Obamacare Enrollee Costs Could Swell Even More Under Trump Rule

Pending court action in the new year around Trump administration regulations of the Obamacare marketplace could further ratchet up the cost of enrollees’ insurance bills.

Attention has been focused on the expiration of the Affordable Care Act premium subsidy enhancements that expired at the end of the year. The changes, made in 2021, made the assistance more generous and allowed more people to benefit. But now enrollees are seeing bigger premiums because they are no longer getting as much assistance.

While Congress failed to act on those expiring credits, legal action playing out in court could add to consumers’ health-care sticker shock. A Maryland federal district court in August paused major portions of a rule aimed at tightening oversight in a challenge brought by Democratic cities. The Department of Health and Human Services is appealing part of the decision.

When Congress returns in January, House Speaker Mike Johnson (R-La.) said he would allow a vote on a premium tax credit extension, but there isn’t a clear path forward on what will pass the House and Senate. As debate drags on, briefs in the US Court of Appeals for the Fourth Circuit over the marketplace rule are due in February and March.

Premiums Rise, Congress Dithers

Congress’s passage of the American Rescue Plan Act of 2021 during the Covid-19 pandemic included major changes to the ACA premium tax credits that were in place for five years.

They reduced how much households had to contribute toward the premium for a benchmark plan, making the subsidies effectively larger. People making 100% to 150% of the federal poverty level paid nothing in premiums. People making 400% of the federal poverty level were newly eligible for the tax credits.

But those tweaks expired due to ideological gridlock over the issue in Congress. Annual premium payments are expected to increase by 114% in 2026 on average, according to the health analyst group KFF. The Congressional Budget Office estimated the expiration would mean 2.2 million more people would lose health insurance in 2026.

Plans for enrollees who signed up by Dec. 15 on the federal exchange kick in on Jan. 1. Open enrollment for the federal marketplace closes on Jan. 15.

Read More: Blue States Lose Bid to Halt HHS Obamacare Enrollment Changes

Neither an extension of the tax credits nor an alternative made it through Congress by the time lawmakers departed for their holiday recess. But that wasn’t due to lack of trying.

Disagreements over the future of the tax credits led to the longest government shutdown in US history from October into November. Although some Senate Democrats eventually crossed the aisle to reopen the government after 43 days, lawmakers never reached a deal on ACA subsidies.

In the final days of session, moderate House Republicans who had been pushing for a floor vote on the issue joined Democrats on a discharge petition for a three-year extension, providing the last four signatures to reach the required 218. Johnson said lawmakers would vote in January. Sens. Susan Collins (R-Maine) and Bernie Moreno (R-Ohio) are also trying to get bipartisan agreement on a proposal to extend the tax credits.

If 2026 brings an agreement on ACA subsidies, lawmakers could apply the credits retroactively, said Cynthia Cox, vice president and director of the Program on the ACA at KFF. The tax credits that were part of the 2021 American Rescue Plan Act also were retroactive to the start of the year.

Read More: 4th Circuit Keeps Pause on Trump Obamacare Provision in Place

Marketplace Rules in Court

The Centers for Medicare & Medicaid Services in June finalized a rule (RIN 0938-AV61) to increase oversight of the exchanges, which the agency projected could kick 1.8 million people off the Obamacare rolls. The rule imposed a $5 fee on certain low-income auto-enrollees, shortened enrollment periods on state-run exchanges, and allowed insurers greater leeway in lowering the actuarial value of their plans.

Actuarial value refers to the average share of medical spending the insurer pays. Giving insurers more flexibility could lead to more out-of-pocket costs for enrollees if the plan decides to cover less. Insurance lobbyists and stakeholders have expressed support for the change. AHIP, the insurance trade group, said the change " would allow issuers to design plans that meet the needs of enrollees.”

Allowing insurers to lower the actuarial value in future plan years could be another financial strain for enrollees, said Claire Heyison, senior policy analyst for the Center on Budget and Policy Priorities.

“Enrollees are going to continue to face really difficult choices when it comes to paying for health care and how that fits into other aspects of their budget,” she said.

The CMS said the changes in the rule were needed to rein in fraudulent enrollments from unscrupulous brokers and help lower premiums. But two lawsuits from Democratic cities and states say the agency’s actions will cost real people their insurance, and allege the agency is overstepping its authority.

The US District Court for the District of Massachusetts declined to temporarily freeze the rule after California and others filed suit. But the US District Court for the District of Maryland paused provisions relating to the $5 fee, plan actuarial value, eligibility verifications, and the ability for insurers to deny coverage to individuals with outstanding bills.

The Fourth Circuit is weighing whether to unfreeze the provision on actuarial value, but denied HHS Secretary Robert F. Kennedy Jr.’s request to lift the lower court’s stay while the case continues.