The question about the federal government shutdown isn’t just when it will end, but how?
If it ends well, millions of Americans will continue to afford health insurance. If it ends badly, premiums will soar, families will be priced out, and coverage will vanish.
The main sticking point in shutdown negotiations is whether Congress will extend the Affordable Care Act (ACA) marketplace subsidies. The marketplace is often the best, and sometimes the only, path to health coverage for many people: those with low incomes, those without employer-sponsored insurance, and those who earn too much to qualify for public programs but can’t afford private coverage on their own. ACA enhanced premium tax credits were introduced in 2021 and then extended through 2025.
Nationally, enrollment in ACA plans surged from 11 million to a record 24 million people due to these expanded subsidies. They allowed some lower-income enrollees to access health plans with no premiums and capped the amount higher earners pay for premiums to 8.5% of their income. They also expanded eligibility for middle-class earners. Here in New York State, more than 140,000 people rely on these enhanced tax credits to access quality, affordable health coverage.
Without subsidies, the math simply doesn’t add up. A single person earning between 133% and 400% of the federal poverty level makes roughly $15,000 to $60,000 a year. Yet private insurance for an individual costs about $12,000 annually on average. Paying $12,000 out of a $60,000 income is impossible if you also want to eat and have a place to live.
These highly effective enhanced credits are set to expire at the end of this year. If that is allowed to happen, get ready for some whopping sticker shock. Nationally, expiration of the credits is estimated to more than double what subsidized enrollees currently pay annually for premiums — a 114% increase. For some, like a 60-year-old couple making just over the poverty line, the increase could be more than $22,600 per year, potentially consuming a quarter of their income.
Approximately 4 to 7.3 million Americans could lose their health insurance coverage if the enhanced tax credits expire, with estimates suggesting millions more could become uninsured over the next decade.
New Yorkers will feel this. The State estimates average premiums statewide will rise by nearly 40%, an average monthly increase of $114 for individuals and $228 for couples. The Department of Health provides an excellent breakdown here of the expected local effects.
Premium jumps like that will likely induce a “death spiral.” That means premiums for everyone would likely rise as the risk pool becomes less healthy. Many younger, healthier people might opt out of insurance due to the higher cost, leaving a higher concentration of sicker, more costly enrollees.
Extending these health care subsidies is the issue at the heart of the shutdown. But ending the impasse would also restore paychecks for about 115,000 federal workers in New York, stabilize funding for antihunger programs like SNAP and WIC, and get Social Security and veterans’ benefits processing back on track.
There are no winners in a government shutdown. Extending health care subsidies in an enduring way will both end the stalemate and keep Americans healthier. There is an obvious offramp out of this mess; policymakers need to take it.
