As the Republican Party regains control of Congress, Republicans are looking to reduce health care spending, with a particular eye on cuts to Medicaid and work requirements. While these fights will almost certainly get a lot of attention, it’s important to also pay attention to some of the less splashy policies that are also on the chopping block.
These may not be major programs. Some you may never have heard of. But America’s social safety net relies on a patchwork of many different, sometimes inconspicuous, subsidies that many of us take for granted. Some of these programs may only appear in spending bills as a small line item that few people notice, and that makes it just that much easier for lawmakers to slowly but surely dismantle our social safety net.
Here’s an example: Millions of families are facing a spike in health care costs as crucial subsidies expire at the end of next year. Some families will see their premiums increase by thousands of dollars; others may lose their insurance altogether.
In 2021, President Joe Biden signed the American Rescue Plan Act, which included a provision strengthening the premium tax credit – a component of the Affordable Care Act (ACA) that subsidized premium costs for some lower- and middle-income groups. families. The Biden-era improvements, which essentially expanded the number of people eligible for the tax credit, were originally set to expire at the end of 2022, but Congress extended them through 2025 when it passed the Inflation Reduction Act. (For families at or just above the poverty line, the increased tax credit subsidizes the entire premium. For people earning more than 400 percent of the poverty line — people who previously did not qualify for this subsidy — their premium is limited to 8.5 percent of their income.)
The improved premium tax credits have contributed to a record number of insured people in the United States. In February 2021, before Congress expanded premium tax credits, 11.2 million people were enrolled in health care coverage through ACA marketplaces. By 2024, that number had risen to 20.8 million people.
There are many reasons for the dramatic increase in marketplace coverage – including the fact that millions of people disenrolled from Medicaid coverage after Covid emergency measures expired and had to turn to other forms of insurance, including the marketplace – but the improved premium tax credit played a crucial role. According to the Kaiser Family Foundation, the expansion was the main reason so many more people were able to sign up for health care coverage through the ACA marketplace.
If Congress allows the enhanced premium tax credits to expire, millions of people will see a noticeable increase in out-of-pocket spending. Many will likely lose coverage, and that’s without considering how much more is at stake if Medicaid is also cut. For low-income families, especially those living just above the poverty line, that can be a nightmare.
Who is at risk of seeing higher costs?
The improved tax credits haven’t dramatically changed the health care system, and you probably don’t remember hearing the candidates talk about them much, if at all, during the election. But they turned out to be a crucial, albeit small, improvement to the already existing system, and had immediate and tangible results when it came to getting more people insured.
“The improvements in the premium tax credit have really resulted in huge pocket savings for people – $700 [per year] average,” said Gideon Lukens, senior fellow and director of research and data analysis at the Center on Budget and Policy Priorities (CBPP). “They were actually the primary reason that market enrollment increased… and the uninsured rate fell to an all-time low.”
Currently, about 93 percent of people enrolled through the ACA marketplace receive premium tax credits. But if these tax credit expansions are not extended or made permanent, 3.4 million people could lose their insurance, according to the Congressional Budget Office. The Urban Institute similarly estimates that 4 million people could lose their insurance if Congress does not act in time.
According to the Center on Budget and Policy Priorities, Black and Latino people have benefited the most from the enhanced premium tax credit, so they are likely to be disproportionately affected by the cuts. For example, marketplace enrollment among black people grew by 186 percent after the enhanced premium tax credit went into effect, and among Latino people it grew by 158 percent. In contrast, market enrollment for other racial groups grew 63 percent over the same period.
More than 19 million people are likely to see higher premiums without the enhanced tax credit. Many families could see costs rise significantly, especially if they have moderate incomes or have older members who already have to pay higher premiums. For example, a 60-year-old couple making $82,000 a year could triple their monthly premiums, meaning they would owe an additional $18,400 out of pocket, according to the CBPP report.
The GOP will be responsible for deciding whether the enhanced premium tax credits should expire or be extended. Given the success of the tax credits – which have led to record enrollment – it would be a mistake to abandon the improvements.
While the Republican Party may not necessarily be as eager to expand social programs—it tried and failed to repeal the Affordable Care Act during Donald Trump’s first term—the benefits of the enhanced premium tax credit are extremely tangible , and when they’re gone, millions of Americans will soon notice. That could give Democrats room to pressure Republicans to reach a deal that would ideally make these improvements permanent. So while lawmakers must fight tooth and nail to minimize or prevent cuts to major programs like Medicare or Medicaid, they should also remember that these small adjustments are also worth fighting for, including things like the enhanced premium tax credit or, say, what people can buy with food stamps, these provisions still lower the cost of living for millions of families.
As Republicans regain control of Congress and the White House, it is easy to lose hope that any meaningful anti-poverty efforts will happen at the federal level. But while elections have consequences, they are also not permanent. That’s why I’ll focus in the coming months on the anti-poverty policies that states across the country are experimenting with—experiments that could one day be replicated at the federal level if more politically feasible. Have you taken advantage of state or local programs that you think would be a good model for the rest of the country? If so, I’d love to hear from you. Send me an email at abdallah.fayyad@vox.com.
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