In most articles about the looming expiration of the enhanced premium tax credit (EPTC) associated with the Affordable Care Act (ACA), the authors tend to focus on how many people are at risk of losing their insurance. While a central feature of the debate over whether or not to keep these tax credits, it only tells part of the story.

I've seen this information sliced and diced and repackaged lots of ways. But in a recent Commonwealth Fund issue brief, the authors go farther than most, analyzing the broader impact on hospitals, care providers, insurers, health workers, and so on. They even look at the impact on businesses on the periphery of healthcare that will be affected when, for instance, rural hospitals have to shut down due to a lack of funding as a direct result of dipping Obamacare enrollment numbers.

Going even further, the authors of the data brief also forecast the impact of these potential changes on economies, employment, and tax revenue on every state plus the District of Columbia. It's a holistic approach that foregrounds the danger to everyone within shouting distance of the healthcare industry of a collapse of the EPTC, and even those outside of the industry.

The EPTC is one of two existing Obamacare subsidies, and it helps low- and middle-income individuals and families who meet certain criteria to buy insurance through the ACA health insurance marketplaces at an affordable rate.

The ball is now in Congress' court to reauthorize EPTC legislation. Needless to say, if these tax credits are allowed to expire later this year, as they are scheduled to do, costs will rise sharply and fewer people will be able to afford to stay on their plan. This will lead to millions of people losing health coverage.

To set a baseline for the discussion, I'll post six graphs that tell the story of the progress that Obamacare has made in the past five years in enrolling steadily (and then drastically!) more people.

For those uninitiated in things like insurance exchanges and tax credits, I only ask that you look at the trend lines for now, which I've provided to give you a sense of how literally everything is moving in the right direction. The charts are broken down by so-called "metal level," which is just another way of saying "insurance plan type." The "metal" comes from their naming convention, such as gold, silver, bronze, and platinum.

Please note that this data comes only from the 31 states that are considered "inside the ACA exchanges." These are states that either have Federally Facilitated Exchanges (FFE) – including states performing plan management functions – and states whose State-based Exchanges rely on the federal information technology platform for QHP eligibility and enrollment (SBE-FP). Put another way, these 31 states use Healthcare.gov as the underlying infrastructure of their plans.

Don't worry about the particulars of this right now, as I'll get into these distinctions a little further down. Just know that this data doesn't represent the entirety of the performance of ACA insurance exchanges. That said, to me it's a good indicator of broader trends at work.

First up, the data for gold plan enrollees:

This is a good graph to start with, because you can very clearly see where enrollment numbers drastically increased in 2024. There are reasons for this, which I'll detail in a minute. Next up, let's look at silver plan enrollees:

You might have noticed a significant jump in the total numbers of enrollees for the silver plan in the year 2024, and there's a good reason for that. That's because incentives have tipped over time toward driving people toward this plan. We'll investigate why in a little bit. Next we have bronze plan enrollees, followed by platinum, catastrophic, and expanded bronze enrollees:

Look at those trend lines! They're all ramping up, no matter the metal level. Keep this in mind as we explore the consequences of making it more challenging for people to enroll in Obamacare.

Before we get started, I think it's important to keep in mind that these enrollees are human beings we're talking about, and their lives will drastically change if these measures aren't extended. It's important to ground the numbers I'll be pointing to in this reality, because this sort of blog post can rapidly become an intellectual exercise if we're not careful. There's a lot on the line here.

Of particular note, the previously-mentioned Commonwealth Fund issue brief notes that consequences of not extending the tax credits would fall most squarely on Black and Latino Americans. In addition, residents of states that haven't expanded Medicaid under the ACA will be disproportionately affected. These two groups – African American/Latino populations and residents of non-Medicaid expansion states – overlap significantly.

Indeed, according to the Center on Budget and Policy Priorities, as of 2024, the following was true:

"Some 38 and 33 percent of Black and Latino people, respectively, reside in non-expansion states, compared to 26 percent of the overall U.S. population…Texas alone, where roughly 1 in 5 Latino people in the U.S. live, is home to 74 percent of Latino people in the coverage gap."

What is this so-called "Medicaid coverage gap"? People facing this issue earn incomes below the federal poverty level, and their income level makes them ineligible for financial assistance through the ACA marketplaces; at the same time, they don’t qualify for Medicaid because they live in one of the states that have not adopted the ACA Medicaid expansion. A total of 1.6 million uninsured adults are stuck in the coverage gap, and African Americans and Hispanics make up a disproportionate percentage of this population.

