End of ACA Subsidy Impact
Despite last year's record-setting government shutdown, Democrats in Congress were unable to secure the votes necessary to extend the COVID-era enhanced ACA subsidies. Temporary health insurance subsides were originally included in the American Rescue Plan Act, which was signed into law during 2021, for the 2021 and 2022 tax years only. The temporary subsidies were later extended under the Inflation Reduction Act of 2022 and were, of course, the subject of significant controversy during the 2025 government shutdown. The subsidies formally expired after 2025.
We asked two professors and authors of Tax Facts with opposing political viewpoints to share their opinions about whether the loss of enhanced ACA subsidies has negatively impacted individuals in the individual health insurance marketplace.
Below is a summary of the debate that ensued between the two professors.
Their Votes:
Their Reasons:
Byrnes: These COVID-era subsidies were never intended to be permanent. As I've said many times before, there's no reason to blindly extend every COVID-era relief provision now that the pandemic is well behind us. Taxpayers continue to have robust options for purchasing health insurance coverage through the ACA marketplace. The OBBB hasn't had a negative impact on those options. In fact, the Trump administration policies have allowed health insurance companies to develop and offer more unique and custom-tailored insurance offerings.
Bloink: According to recently released studies, over a million taxpayers who had previously enrolled in health coverage through the ACA marketplace have dropped coverage. Some industry experts expect that enrollment could drop by as much as a quarter by the time the year is over. We have to realize that this will have a ripple effect on coverage within the marketplace and an overall negative impact for taxpayers—particularly lower-income taxpayers without access to employer-provided health insurance.
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Byrnes: Taxpayers are now able to purchase less comprehensive coverage so that they can get the coverage they actually need without the one-size-fits-all price tag. Yes, some younger and healthier taxpayers have chosen to forgo traditional, comprehensive health coverage—because they're choosing options that better suit their needs. That's not a negative development.
Bloink: Two major insurance carriers have already decided to stop offering coverage through the marketplace—clearly demonstrating that consumer choices have already begun to decline. Less competition in the marketplace often leads to higher prices. Now that we don't have the enhanced premium subsidies to help offset those prices, we're likely to see an even more rapid de-enrollment going forward.
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Byrnes: The Biden-era enhanced ACA subsidies only served to generate additional waste and abuse within the health insurance system. The OBBB policies only work to eliminate this waste and abuse. Taxpayers who genuinely need financial assistance and qualify for that assistance still have options for getting help covering their premium costs. The Biden-era policies simply were not working and there's no reason to continue extending policies that aren't performing while costing the government millions.
Bloink: Risk shifting is the entire purpose of insurance. We now have a situation where healthier Americans are electing to forgo health insurance coverage because they can no longer afford it. That means enrolled individuals are likely to be sicker--making it more difficult for insurance carriers to continue offering the robust coverage options Americans deserve at a price point they can afford. Prices have and will continue to increase—hurting everyone—until we're able to create a health insurance system where all Americans can participate.