ACA Premiums Are Rising — But Not Because of Expiring Subsidies

As we move into the 2026 plan year for health insurance under Obamacare or the Affordable Care Act (ACA), many headlines suggest that the expiration of the enhanced subsidies from the Joe Biden era is the main reason premiums are going up. However, a recent study by the Paragon Health Institute finds that the subsidy rollback accounts for only a small fraction of the premium increase, Breitbart News reports..

What the Data Shows

Specifically, Paragon looked at benchmark premium filings and found that the average premium for a representative 50-year-old enrollee earning 200 percent of the federal poverty level is projected to rise from about $8,326 in 2025 to $9,991 in 2026. Of that roughly $1,665 increase, only $333—about 4 percent—is attributed to the expiring pandemic credits. The other $1,332—around 16 percent—of the increase stems from other factors. In short, the narrative that premiums are soaring because the Biden-era enhanced credits are being pulled back does not align with these filings. (RELATED NEWS: Health Insurance Open Enrollment: What to Know Before Jan 15)

So What Is Driving the Increase?

While the subsidy change plays a modest role, insurers and analysts identify several underlying factors pushing premiums higher:

Rising medical utilization and inflation. Health-care services are becoming more expensive, and people are using more services.
Drug and specialty therapy costs. The cost of new treatments such as GLP-1 drugs for weight-loss and diabetes, biologics, and gene therapies is accelerating.
Consolidation in health-care markets. Fewer providers and insurers mean less competition, which can raise costs.
Work-force shortages and inflation-driven overhead. Higher labor costs and inflation are adding pressure throughout the system.
Structural design issues in the ACA individual market. Structural flaws that have plagued Obamacare since 2014 still weigh on premiums.

Thus, the premium spike reflects a complex mix of underlying cost pressures rather than simply the loss of one subsidy program.

Why the Subsidy Expiration Still Matters — But Not As Much

It’s important to clarify what the subsidy change does do. At the height of the pandemic-era credits, many enrollees paid very low or even zero premiums because the federal government covered a high share of costs. Under those enhanced credits, taxpayers were covering up to 93 percent of the typical enrollee’s premium. Even after the enhanced subsidies expire, the federal government will still cover more than 80 percent of the typical enrollee’s premium via the regular subsidy structure.

However, because the underlying premiums are already rising based on the cost drivers listed above, the loss of the extra subsidy simply strips away a cushion rather than triggering the whole premium rise. This nuance is what analysts highlight: the premium jump is not primarily about the subsidy phase-out; it’s about the underlying cost spiral.

Still, for many consumers, the expiration of the enhanced credits may feel significant — especially if the premium rise is layered on top of subsidy reduction.

What This Means for Consumers

For individuals shopping in the ACA marketplace, here are some key take-aways:

Expect higher premiums next year. Although the enhancement phase-out is a small part of the puzzle, the cost pressures mean significant rate hikes are likely.
Subsidies will still exist. Most enrollees will continue to receive federal help, even without the enhanced pandemic credits. That means their out-of-pocket premium may increase less than the headline rate hike.
But premiums alone don’t tell the whole story. Even if federal assistance limits what you pay, rising costs will impact the system broadly — including deductibles, provider costs, and service prices. (MORE NEWS: Broadband Overhaul: Trump Fixes Biden’s Failed $42.5B Plan)
Shopping matters. With premium increases coming, comparing plans, considering metal levels (bronze, silver, gold), and checking subsidy eligibility will be more important than ever.

Looking Ahead: Policy Implications

From a policy perspective, the findings raise some important questions:

If the premium rises are mostly driven by structural cost pressures, then extending the enhanced credits may not be sufficient to rein in rate hikes. It may offer short-term relief for consumers’ out-of-pocket costs, but it does not fix the root causes of rising premiums.
Addressing healthcare cost inflation, market consolidation, drug pricing, and utilization may be a more durable strategy to stabilize premiums.
The narrative around the subsidy expiration needs nuance. Policymakers and the public may assume that losing the enhanced credits triggers the entire premium surge. The data suggests otherwise. Misdiagnosis of the problem can lead to less effective solutions.

Final Take

While many are attributing the upcoming surge in Obamacare premiums to the end of the Biden-era enhanced subsidies, the data tells a different story. The expiration of those credits contributes only a small part of the total increase. The bulk of the premium rise stems from longstanding cost pressures: medical inflation, expensive drugs, consolidation, and other systemic factors.

For consumers, this means higher premiums are on the way — but subsidies will remain, and many will still be protected from the full rate increase. For policymakers, the challenge is clear: reducing premiums sustainably requires tackling the root drivers of cost, not just extending temporary subsidy enhancements.

As the 2026 plan year approaches, both shoppers and lawmakers would benefit from understanding this complexity. The premium spike is real. But the story behind it is deeper than a single subsidy change.