We'll look at these trends in more depth a little further down, but briefly, in 2024 the Urban Institute found that "Black and Hispanic people will see greater reductions in the percent of uninsured people relative to White people because of enhanced PTCs." The inverse of this is true as well: if the EPTCs go away, an outsized number of these minority groups will feel the negative effects.

It's also worth noting at the outset that any changes to Medicare, no matter their specific target, are deeply unpopular with the American public. While not mentioning the EPTC directly, a recent KFF survey found the following:

"...fewer than one in five (17%) say they want to see Medicaid funding decreased. In fact, most people say funding for Medicaid should either increase (42%) or stay about the same (40%)."

When it comes to Medicaid funding, it should be no surprise that a strong majority (64%) of Democrats favor increasing spending, as do four in ten independents. Sentiment for increasing Medicaid funding also holds true broadly across Republican ranks, and interestingly, about three in four total rural residents and two-thirds of rural Republicans say funding should increase or stay the same.

No matter how you frame it, cutting Medicare and Medicaid benefits are not broadly popular prospects. Before we go any further and start digging into the data, a quick primer on the EPTC is in order.

The EPTCs, which started out as just PTCs (more on that evolution below), are available only to people residing in states that have accepted extended Medicaid benefits. As stated before, the PTCs were established under the ACA, and it helped people previously unable to afford insurance to gain coverage. The tax credits have evolved over the years, most significantly in 2020 and 2022.

The enhanced (sometimes also called "advanced") premium tax credit is based on an individual's estimated income and household size, and it takes into account how much health coverage costs in a given state.

As the Commonwealth Fund notes, "As part of the American Rescue Plan Act of 2020, Congress increased the ACA marketplace premium tax credits (PTCs) to ensure that Americans had access to affordable health insurance during the pandemic. In 2022, Congress extended these enhanced tax credits through 2025 as part of the Inflation Reduction Act."

As the Congressional Budget Office (CBO) puts it, "ARPA reduced the maximum amount eligible enrollees must contribute toward premiums for health insurance purchased through the marketplaces established by the Affordable Care Act, and it extended eligibility to people whose income is above 400 percent of the federal poverty level (FPL)." The Inflation Reduction Act (IRA) extended the ARPA provision for three additional tax years, 2023 to 2025.

Remember how my graphs all showed a significant uptick in enrollment numbers in 2024? This is likely because of the IRA extending ARPA provisions. As the CBPP puts it, "...a record-breaking 21.4 million people had selected a marketplace health insurance plan for 2024. This is a 30 percent increase over last year and is the fourth consecutive year of record ACA marketplace enrollment."

Referencing the IRA and ARPA, the CBPP goes on to say the following:

"Those laws also removed the income cap on premium tax credit (PTC) eligibility (previously set at four times the federal poverty level, or about $58,000 a year for an individual), ensuring that no one pays more than 8.5 percent of their income for the silver-level benchmark plan. These enhancements have driven consistent enrollment growth since 2021."

If you recall the graph at the beginning of this post showing how enrollment in the silver plan has shot through the stratosphere in the ensuing years, this is the likely reason behind it. Now that we're in the final year of that expansion, Congress has to revisit this issue and decide whether or not to extend the tax credits yet again.

Offering these progressively more generous premium tax credits spurred ever-increasing enrollment in ACA marketplace insurance, which contributed to record low uninsured rates. As of 2024, 93 percent of marketplace enrollees – which equates to 19.3 million people – receive premium tax credits, which is a record level of enrollees.

As part of the Affordable Care Act, the framers stipulated two different approaches for lowering monthly insurance premiums. You might have heard them referred to as Obamacare subsidies. The first of these we've already talked about: EPTCs. The second is what is known as Cost-Sharing Reductions, or CSRs.

Similar to EPTCs, CSRs provide extra savings that reduce beneficiaries' out-of-pocket costs. A person must fill out an application online to see if their income level qualifies them to receive out-of-pocket cost savings, and they must enroll in a silver plan (more on the tiered plan structure below). If you cast your mind back to the graphs at the beginning of the post, you'll see mounting evidence for why most enrollees elect for the silver plan.

