Millions of Americans are poised to confront significant increases in their health care costs as federal subsidies under the Affordable Care Act (ACA) are set to expire. The deadline for enrolling in a marketplace plan for 2026, which fell on December 15, 2025, passed without an agreement on extending these crucial subsidies. This situation leaves many individuals who rely on these subsidies vulnerable to steep price hikes in the coming year.
The ACA, introduced in 2010, aimed to reduce the number of uninsured Americans, a number that had reached approximately 49 million prior to its enactment. The legislation sought to address a long-standing debate over whether health care should be a government responsibility or a burden borne by individuals and employers. Disagreements over this fundamental question have fueled political divisions, culminating in a government shutdown that lasted 43 days, starting on October 1, 2025.
The ACA’s goal was to cut the uninsured population by about 30 million people, which would have brought the rate down to roughly 3 percent of the U.S. population. Currently, about 26 million Americans, or 8 percent, remain uninsured. Although this represents progress, the situation remains precarious, particularly as the expiration of pandemic-era subsidies approaches.
Impact of Medicaid Expansion and Subsidies
The ACA implemented several strategies to achieve its objectives, including expanding the Medicaid program to cover workers earning below 138 percent of the poverty line. Originally mandated for all states, this expansion became optional following a Supreme Court ruling. As of December 2025, 40 states and the District of Columbia have adopted Medicaid expansion, providing coverage for roughly 20 million Americans.
Marketplace subsidies were designed to assist low- to moderate-income individuals in purchasing health insurance. For instance, those earning less than USD 18,000 annually contributed only 2.1 percent of their premiums, while those making USD 60,240, or 400 percent of the federal poverty level, paid 10 percent. These subsidies were significantly increased during the pandemic, allowing many to avoid premiums altogether. However, these enhancements are set to expire at the end of 2025.
The return to pre-pandemic subsidy levels is expected to lead to considerable cost increases for many consumers. For example, an individual earning USD 45,000 annually could see their monthly health insurance payment soar by 74 percent, from approximately USD 207 to USD 360. This increase comes alongside projected insurance plan price hikes of about 18 percent for 2026, potentially leading to total cost increases exceeding 100 percent for some ACA marketplace users.
Potential Consequences of Subsidy Reductions
Proponents of maintaining the enhanced subsidies warn that their expiration could result in 6 million to 7 million individuals leaving the ACA marketplace, with around 5 million likely to become uninsured in 2026. The Congressional Budget Office has projected that cuts to Medicaid, as outlined in tax and spending legislation signed into law by former President Donald Trump in July 2025, could leave more than 7 million people without coverage. Combined with the rollback of ACA subsidies, the total number of uninsured Americans could reach 16 million by 2034, undermining the gains achieved since the ACA’s inception.
Critics of the enhanced subsidies argue that they have substantially increased federal health care expenditures, with almost 22 million Americans receiving subsidies in 2025, a significant rise from 9.2 million in 2020. Opponents also contend that the government should not provide support to higher earners who do not require financial assistance. Furthermore, many employers are reportedly using the ACA to minimize their obligation to provide health insurance to employees.
The U.S. health care system is the most expensive in the world, and the projected rise in uninsured individuals could lead to higher overall costs. As fewer people receive preventive care and delay seeking medical attention, the need for more complex and costly interventions may increase.
State-level policies also play a critical role in shaping health insurance coverage. As of 2023, approximately 8 percent of individuals under 65 were uninsured nationwide, but the rate varied significantly, from 3 percent in Massachusetts to 18.6 percent in Texas. States governed by Republican leadership tend to have higher uninsured rates compared to those under Democratic leadership, reflecting broader political differences regarding the responsibility for health care costs.
The future of U.S. health care policy remains uncertain as lawmakers grapple with these issues. Those advocating for government responsibility argue for expanded coverage financed through taxes, while proponents of individual responsibility favor market-driven solutions. Without a resolution to this fundamental debate, the contentious discussion surrounding health care costs and coverage is likely to persist for years to come.