Unless Republicans decide to extend a tax credit that makes health insurance more affordable for middle-class Americans, they will see premiums go up by more than 7 percent for most of the coming decade.
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A main reason why Donald Trump prevailed in last month’s election is that high inflation in the early part of the Biden administration caused prices to soar and Republicans promised to lower the cost of living.
However, if they do not extend the enhanced premium tax credits (PTC) that help millions of Americans pay for their health insurance under the Affordable Care Act (ACA), then they will get off to a bad start.
As of now, these tax credits, which make insurance more affordable for individuals earning up to about $60,000 and for families of four whose combined income does not exceed roughly $125,000, are set to expire at the end of 2025.
If Congress allows that to happen (or if Trump does not sign an extension into law), premiums would go up, and millions of people would lose health insurance altogether.
According to an analysis from the nonpartisan Congressional Budget Office (CBO), which it released Thursday at the request of several Democratic lawmakers, the failure to expand these tax credits would increase the cost of gross benchmark premiums by 4.3 percent in 2026, by 7.7 percent the following year, and then by an average of 7.9 percent through 2034.
In addition, CBO estimates that 2.2 million Americans would forego purchasing health insurance in 2026, 3.7 million in 2027, and then an average of 3.8 million each year through 2034 because it would become too expensive for them.
“Because of the American Rescue Plan and Inflation Reduction Act, congressional Democrats were successful in lowering the cost of health care for millions of hardworking taxpayers,” said House Minority Leader Hakeem Jeffries (D-NY).
He added that there is a “fierce urgency” to address the issue and called on congressional Republicans “to partner with us to lower health care costs for American families.”
It seems unlikely that the GOP will do so.
First of all, extending the tax credits is costly. CBO previously estimated that a 10-year extension that would prevent these premium increases and help keep Americans enrolled through ACA would cost $335 billion.
And that’s money Republicans would likely prefer to spend on tax cuts.
“Democrats made massive progress in making heath care more affordable for millions of Americans,” said Senate Majority Leader Chuck Schumer (D-NY). “Congress should work in a bipartisan manner to extend these middle-class tax cuts rather than give another tax break to corporations and the ultra-wealthy.”
There is a second reason why Republicans may want to risk letting the tax credits expire: They might hope that higher premiums would make ACA less popular, which could give them an opening to repeal a program they have despised since its conception.
On Thursday, Senate Finance Committee Chairman Ron Wyden (D-OR) called on Republicans to “end their ideological crusade” against the program also known as Obamacare.
This issue is a great example of what it means for Republicans to control Congress and the White House. Americans will notice when their premiums shoot up, and, when that happens, there is only one party to blame for it.
That, of course, will be welcome news for Democrats.
“This is a stark preview of health care under Donald Trump: higher insurance premiums for families who buy health coverage on their own, and more uninsured Americans who can’t afford health insurance at all,” Wyden said.
