Hospitals are facing a tough road ahead should ACA premium tax credits expire at the end of 2025, leaving more patients uninsured or with higher costs, more incentive to delay or skip care, and an increase in uncompensated care. The AHA has warned this could lead to a $28 billion reduction in hospital spending over the next decade.
“Coverage losses of this magnitude would be unprecedented for our country,” AHIP President Mike Tuffin said in May, noting the potential for an increase in premiums in the individual market and a set back around efforts to tackle chronic disease.
Low- and middle-income individuals are offered premium tax credits to help them purchase health coverage on the ACA marketplace. Originally authorized by the American Rescue Plan Act in 2021, the tax credits were extended by the Inflation Reduction Act through the end of this year. According to CMS, 24.3 million people were enrolled in ACA coverage for 2025, a 13% increase from the previous year.
Republicans’ proposed “One Big Beautiful Bill,” which does not include an extension of the tax credits, could lead to 4 million more people becoming uninsured because of the expiration. According to the Congressional Budget Office, total coverage losses from the bill (with Medicaid losses factored in) could reach 16 million by 2034. While gross benchmark premiums for ACA marketplace plans would decrease by an average of 12.2%, this reduction would largely be due to fewer enrollees and benefit adjustments, not greater affordability.
If the subsidies expire, healthier enrollees are expected to leave the ACA market at a higher rate than those with more significant healthcare needs. Enrollment among people aged 18 to 34 could drop by over 47%, according to Oliver Wyman, and the average net premium per enrollee receiving tax credits is projected to increase by 90%, or about $1,200 annually.
Hospitals that rely heavily on individual and small group reimbursement are likely to see changes in their payer mix as more patients turn to other insurance options or opt out of coverage altogether. The shift would impact those hospitals’ revenues, particularly in regions where ACA market participation is high.
Texas is projected to see the largest increase in uninsured individuals, with over 1 million people expected to lose coverage if the tax credits expire, according to the Commonwealth Fund. Texas is also expected to lose the most healthcare jobs if the credits expire. Nationwide, healthcare employment is expected to decline by 130,000 jobs, with hospitals, physician offices, and pharmacies taking the brunt of the losses. Overall, the U.S. economy would lose 286,000 jobs in 2026, including in healthcare and other sectors, and total state GDPs would fall by $34.1 billion.
Individual states across the country are already seeing how premiums might increase if the tax credits expire. Insurers have started submitting their proposed 2026 rates, which reflect the expected loss of tax credits, with many states seeing average increases in the double digits.
In Washington state, the average proposed increase for individual plans is 21.2%. Connecticut insurers have proposed a 17.8% average rate hike, and New York insurers are requesting 13.5% more on average in the individual market.
