ACA subsidies expire after Senate fails to act on shutdown deal

Congress created enhanced ACA premium tax credits in the American Rescue Plan Act of March 2021 in response to COVID-19. The credits expanded eligibility beyond the original ACA thresholds — previously, only people earning up to 400% of the federal poverty level qualified; the enhanced credits extended subsidies to everyone, with no income cap, and capped premiums at 8.5% of income regardless of how much someone earned. The Inflation Reduction Act of August 2022 extended them through Dec. 31, 2025.

KFF estimated that 22 million people received enhanced tax credits in 2025 — representing about 92% of all ACA marketplace enrollees. About 3.4 million of those enrollees, earning between 100% and 150% of the federal poverty level, paid $0 per month in premiums. For all 22 million, the Jan. 1, 2026 expiration represented an average premium increase of 114% — the equivalent of a doubling of out-of-pocket health insurance costs with no change in coverage.

The enhanced subsidies became the central sticking point in the 43-day government shutdown. Senate Democrats refused to vote for a clean continuing resolution without a commitment to extend the credits. As part of the Nov. 12 shutdown deal, Senate Majority Leader JTJohn Thune and eight Senate Democrats agreed to a December vote on a subsidy bill of Democrats' choosing. Thune delivered the promised vote, but the commitment was to a floor vote — not a guarantee of 60 votes or a commitment to support the Democratic bill.

On Dec. 11, 2025, the Senate voted on two competing health care proposals. The Democratic Lower Health Care Costs Act, a clean three-year extension of the existing enhanced credits, failed 51-48: all 47 Democrats and independents plus four Republicans — Susan Collins (ME), Josh Hawley (MO), Lisa Murkowski (AK), and Dan Sullivan (AK) — voted yes. Forty-four Republicans voted no. Steve Daines (R-MT) missed both votes.

The Republican alternative, authored by Sens. BCBill Cassidy (R-LA) and Mike Crapo (R-ID), also failed 51-48. Their bill would have provided up to $1,500 per year in health savings account deposits for Americans earning less than 700% of the federal poverty level — but only for bronze or catastrophic plans, which have average deductibles of around $7,000. The money could not be used to pay premiums. Republicans argued the plan 'delivers the benefit directly to the patient, not to the insurance company.'

Democrats rejected it as inadequate: 'Under the Republican plan, the big idea is to hand people about $80 a month and wish them good luck,' Senate Minority Leader CSChuck Schumer said before the vote. Rand Paul (R-KY) was the only Republican to vote no on the Cassidy-Crapo bill, saying it didn't go far enough in unwinding the ACA. The Collins and Hawley crossover votes — which matched on both bills — suggested four Republicans were open to a deal but not enough to force leadership's hand.

In the House, Democrats tried a different tactic. A discharge petition — a procedural tool that lets members force a floor vote without leadership's approval if they collect 218 signatures — was filed on the three-year subsidy extension. On Dec. 17, four House Republicans crossed party lines to sign it: Brian Fitzpatrick (PA), Mike Lawler (NY), Rob Bresnahan (PA), and Ryan Mackenzie (NY), all representing competitive districts with significant ACA enrollment. Speaker Mike Johnson had opposed the extension and drafted a weaker GOP alternative.

But when the procedural vote came, all four of those Republicans voted with leadership to block the discharge petition, 204-203. Their signatures made the petition newsworthy; their procedural vote killed it. Rep. Jared Golden (D-ME) and Rep. Brian Fitzpatrick also separately co-sponsored a two-year extension bill with new eligibility requirements, and Rep. Jen Kiggans (R-VA) and Josh Gottheimer (D-NJ) filed a one-year extension. Neither advanced.

The states where subsidy expiration hit hardest were predominantly Republican-leaning. 🌴Florida had the highest ACA marketplace enrollment in the country — about 4.3 million enrollees in 2025. 🤠Texas had approximately 2.2 million. 🍑Georgia, 🌲North Carolina, and 🔔Pennsylvania each had more than 500,000. These five states alone accounted for nearly 40% of the 22 million subsidy recipients.

Senators and representatives from those states faced a political tension: their constituents stood to lose the most from expiration, but their party leadership opposed extending the credits. Murkowski's and Sullivan's yes votes reflected 🐻Alaska's high cost of living and significant individual market enrollment. Hawley's yes vote was notable given his general alignment with Trump on other issues — and signaled he saw political risk in voting against health care affordability in a state (🌉Missouri) with significant rural ACA enrollment.

KFF projected that the average annual premium for a subsidized ACA enrollee would rise from $888 in 2025 to approximately $1,904 in 2026 — a 115% increase. But averages obscure the sharpest cases: a 60-year-old earning $40,000 in a high-cost state like 🦬Wyoming or ⛰️West Virginia could see monthly premiums jump from roughly $150 to more than $1,200 for a midlevel silver plan. At those prices, most older, lower-income enrollees would be priced out of coverage entirely.

The Congressional Budget Office had estimated that extending the enhanced credits for three years would cost approximately $335 billion over the budget window. Senate Republicans argued this was a cost the government couldn't afford and that the subsidies inflated insurance company profits without sufficiently controlling underlying health care costs.

The broader political context shaped Republican intransigence. Senate Republicans passed the 'One Big Beautiful Bill' in July 2025 using budget reconciliation — a procedure that allows simple-majority passage for tax and spending legislation — which included more than $1 trillion in Medicaid cuts and extended Trump's 2017 tax cuts. The reconciliation bill did not extend ACA subsidies despite their popularity. Republicans then argued they couldn't extend the subsidies separately because doing so would cost money not offset by other cuts.

Democrats framed the Dec. 11 vote as a deliberate exposure of Republican priorities: the party had just passed $1 trillion in tax cuts for corporations and high-income earners through reconciliation while blocking $335 billion in health care subsidies for working families through regular order. Schumer said after the vote: 'After today's vote, the American health care crisis is now 100% on Republican shoulders.'

The subsidy expiration did not mean the ACA itself was repealed or that marketplace plans stopped being sold. Insurers still offered plans in 2026 — but at dramatically higher premiums. Enrollment data for 2026 was expected to show a significant decline as people priced out of coverage dropped their insurance. Actuaries warned of a 'death spiral' risk: as healthier people drop coverage because of higher costs, the remaining pool of insured people is sicker on average, driving premiums higher still for everyone who stays. The CBO projected that 3-4 million people would lose coverage in 2026 as a result of the expiration.

Health economists noted that the geographic concentration of the impact — in Trump-voting states with high rural ACA enrollment — created a structural political vulnerability for Republicans heading into the 2026 midterms. Democrats began building a campaign messaging strategy around the premium increases before the Dec. 31 deadline had even passed.