Health Insurance Costs to Climb Sharply for ACA Users in 2025
Starting in January 2025, Affordable Care Act (ACA) insurance premiums will rise significantly, with the average enrollee facing a 75% increase in monthly costs. This drastic hike is tied to the expiration of enhanced premium tax credits, which were implemented during the COVID-19 pandemic to lower health care costs for individuals using the ACA Marketplace.
If someone currently pays $60 a month, that cost could rise to $105 next year. These steep increases are likely to affect enrollment, particularly among relatively healthy individuals, who may opt to forgo insurance altogether due to higher costs. In this scenario, the insurance risk pool could skew toward people with chronic conditions, raising costs for insurers and ultimately for all consumers.
The Congressional Budget Office estimates that allowing these tax credits to expire could result in an additional 4.2 million people becoming uninsured, disrupting progress made during recent years in reducing the national uninsured rate.
Why Insurers Are Raising Premiums Now
Each summer, insurance companies submit detailed rate proposals to state regulators for approval, outlining expected costs and justifications for increases. This year, most insurers cited federal policy changes rather than rising drug or hospital costs. The consensus points to the expiration of premium tax credits as the primary driver behind rate hikes.
These filings, often hundreds of pages long, include not only actuarial data but also narrative explanations for pricing decisions. Insurers expect that without the subsidies, fewer healthy people will purchase plans, leaving the system to cover a disproportionate number of individuals with expensive medical needs. As a result, insurers are preemptively raising rates to accommodate a potentially sicker customer base.
Despite these developments, an extension of subsidies appears politically unlikely. Lawmakers from the Republican Study Committee argue that the tax credits promote unsustainable spending and dependency on federal assistance. They maintain that the government should not intervene to suppress the rising cost of health insurance, which they blame on the structure of the ACA itself.
Pandemic-Era Support Reversals Set to Impact Millions
The enhanced subsidies were introduced during the pandemic to make ACA plans more affordable and significantly increased enrollment. By January 2024, a record 24 million Americans had signed up for ACA coverage, contributing to the lowest uninsured rate in U.S. history.
Enrollment growth was particularly strong in Southern states like Texas, Florida, and Georgia—regions with high numbers of people without employer-provided insurance. If premiums climb and subsidies are not extended, many of these gains may be lost as individuals find themselves priced out of coverage.
The potential rollback of support could affect not only working-class individuals but also small business owners and self-employed workers who rely on the ACA for health insurance. Without intervention, the expiration of these financial supports could push millions back into the ranks of the uninsured, with significant public health and economic consequences.
Consequences of Policy Inaction
The broader effects of this premium surge are multifaceted. Rising premiums may not only discourage enrollment but also undermine trust in the health insurance system itself. Advocacy groups are warning of a ripple effect that could strain hospitals and clinics as more people delay or avoid care due to lack of coverage.
The Centers for Medicare & Medicaid Services advises current enrollees to carefully review their options during the next open enrollment period and consider alternative coverage plans if available. However, analysts warn that there are few viable alternatives for people who fall between Medicaid eligibility and employer-based insurance.
At the heart of the issue is a policy debate over the role of federal support in health care. Without action, the ACA marketplace could see its most dramatic enrollment decline since its inception, challenging the long-term stability of one of the United States’ most ambitious health reform efforts.
For up-to-date information on ACA changes, visit the U.S. Department of Health & Human Services.
