Michiganders are bracing for a significant change in health insurance costs thanks to tax credits set to expire at the end of December.
U.S. lawmakers failed to extend COVID-era subsidies for Americans who secure coverage through the Affordable Care Act (ACA) marketplace. That means those enhanced tax credits secured in 2021 will expire on Jan. 1.
Without the enhanced premium tax credits, the average annual premium is expected to increase from $888 in 2025 to $1,904 in 2026, according to the nonpartisan health policy research group, KFF.
In Michigan, an estimated 484,000 residents have benefited from those subsidies, according to the U.S. Joint Economic Committee. Without the tax credits, the committee estimated about 137,700 people would lose their ACA coverage.
Additionally, the federal committee estimated the effects of spending cuts through President Donald Trump’s “One Big Beautiful Bill Act” would cause another almost 260,000 Michiganders to lose Medicaid coverage.
The ACA marketplace provides health insurance for people who don’t have access to employer-provided health insurance or other public insurance options like Medicare and Medicaid.
Subsidies are available for enrollees who make less than 400% of the federal poverty level. That would be about $60,240 for a household of one in 2025 with a higher bar for increasingly large families.
In 2021, Congress added the enhanced premium tax credits during the COVID-19 pandemic. That helped residents afford coverage regardless of income status.
According KFF, a survey found about 25% of respondents said they would very likely go without health insurance next year rather than pay a premium of double or more.
Democrats in Congress fought for an extension of the enhanced subsidies. Disagreements on the topic was the key factor in the government shutdown, which extended from Oct. 1 through Nov. 12.
The majority of Republicans have been unwilling to extend the program, citing fraud and cost issues.
Enough Democratic lawmakers conceded on the issue and agreed to reopen the government based on an agreement that the Senate would vote on legislation to extend the ACA tax credits. That vote on a pair of bills, including a three-year extension, failed on Dec. 11.
Congress still could extend the subsidies at the first of the year. On Dec. 17, four Republicans in the House of Representatives, none from Michigan, broke ranks and joined Democrats to force a vote in the chamber on extending the subsidies in January. This was a rebuke of House Speaker Mike Johnson, R-LA, who had refused to bring an extension up for a vote.
But even if the measure passes, it would face an uphill battle getting out of the Senate.
A health care bill authored by House Republicans did pass on Dec. 17, but it does not address the main issue of expiring ACA tax credits, rather focused on insurance options and cost-sharing.
The bill would allow small businesses to offer their own health plans, restores funding stopped in 2017 for cost-sharing reductions, which is a different type of subsidy designed to help eligible ACA enrollees on silver plans with some out-of-pocket costs and would also require more transparency from pharmacy benefit managers related to prescription drug pricing practices.
Some Republicans who face tough reelection bids next year are concerned about the ACA premium spikes on the horizon. President Donald Trump has said repeatedly he does not want to extend subsidies, preferring to bypass insurance companies and pay people directly, but there isn’t a plan.
In the meantime, Trump said before Christmas that he planned to convene insurance companies in the coming weeks, in an effort to get them to reduce costs for the more than 20 million Americans set to see their premiums increase at the end of the year.
Senators remain engaged in bipartisan health care talks on a compromise bill.
Open enrollment for 2026 coverage ends Jan. 15. For more information, visit HealthCare.gov. Former President Barack Obama signed the Affordable Care Act, also known as Obamacare, into law in March 2010.