Millions are starting off the new year with a heftier health insurance bill

This is an adapted excerpt from the Jan. 4 episode of “Velshi.”

Millions of Americans are starting off the new year with a heftier health insurance bill — or no insurance at all. On Jan. 1, enhanced premium subsidies for the Affordable Care Act expired, which will cause premiums to spike for millions of Americans. The issue was central to the government shutdown in the fall, with Democrats insisting on extending the subsidies. 

Ultimately, Republicans did not get behind the effort.

Last year, an estimated 24 million Americans received coverage through Marketplace plans, and a majority of those people received subsidies.

To understand what happens next, it’s important to consider how we got here. The Patient Protection and Affordable Care Act, to use its full name, was signed into law by then-President Barack Obama in March 2010. It’s widely known as Obamacare.

The ACA touched on many aspects of the health care system. One important thing it did was create the health insurance marketplace. 

On the marketplace, individuals, families and some small businesses can directly purchase health insurance plans. This is a crucial option for people who don’t get insurance through an employer or through Medicare or Medicaid.

Last year, an estimated 24 million Americans received coverage through marketplace plans, and a majority of those people received subsidies.

Subsidies are tax credits that make your insurance bill lower. It’s not a handout, as some Republicans might call it. Subsidies make insurance more affordable — the same way employer-sponsored insurance makes your bill more affordable by the employer taking on a share of the costs.

When the ACA was first signed into law and for years following, it offered some subsidies, but there was a hard cutoff: If your income was more than four times the federal poverty level, you received no subsidy.

To put that into perspective, four times the federal poverty level is still not a ton of money in this day and age. In 2024, the federal poverty line was $31,200 for a family of four. 

Four times that figure would be just under $125,000 for a family of four.  So, if your family unit made more than $125,000, you were not eligible for a subsidy.

In March 2021, Congress passed the American Rescue Plan Act, then-President Joe Biden’s Covid recovery stimulus bill. The bill eliminated that subsidy cliff, offering the credit for people at every income level and increasing financial assistance for those at lower incomes who were already eligible.

But that was temporary. 

The credit was later extended in the 2022 Inflation Reduction Act to carry through the end of 2025, which brings us to the first week of 2026. Now, 24 million Americans are about to face dramatically higher health care costs.

An analysis by the KFF, a health policy research organization, found that for the millions currently receiving ACA coverage, annual premiums are expected to roughly double from around $890 a year to an average of $1,900 a year.

Many Americans simply can’t afford that kind of increase. According to a KFF poll taken in November, 52% of people enrolled under the ACA say that if their premium doubled, they would be likely to go without health insurance coverage entirely.

Oscar Bauman and Allison Detzel contributed.