Why ACA tax credits for 22 million Americans are at the center of the government shutdown drama

"Known as the enhanced premium tax credit, the subsidy has been used by millions of low- and middle-class households since it was authorized under the American Rescue Plan Act in 2021. Since then, spurred by the tax credit, the number of people who have enrolled in ACA marketplace health insurance plans has almost doubled, according to health care publication KFF."

""Insurers are already preparing to send notices to households that they will see increases starting in January 2026," said Alex Jacquez, chief of policy at Groundwork Collaborative, a liberal economic advocacy group, and former a White House economic official under former President Joe Biden, on a conference call Friday to discuss the tax credit. He added, "People are more and more concerned about the cost of living, and [this is] a hit to their pocketbooks that they will start seeing in weeks.""

Enhanced premium tax credits, authorized under the 2021 American Rescue Plan Act, currently help about 22 million Americans lower marketplace insurance costs and have nearly doubled ACA marketplace enrollment according to KFF. Those subsidies are scheduled to expire at the end of 2025, and leading Democrats are conditioning government funding deals on Republican agreement to extend them. KFF projects average premium increases of about 75% if subsidies end and estimates around 4 million people could drop coverage. Insurers are preparing notices of higher premiums effective January 2026, and households will likely face immediate financial strain as out-of-pocket costs rise.

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