These savings are achieved by lowering an enrollee's deductible, coinsurance rate, or copays. The out-of-pocket maximum is also limited by this subsidy. Some potential enrollees may be eligible for both the EPTC and CSRs, and this can help them save on annual health plan costs.

I think it's worthwhile to give a very brief overview of how the APA insurance exchanges work, and also to take a general look at the flavors of insurance plans nationwide. It will help to keep in mind the various types of plans when we look at trends a little further down, and how all of this will likely reverse if the tax credits aren't renewed.

When looking at data from the health insurance exchanges, it's important to understand that they fall into three broad categories:

A total of 31 states fit into the first two categories listed above (FFE + SBE-FP) – these are sometimes referred to as being "inside the ACA exchanges." It's data from these exchanges that I used to inform my graphs at the top of this post. On the other hand, 20 states plus the District of Columbia fit into the third category and don't use the federal government platform ​to determine plan eligibility or enact enrollment. These latter states are referred to as being "outside of the ACA exchanges."

I'm not 100% sure about this, but it seems that for the plans inside the ACA marketplace, enrollees must pick one of the four so-called "metal tiers," or gold, silver, bronze, or platinum. In other words, the other two categories aren't available to them. The defining features of these tiers is something called "actuarial value."

Put simply, actuarial value – or actuarial value percentages – represent how much of a typical population’s medical spending is covered by a health insurance plan.

I like the following definition of actuarial value provided by a website called Beyond the Basics:

"The actuarial value is 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans, and 90 percent for platinum plans. The higher the actuarial value, the more the plan covers of a typical population’s costs (and thus the typical population would pay less out-of-pocket). A lower actuarial value means the plan covers less of the costs (and the population pays more). The actuarial value calculation focuses mainly on cost-sharing charges. This means that a bronze plan generally would have higher overall enrollee cost sharing than a gold plan would."

It's worth stopping for a minute and asking why residents of states that haven't expanded Medicaid will be most affected if the tax credits aren't renewed. Earlier we examined how certain minority groups, which are disproportionately represented in non-Medicaid expansion states, would fare worse than other groups if the EPTCs weren't extended. But what's so special about Medicaid that states with less robust versions come out on the short end of the stick? The Commonwealth Fund article provides us with some insight:

"Residents of these states are more reliant on enhanced PTCs, because their legislatures and governors have not taken up the ACA’s Medicaid expansion and there are no other affordable health insurance options."

These states include Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. In addition to many people in these states and others losing their insurance, it's also worth pointing out that the CBO predicts "that not extending the credit will increase the number of people without health insurance and raise the average gross benchmark premiums for plans purchased through the marketplaces."

What are these benchmark premiums that are likely to rise? The Paragon Health Institute tells us that "a benchmark plan is the second lowest-cost silver plan premium in the consumer’s region. The Premium Tax Credit (PTC) related to Affordable Care Act plans is based on the cost of the benchmark plan as it relates to the household income of the insurance enrollee. The higher the benchmark plan premium, the larger the PTC."

The American Hospital Association adds numbers to the mix, stating that "The lack of an extension would also increase gross benchmark premiums by 4.3% in 2026 and by 7.9% on average from 2026-2034." So not only will people lose their insurance, but for everyone else obtaining insurance through the insurance exchange, their premiums will likely rise significantly.

While the knock-on effects of stopping the EPTC are fairly straightforward, it's worth reviewing how the authors of the Commonweath Fund issue brief conceive of them:

"The dynamics of this ripple effect work as follows. As the enhanced PTCs disappear, former recipients will likely either become uninsured or shift to another form of health insurance. Health insurers, in turn, will no longer collect the PTCs (and other insurance payments), causing them to cut payments for patient care to hospitals, doctors’ offices, pharmacies, and other health providers. For their part, health providers will need to cut jobs — some could even close due to loss of revenue. This would lower access to health care overall, even for people who remain insured."

Wait, there's more!

"Providers will also need to reduce payments to businesses in their supply chains, and, in response, those firms will be forced to cut labor and other costs. As employees lose income, they must reduce spending on consumer goods and services. Finally, the loss of individual and business income results in less state and local tax revenue collected."

It's on these last two items – a reduction in consumer spending and loss of state and local tax revenue – that every American should be focused. For me, these concerns represent a wider picture of the repercussions of Congressional inaction. These two eventualities could affect all of us, no matter our medical status. They throw into stark relief the deep consequences of ending these tax credits, particularly in states that haven't expanded Medicaid coverage.