Looming Deadlines for Healthcare Subsidies
December 2, 2025
Roshan Shivnani
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December 2, 2025
Roshan Shivnani
For Americans, healthcare is one of the most basic of services. However, the issue of unaffordability has driven a need for government intervention over the past few years. It's why, from the 2021 American Rescue Plan to the 2025 Inflation Reduction Act, premium subsidies under the Affordable Care Act were created and extended to lower what marketplace consumers pay. These subsidies capped the cost of a benchmark plan at about 8.5% of income and expanded eligibility above 400% of the federal poverty level. However, these services may soon fizzle away. That’s because the deadline to extend these enhanced Affordable Care Act premium subsidies is imminent, with its expiration date on December 31, 2025.
Assuming that Congress can’t reach a bipartisan agreement and fails to meet the deadline, it would mean that the subsidy formula would revert to the pre-2021 rules on January 1, 2026. The result would be smaller tax credits for people between 100% and 400% of the federal poverty line and an outright removal of help for those above that threshold. The Kaiser Family Foundation anticipates that average monthly premium payments for marketplace enrollees would more than double without the enhanced credits, which serves as a massive price shock for the roughly 22 million people who currently receive ACA tax credits. That’s led many insurers and state exchanges to warn of similar price jumps extending to many middle-income families.
That puts the question of extending subsidies in the scope of a larger debate over spending and the recent government shutdown. The majority of Democrats are pushing to at least continue the current enhancements, and many favor making them permanent, under the notion that letting them lapse would amount to a stealth premium increase on working-class enrollees. Notably, that line of thought isn’t extreme, with Kaiser Family Foundation polling finding that 78% of Americans, including a majority of Republicans, want the marketplace tax credits extended.
That’s caused Republicans to split. Conservatives have been willing to let the subsidies expire, whereas moderates in competitive districts warn that premium spikes would be politically and economically damaging. Even President Trump recently signaled that it “may be necessary” to support some extension as the December 15 sign-up deadline for plans starting January 1 approaches. But a budget burden makes the choice difficult. Some financial models estimate that a one-year extension of the enhanced subsidies would add about $30 billion to federal deficits, and a permanent extension would add roughly $350 billion over ten years. Ultimately, whatever compromise Congress chooses this month is bound to have ripple effects across the health and financial security of the country.
Read more here:
Committee for a Responsible Budget (CFRB)
3 Points
1. Premium Price shocks
Most basic of points, I’d focus on 1. Quantifying how most Americans barely afford care, so these subsidies are a lifeline 2. No extension means that the line is pulled away
2. Hospital Collapse
Lots of hospitals, especially rural operate very thin margins. If care is unaffordable and people no longer buy it, it also pushes these hospitals barely staying afloat into closure.
3. Insurance retreat
I think this could be an interesting point. Insurance companies love to operate in safe industries with immense certainty. If you can correctly explain how a failure to extend the subsidies feeds into larger uncertainty, which would drive insurance companies out of the industry, I would say this point has the most “wow” potential.
Analysis + Concluding Thoughts
This is a kind of question where the answer isn’t very complicated, so use that to your advantage and focus on clean delivery, strong impacts - which the question lends itself very well too.