This shutdown fight has life-or-death consequences

At the heart of the fight over the government shutdown is the fate of health insurance for millions of Americans who may soon face an impossible choice: accept a significant increase in their premiums or take a gamble and forgo coverage.

About 4.2 million people are expected to lose coverage if Congress fails to extend premium subsidies for Affordable Care Act plans, according to the Congressional Budget Office. A separate analysis by KFF found that without the subsidies, which are set to expire at the end of the year, average annual premiums would more than double — from $888 this year to $1,904 in 2026.

Democrats want the subsidies extended permanently, while Republicans are ready to let them lapse. Democrats also want to restore the Medicaid funding cut from the One Big Beautiful Bill Act.

It’s a political battle that has real consequences for millions of Americans, many of whom own or work for small businesses or have scrimped and saved to retire early. "These are your friends, neighbors, and colleagues who are going to lose insurance and their health is going to suffer as a result," says Rachel Werner, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania.

In the complex U.S. health care system, the public has long struggled to understand how policy changes might affect them. And the topic of ACA subsidies is particularly complicated. One issue is that the expiration of the additional tax credits, which more than 90% of current enrollees qualify for, won’t affect everyone equally. Some will see steep rate hikes as they lose subsidies altogether. Others will continue to receive some help, albeit less of it. (And to be clear, even a modest cost increase can have a significant impact on many households.) Insurance companies, meanwhile, are responding to the uncertainty by implementing their own price hikes, adding to consumers’ overall costs.

The impact of this seemingly technical policy change will be huge. After the Biden administration sweetened the tax credits to make insurance more affordable for a broader swath of the population, the number of individuals buying plans through the marketplace more than doubled. At the same time, the number of uninsured Americans dropped to an all-time low.

Who is most at risk of losing coverage? Self-employed Americans, small business owners or those working for small businesses with fewer than 25 employees. They account for 48% of adults insured by an ACA plan, according to a new analysis by KFF. That could disproportionately affect people living in rural areas, where small businesses account for a large proportion of jobs.

The other major group that will take a hit is people who retire early. Those 50- to 64-year-olds once found themselves in an expensive health care limbo between their previous employer-sponsored coverage and Medicare eligibility. But enhanced subsidies made marketplace plans much more affordable by capping their contribution at 8.5% of their income. Now, that group represents just over half ACA enrollees who make more than four times the federal poverty level.

Without the extra credits, those individuals won’t receive any assistance paying for their insurance. After years of careful planning, their health care costs will skyrocket. A 60-year-old couple living on $85,000 (just over the threshold that would qualify them for subsidy eligibility) could see their monthly premium jump from about $600 to over $2,100 — or nearly a third of their household income, according to KFF.

Health care providers will feel the squeeze, too. Last week, the Robert Wood Johnson Foundation and the Urban Institute estimated that the expiration of the enhanced tax credits would result in $32.1 billion in lost revenue for hospitals, doctors and other health care providers.

The most significant drop in health care spending would occur in the South, where a cluster of states still have not adopted Medicaid expansion, which allows anyone with a household income below 138% of the federal poverty level to qualify for public insurance. The subsidies allowed people living just above the poverty line in those 10 nonexpansion states to obtain a silver ACA plan at no cost. That significantly reduced the number of uninsured people in those states, where more than 6.2 million people in that income range signed up for marketplace plans in 2025.

The end of subsidies will hit people living in those red states hard — and lead to the biggest declines in health care spending, according to the analysis by the Robert Wood Johnson Foundation and Urban Institute. Spending would fall nearly 5% in Florida, Georgia and Texas.

Meanwhile, individuals who maintain their coverage could find that they have fewer options available come November. Some insurers are opting out of the marketplace next year, arguing that the lack of extra subsidies will cause healthier people to drop coverage altogether, which would leave them with a sicker — and more expensive — pool of patients.

Of course, the subsidies aren’t free. The CBO estimates that maintaining the credits would cost roughly $350 billion over the next decade. And because the enhanced subsidies are relatively new, it’s too early to quantify their benefits — for example, how access to preventive care might alleviate the burden of chronic conditions or reduce longer-term health care costs.

Still, health policy experts point to robust data on the health, financial and economic impact of other significant efforts to improve insurance coverage — such as Medicaid expansion — as an encouraging sign. And in June, Werner and her colleagues offered a more compelling reason to extend the subsidies: ending them would not only lead to an estimated 5 million people losing insurance, but also result in an additional 8,811 deaths.

It’s an important reminder of the high stakes in scrapping a policy that has been working so well for so many Americans.

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Lisa Jarvis is a Bloomberg Opinion columnist covering biotech, health care and the pharmaceutical industry. Previously, she was executive editor of Chemical & Engineering News.