More than 100,000 Alabamians are at risk of losing their health insurance if Congress doesn’t extend a set of tax credits that has drastically lowered costs.

The number of people with health insurance through the Affordable Care Act marketplace in Alabama has nearly tripled in the last four years as more people became eligible for subsidies.

But the enhanced premium tax credits responsible for that growth are set to expire by the end of the year and are at the heart of the federal government shutdown.

“I am extremely concerned,” said Debbie Smith, campaign director for Cover Alabama, a Medicaid-expansion advocacy group run by Alabama Arise. “Since we haven’t expanded Medicaid, we rely on these tax credits a lot. It’s really been holding up our health care system as a whole. And that system is not in the best shape, but I fear that it would get a lot worse if the tax credits go away.”

KFF, a health policy research nonprofit, estimates about 130,000 people in Alabama are expected to lose their coverage if the credits aren’t renewed. And premiums for individuals enrolled in the ACA marketplace could rise by an average of 93% in Alabama.

In a report released Thursday, the Commonwealth Fund estimated that Alabama could lose 9,100 jobs, mostly in the health care sector, if the subsidies are allowed to expire. That’s the seventh highest amount of any state in the country.

The enhanced tax credits were first passed by the American Rescue Plan in 2021 – they made more people with higher incomes eligible and expanded the credits to cover more costs – and were extended through 2025 in the Inflation Reduction Act.

In 2020, 160,429 Alabamians were signed up for subsidized health insurance through the Affordable Care Act. By 2025, that number reached 477,838 people, according to KFF.

That’s nearly 10% of the state’s population.

With higher marketplace enrollment, the state has seen a lower rate of people being uninsured. In 2020, about 12% of Alabamians didn’t have health insurance, according to the Public Affairs Research Council of Alabama.

By 2022, a United States Census Survey found that the rate fell to 8.8%.

“These enhanced credits have been crucial to lowering the amount of people that we have in the coverage gap,” said Smith. “Our uninsured rate is absolutely better because of these enhanced premium tax credits.”

Alabama has had the 10th fastest growing marketplace in the country since the subsidies were expanded, according to KFF. Like Alabama, most of the other states in the top 10 also did not expand Medicaid.

“It’s especially important in states that didn’t expand Medicaid, because it’s made that coverage really, really cheap for those low income people that fall into the coverage gap,” said Katherine Hempstead, national health policy expert at the Robert Wood Johnson Foundation.

“It’s led to a huge increase in enrollment in those states and if they’re not extended, Alabama is going to notice this a lot more than, like New Jersey or Massachusetts.”

Rising costs

People across the country could lose insurance for a combination of reasons.

The premium enhanced tax credits, unlike the original Affordable Care Act tax credits, removed an income cap, making subsidies available to people making over 400% of the federal poverty level.

Individuals making more than $62,600 or a family of four with an income over $128,600 can qualify under the enhanced credits, according to the federal government.

If those credits aren’t extended, people above that income level will no longer be eligible for the program.

Experts say others may choose not to enroll because premiums would become too expensive.

According to KFF, premiums on the marketplace would more than double nationwide if the tax credits expire.

Democrats in Congress refused to pass the Republican-sponsored bill to fund the government unless the tax credits were extended, saying it’s an urgent issue that’s helped millions of Americans afford health care.

The Congressional Budget Office estimates that 4 million people will become uninsured if the enhanced tax credits expire. The office also said that extending the policy will cost the government $350 billion over 10 years.

Republicans, however, maintain that the debate over the tax credits can wait and don’t need to be negotiated in the funding bill.

“That’s a Dec. 31 issue,” House Speaker Mike Johnson (R-LA) said. That’s the day the credits are set to expire.

Politicians in the state are similarly divided along party lines.

U.S. Rep. Shomari Figures, D-Mobile, said he could not vote on the funding bill because of what’s at stake for health care in the state.

“Families in Alabama and across the country are at risk of losing their healthcare, and healthcare costs for millions of Americans will skyrocket if the Affordable Care Act premium subsidies are allowed to expire,” the congressman said in a statement posted to X.

“More hospitals are at risk of closing in our rural communities, and costs for everyday people keep rising. Our families and neighbors deserve better than this chaos. Republicans should join Democrats to negotiate in good faith and do what’s best for Alabama and America.”

U.S. Rep. Terri Sewell, D-Birmingham, said 53,000 people in her district, which spans from Birmingham through the western portion of the Black Belt, would lose coverage if the extended tax credits lapsed.

She blamed Republicans for the shutdown, saying they are ‘hellbent on kicking Americans off their healthcare.’

