Buying health insurance is about to become even less affordable for millions of Americans, if Congress doesn’t act before the end of the year.

A set of more generous subsidies put in place as a pandemic relief measure is on track to expire at the end of 2025. If allowed to lapse, premiums will soar for many people who rely on health insurance purchased through marketplace plans under the Affordable Care Act. The looming health insurance premium price hike is known as the “subsidy cliff.” 

Millions of Americans who aren’t offered insurance through work rely on the insurance marketplace – and its subsidies – for coverage. That includes self-employed, contract and part-time workers, many students and young retirees not yet eligible for coverage under Medicare. If the extended subsidies expire, people with marketplace coverage will see a 75% increase on average for their monthly insurance premium. 

A helpful calculator from the health policy group the Kaiser Family Foundation demonstrates how dramatic that change might be for American families. In one example, a family of four in West Virginia making $125,000 could go from paying $885 to $2,918 each month –  an increase that could easily put insurance out of financial reach. Because states have their own rules, income limits and subsidies on top of the federal framework, any pain from newly unaffordable premiums will be felt unevenly around the country.

The higher costs could drive an estimated four million people away from the marketplace, sending the number of uninsured Americans up for the first time in years. Marketplace enrollment opens at the beginning of November, so Congress and the Trump administration are on deadline if they want to keep plans cheaper leading into next year’s midterm elections.

Why did marketplace plans get cheaper?

Insurance plans under the ACA have always offered subsidies, known as premium tax credits, that make them more affordable for people in lower income households. What is set to expire at the year’s end is the “enhanced” set of subsidies put in place as a pandemic relief measure during the early Biden administration. Those subsidies meant that many more households could qualify for help paying their insurance premiums. 

The expanded premium tax credits both boosted the portion of the premium covered by the government for many Americans and extended eligibility for the credit to households with an income above 400% of the federal poverty guideline, capping premium payments at 8.5% of income. In 2025, a two-person family with a household income of $84,600 or a four-person family making $128,600 could still be eligible for subsidized insurance premiums under the expansion. 

If the enhanced tax credits lapse, eligibility for the subsidies will revert to their pre-pandemic limits. Households that make between 100% and 400% of the federal poverty guidelines can still qualify, but families with an income exceeding those guidelines would again be on the hook for paying the full monthly premium. Millions of families that signed up with marketplace plans after 2021 may experience sticker shock, having never shouldered the full cost of their monthly insurance premiums. According to KFF data, marketplace enrollees in West Virginia, Wyoming and Vermont are poised for the worst premium price hikes.

The two-year phase of enhanced subsidies was signed into law under the American Rescue Plan Act in early 2021 by former President Biden. The discounts were designed to be temporary, making health insurance more accessible during a difficult time for many Americans, but Biden later extended them for an additional three years through 2022’s Inflation Reduction Act, his signature legislative package focused on the climate crisis. With the extension, the enhanced subsidies are set to expire before 2026 insurance plans kick in unless Congress and the White House intervene. 

The number of insured Americans is way up

Insurance plans offered through the ACA, also known as Obamacare, have ameliorated the number of uninsured Americans over the last decade. The number of people without health insurance in the U.S. has fallen by 20 million since 2013, the year before the first marketplace plans went into effect.

More Americans are signing up for marketplace insurance plans every year, a phenomenon at least partially driven by enhanced subsidies that make the plans more affordable. As of early 2025, 24.2 million people – almost 7% of the U.S. population – opted for health coverage through marketplace plans for the calendar year. 

The number of insured people in the U.S. is at historic highs, but that doesn’t mean health insurance is cheap. Even with Medicaid and marketplace subsidies, more than 1.6 million low-income Americans still slip into a gap between eligibility for Medicaid coverage and marketplace subsidies. 

Almost two-thirds of uninsured adults surveyed by the KFF in 2023 said that they don’t have insurance because they couldn’t afford the cost of coverage. The Congressional Budget Office estimates that 4.2 million more people will be uninsured in 2034 if the enhanced tax credits are allowed to lapse rather than made permanent. The CBO estimates that making the expanded tax credits permanent would increase the national budget deficit by $335 billion from 2025 to 2034.

Republicans once battled to repeal the ACA, but those efforts were famously doomed by a dramatic thumbs down from the late Senator John McCain. Uptake of marketplace plans has soared since the program’s early days, a phenomenon that runs in parallel with the rise of the gig economy, for better or worse.

While the Trump administration hasn’t been shy about gutting insurance coverage for low income Americans to pay for tax cuts, Republicans are wary about how the subsidy cliff might impact their odds in the 2026 midterms. The Trump administration did just announce expanded access to low premium, high deductible “catastrophic” plans for people who don’t qualify for marketplace subsidies starting next year, so right now it looks like the cheaper premiums that help millions of Americans afford insurance may not be long for this world.