When the pandemic hit in 2020, millions of Americans lost their jobs, and along with them, their health insurance. To keep people covered, Congress expanded the Affordable Care Act’s premium tax credits (PTCs) through the American Rescue Plan Act (ARPA) and later extended them under the Inflation Reduction Act (IRA). These “enhanced” subsidies made health insurance dramatically more affordable for working families and even extended eligibility beyond the usual 400% of the federal poverty level.
The catch? They were never meant to last forever. Unless Congress acts, these enhanced credits will expire at the end of 2025, sending premiums back to pre-2021 levels.
The Sticking Point in Washington
The fate of these subsidies has become one of the key sticking points in the current funding impasse that has led to a partial government shutdown.
Democrats are pushing to include an extension of the enhanced ACA subsidies in the funding bill, arguing that millions of Americans would otherwise see unaffordable premium hikes. Republicans contend that these subsidies were temporary pandemic measures that should end as the economy stabilizes.
Both sides see fiscal responsibility differently, Democrats through continued access to affordable healthcare, Republicans through reduced federal spending. As a result, the disagreement over healthcare funding has become a central factor holding up broader government operations12.
The Problem with a Sudden Expiration
The national economy looks solid on paper — low unemployment, steady job creation — but for many working families, especially in rural communities like Southeastern Kentucky, recovery feels uneven. Incomes have barely kept pace with inflation, and healthcare costs continue to rise faster than wages.
If the enhanced subsidies expire all at once, millions of Americans could see their monthly premiums double overnight. In fact, the Kaiser Family Foundation (KFF) estimates that premiums for subsidized marketplace enrollees would have been 93% higher in 2024 without the enhanced tax credits3.
That’s a particularly heavy burden in Southeastern Kentucky, where median household income remains well below the national average and Medicaid expansion has played a major role in reducing the uninsured rate4.
The Case for a Gradual Phase-Out
Instead of choosing between two extremes — permanent extension or abrupt expiration — Congress could take a balanced approach: a phased rollback of the enhanced credits.
Here’s how it could work:
- Year 1: Reduce the enhanced subsidy amount by 25%.
- Year 2: Reduce by another 25%, continuing until pre-2021 levels are restored.
- Keep the 8.5% income cap in place for the first two years to protect middle-income families.
- If the economy weakens or real household incomes stall, pause the rollback for a year.
This approach would protect families from sudden premium spikes, give insurers and state exchanges time to adjust, and gradually reduce federal spending.
A Balanced Path Forward
A phased rollback honors both sides of the debate. It recognizes the fiscal reality that temporary programs shouldn’t last forever, but also acknowledges that many Americans — particularly in rural Kentucky — still need a safety net while wages and household savings recover.
Health policy doesn’t have to be all-or-nothing. With a little foresight and compassion, Congress can phase out pandemic-era aid responsibly, and maybe even break the gridlock that’s keeping Washington closed for business.
If you think Congress should consider a phased rollback approach to end the gridlock and get back to work, use the template below to contact your representatives. Go to https://www.congress.gov/members/find-your-member to find your representative’s contact page.
Subject: Encourage Inclusion of Phased Rollback of ACA Subsidies in the Current Funding Bill
Dear [Representative],
As a constituent from [State/Region], I urge you to include language in the current funding bill that authorizes a phased rollback of the enhanced Affordable Care Act (ACA) premium tax credits. Doing so would offer a pragmatic compromise to break the current budget impasse while protecting rural families from sudden premium hikes.
The enhanced subsidies, introduced in 2021 as pandemic relief, are set to expire at the end of 2025. Letting them lapse all at once could double out-of-pocket premiums, particularly in our rural areas.
A four-year phased rollback, reducing enhanced subsidies by 25% annually while initially keeping the 8.5% income cap, would:
– Prevent abrupt coverage losses,
– Provide insurers and exchanges time to adjust, and
– Gradually reduce federal spending.
Including this provision would demonstrate bipartisan leadership—addressing fiscal concerns while safeguarding access to care for working families across America.
Thank you for considering this practical compromise.
Sincerely,
[Name]
- The Washington Post – Senate pushes closer to shutdown after Democrats spurn funding bill ↩︎
- The Guardian – Democrats reject spending bill over healthcare cuts as shutdown looms ↩︎
- Kaiser Family Foundation – How Much Will ACA Premium Payments Rise if Enhanced Subsidies Expire? ↩︎
- Kaiser Family Foundation – Kentucky Medicaid and Marketplace Data ↩︎