—not even after Democrats forced a six-week government shutdown to demand it

But lawmakers interested in extending the subsidies haven’t stopped talking about it. And that’s a good thing, because they still have chances to act. In particular, Congress could pass an extension of the enhanced subsidies in the final weeks of December or sometime in the new year, and then make it retroactive to January 1.

It wouldn’t be nearly as effective as having acted already. It’d also be a significant challenge for insurers, state regulators and the people who run HealthCare.gov. But it’s definitely doable, because it’s actually been done before.

In fact, it’s the way these enhanced subsidies first took effect.

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THE ENHANCED SUBSIDIES were initially passed as part of the American Rescue Plan, the Democratic pandemic relief measure from 2021. That legislation didn’t become law until President Joe Biden signed it in March. But it stipulated that the extra assistance would apply to the price of insurance over the full calendar year.

How did that work in practice? Ellen Montz, who joined the Biden administration in 2021, told me the Department of Health and Human Services automatically applied the extra subsidies to insurance payments going forward. In other words, anybody who had already signed up for a plan saw their premiums come down, without having to take any action.

The administration also made sure people had a chance to come back to, and shop again on, HealthCare.gov. They could switch plans if the new assistance meant they could get a policy more to their liking, and they could sign up for one if they hadn’t already.¹

“They got it up and running, prospectively, in about a month,” said Montz, who is now a managing director at the consulting firm Manatt Health. “I imagine they could do something like that now.”

Back in 2021, states that ran their own marketplaces had to make their own decisions about how to implement the changes. In Massachusetts, officials decided to credit the extra money people would have gotten for previous months like overpayments, and then adjusted premiums going forward. They could certainly do something like that again, according to Audrey Morse Gasteier, executive director of the Massachusetts Health Connector.

“We could operationalize a post-January 1st extension,” Gasteier told me, though she added “there’s no question it would be messy.”

A key factor in successfully extending the subsidies now, she explained, would be to make sure that people knew they were suddenly eligible for more money and had better insurance options as a result.

“That would mean reaching out to people who already walked away from the sticker shock and trying to draw them back into coverage,” Gasteier said. “It would also mean reaching out to people who already enrolled in a higher cost plan and will now see their costs come down. . . . The whole affair would need to be coupled with an assertive communication plan.”

Gasteier said she and her colleagues would use whatever resources they had to undertake that kind of strategy, using their 2021 plan as a model. And it’s safe to assume most other states running their own marketplaces would take similar steps, since the states that went to the effort of creating marketplaces tend to be the ones most invested in the program’s success.

But the Trump administration’s commitment to promoting enrollment—and making sure people knew about their options—would be more of an open question, especially given the many times Trump in his first term talked openly of trying to sabotage the Affordable Care Act. That’s why people like Montz say it’d be essential that any legislation extending the enhanced subsidies at this point be crystal-clear on things like creating a new open enrollment period for people to switch plans.

And if Congress wants a late extension to take effect quickly, the surest way would be to stick with the current funding structure instead of making alterations to things like eligibility and income level, according to Jessica Altman, executive director of Covered California.

“A clean extension is relatively straightforward for us to implement, even if retrospective,” Altman told me. “Any changes from the current structure will be much more complicated and take time to deliver. The more significant any changes are, the longer it is likely to take and the more burdensome it will be on marketplace consumers.”

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DEMOCRATS ARE ALL for a clean extension, obviously. And at least a handful of Republicans are also interested, though some are calling for modifications—like limiting the financial assistance available to higher-income buyers or requiring at least token monthly premiums of a few dollars. These are precisely the sorts of changes that Altman warned would make implementation more difficult, though they might be the necessary ingredients of a compromise capable of getting majority support in Congress.

Renewing the subsidies would also require overcoming—or circumventing—the resistance of GOP leaders like House Speaker Mike Johnson, who is against any kind of extension, and Senate Health Committee Chairman Bill Cassidy, who wants to replace the enhanced subsidies with deposits to private accounts that people could use toward paying medical bills. That approach would leave many people (especially those with serious medical conditions) much worse off.

And that is not to mention President Trump, whose posture toward an extension has vacillated between ambivalence and hostility—and who earlier this month floated what looked like a bid for compromise, only to yank it back when congressional Republicans objected . The president could certainly make an extension happen if he wanted, but he has shown no inclination to do so.

Still, dissident Republicans have joined with Democrats to pass laws before, most recently on forcing disclosure of the Epstein files. Republicans in the House who support extension are trying the same procedural technique now—by getting majority support for a “discharge position” that would force a floor vote on their proposals even though Johnson opposes one.

Were they to succeed—a big if at this point—it would put new pressure on the Senate to act. Should they fail, there’s yet another inflection point coming at the end of January, when the funding agreement the parties reached to end the last government shutdown ends—meaning a new agreement will have to be reached or the government will shut down yet again.

Democrats could at that point once again try to force the hand of Trump and the Republicans by demanding a subsidy extension as a condition of reopening the government. They’d probably have more leverage than last time, since by the end of January the premium spike wouldn’t be hypothetical. Also, Trump couldn’t use food assistance to poor people as leverage in the way he did last time, because the spending agreement that ended the last shutdown financed that program for two more years.

No, the odds aren’t great—and, no, the belated, retroactive version of the extension wouldn’t be nearly as effective as the early, prospective kind that Democrats and their allies spent so many months trying to enact.

“With each passing day, more and more people are likely walking away from health insurance or switching to higher deductibles after seeing eye popping out-of-pocket premium increases,” Larry Levitt, an executive vice president at the health research organization KFF, told me.

Still, helping even some of the people who are going to struggle with higher premiums—or who might go uninsured altogether—would make a difference. That’s why the debate around the subsidies is likely to continue, even if legislative progress remains elusive.

“You can’t make everything whole again, but you can make things better than they are right now,” Montz said. “As I say, the best day to pass enhanced premium tax credits is today.”

1. Allowing people the chance to shop for plans didn’t require extra action because the Biden administration had already—as part of a separate pandemic-related initiative—extended open enrollment well into 2021.