“We are willing to work with Republicans on a bill to end this shutdown and protect the health care of the American people. However, we will not vote to rubber-stamp the Republican assault on our health care system,” she said in a statement posted to social media.

In a statement to AL.com, Alabama Sen. Katie Britt said:

“It’s important to realize why we’re currently in this situation. Democrats created the Affordable Care Act, which has turned out to be anything but affordable, expanded the premium tax credits to everyone with absolutely no income cap when they controlled the government in 2021, and then set them to expire at the end of 2025. Prices are set to increase regardless of whether Congress extends these COVID-era tax credits. The program was deeply flawed from the beginning, and it makes no sense to continue to allow the most wealthy among us to access these credits, which is exactly what the Democrats are fighting for.”

“Now, Democrats have shut down the government over a mess they created, and because Republicans refused to cave to their $1.5 trillion partisan wish list. I want to see Alabamians in need receive quality healthcare, and do not believe holding the government hostage is conducive to having important conversations,” she added.

Sen. Tommy Tuberville, who is running for governor, did not respond to requests for comment about whether he’d support extending the tax credits, either in this funding bill or at a later date.

Health insurance companies covering people enrolled in the Affordable Care Act have already announced higher premiums for next year, partly due to the uncertainty around the tax credits being renewed and the sicker population that could result if they’re not.

According to the Alabama Department of Insurance, Blue Cross Blue Shield reported a 19.3% premium increase, UnitedHealthcare Insurance Company reported a 20% increase and Celtic Insurance Company reported a 25% increase.

“Blue Cross and Blue Shield of Alabama understands that rising premiums are difficult for our members…when we set rates, we’re also carefully estimating next year’s healthcare costs. Uncertainty around federal tax credits and marketplace policies makes this even harder,” Sophie Martin, a spokesperson for the insurance company said in a statement to AL.com.

Martin added that Blue Cross, which is the largest insurance provider in the state, “remains a strong advocate for the continuation of enhanced ACA premium tax credits.”

The enrollment period for the ACA marketplace opens on Nov. 1, though experts say it’s unclear how the uncertainty surrounding these enhanced tax credits will be handled if they’re not renewed by then.

‘Strain on all hospitals’

The possible impacts of the tax credits not being extended reach far beyond just the individuals and families enrolled in the ACA marketplace.

Hospitals throughout the state could be hit hard given that high uninsured rates and uncompensated care is a chief financial strain for them.

“If the ACA Enhanced Premium Tax Credits are not extended, we anticipate the state’s uninsured population could increase by more than 100,000, as working Alabamians will likely be unable to afford health coverage without premium assistance. Hospital emergency departments will become the only place they can turn for medical care,” said Danne Howard, deputy director of the Alabama Hospital Association.

“That not only adds incredible financial stress to hospitals that are already operating on razor-thin or negative margins but also results in a loss of revenue for providers who have been reimbursed for the care provided to these individuals.”

After the Big Beautiful Bill was passed in July, which cut Medicaid spending by about $1 trillion, Howard told AL.com that Alabama wasn’t as impacted as other states given that it wasn’t a Medicaid expansion state.

“It’s basically the status quo for us. We really don’t lose anything in the way things are funded,” she said at the time.

But even then she noted that the biggest hit to the state’s hospitals could come if the tax credits weren’t extended.

“If those subsidies expire in December because they were not extended in this big, beautiful, bill, a lot of people will lose coverage. If you have that many people who become uninsured…it absolutely puts a strain on all hospitals, and it does not help our health outcomes, which are already bad,” Howard said in July.

Alabama has already seen 15 hospitals close since 2011, including seven rural hospitals. Of the state’s 50 rural hospitals, 27 are at risk of closure with 19 of those at immediate risk, according to the Alabama Hospital Association.

Nationwide, a new study from the Urban Institute and Robert Wood Johnson Foundation found that that if Congress allows the enhanced premium tax credits to expire, hospitals, physicians, and other providers will face more than $32 billion in lost revenue in 2026.

Hospitals in particular could see $2.2 billion in uncompensated care costs, according to the report.

In Alabama, the Commonwealth Fund said their ‘conservative’ estimate for the economic impact of allowing the credits to expire could amount to $63 million in state and local taxes and $968 million in GDP.

“Chief among our concerns is the negative impact on the health and well-being of the individuals who, for nearly 5 years, have had health insurance that provided access to primary and preventive medical care and screenings,” Howard said.

“The long-term impact will be negative for hospitals, doctors, Alabama’s economy, and workforce.”

If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.