Just as Pennsylvania has started to make rapid progress on reducing the number of families without health insurance, political wrangling in Washington is threatening to pull the rug out from under the effort.
The agency that runs the state’s insurance exchange – as well as healthcare advocacy groups – are sounding the alarm about the need for Congress to continue the expanded health insurance subsides that went effect in 2021, and which would need to be renewed within the next year in order to prevent massive premium increases from hitting hundreds of thousands of Pennsylvanians in 2026.
The subsidies are part of insurance plans under the Affordable Care Act, popularly known as “Obamacare,” and may serve as an early litmus test as to how far Republicans in a second Trump administration want to go in dismantling the healthcare law.
In September, the board of Pennie – Pennsylvania’s state-run marketplace for ACA-subsidized plans – sent a letter to the state’s Congressional delegation warning that “many Pennsylvanians would no longer be able to afford coverage and the coverage gains seen since 2021 would be reversed” if the extra subsidies that started in 2021 were to end.
Those subsidies amount to roughly $500 million per year in federal funds that offset Pennsylvanians’ insurance premiums, according to Pennie. If they were to go away, the average Pennie customer would see an 81% health insurance premium hike – and some age and income brackets would see their premiums skyrocket by four or five times their current amounts.
Since its inception 2010, the ACA has included subsidies for those who do not have access to health insurance through an employer, and instead purchase ACA-regulated plans through systems like Pennie. The subsidies are tax credits that are discounted from monthly premiums, and reconciled on an individual or family’s annual tax return.
The subsidies limit the portion of a family’s overall income that they pay in health insurance premiums; the federal government picks up the tab via tax credit for anything beyond that. The cap varies by coverage level and is phased out by income; under the original version of the ACA, those making over 400% of the federal poverty line (about $125,000 for a family of four, for example) received no benefit.
Subsidies were significantly boosted in 2021 and 2022 through federal stimulus bills backed by President Joe Biden, as part of an effort to control rising healthcare costs. Benchmarks for the percent of income paid for health insurance were lowered, and subsidies expanded across the income scale.
Those making over 400% of the poverty line now have their premium costs happed at 8.5% of their total income, eliminating the cliff. Families living just above the poverty line ($31,200 for a family of four) can often get coverage with no out-of-pocket premium, and others can get better quality coverage with a lower deductible for the same amount they were paying pre-2021.
“It significantly reduced premiums and it helped a lot of folks buy a plan with less-out-of-pocket costs,” said Antoinette Kraus, director of the Pennsylvania Health Access Network, an advocacy group.
Only 5.4% of Pennsylvanians had no health insurance last year, the lowest-ever uninsured rate. At the same time, a record 435,000 people are enrolled in a plan through Pennie, and 90% of them now receive some subsidy.
“I would attribute a lot of that to the enhanced premium tax credits” over the past three years, Kraus said.
Jessie Green, a Lebanon resident who runs a small business with her husband, said her family has purchased insurance through the ACA marketplace since its inception. Although the plans were much better than they were pre-Obamacare, Green and her husband make just over the 400% cutoff, meaning that until recently they received no help as rates crept up.
“It was very, very good for us,” Green said, but “slowly but surely those premiums were beginning to increase because we didn’t qualify for any subsidies.”
At one point, Green was paying $1,700 per month to cover herself, her husband, and her son. When the subsidy expansion went into effect, her out-of-pocket premium cost dropped by nearly $1,000, she said.
“That has been great for us,” she said. “I don’t worry about my health care, I don’t have a little bit of a panic attack about how I’m going to take care of that bill.”
But even though the tax credit subsides have stabilized the cost to Green’s family, the base cost of health insurance has continued to rise. Green said the sticker price on her insurance plan – for just herself and her husband, now that her son is independent – is a whopping $2,237 per month, according to her Pennie records. With the current subsidies, her share is less than a third of that; without, she’d be footing the whole bill.
“Legislators really need to understand that if these tax credits go away, I don’t know what people will do,” Green said. Getting insurance through Pennie isn’t a free ride, she noted, but people who get employer-subsidized insurance often don’t recognize how large the cost burden is.
“There’s still a co-pay, there’s still an out-of-pocket cost, and I have no problem with that,” she said. “But I think sometimes people who have healthcare provided by an employer don’t understand how much it really costs.”
Green’s experience isn’t unique. Premiums for plans on Pennie increased an average of 6% for 2025, according to the state. A plan with mid-tier coverage for a 40-year-old is $461 per month on average in Pennsylvania, according to benchmarking by the Kaiser Family Foundation.
Pennsylvanians like Green who are not quite old enough for Medicare have seen some of the biggest rate increases and would be the hardest-hit if subsidies were to decrease, according to Pennie. The average 60-year-old couple with just over $80,000 per year of income would see the price of a benchmark plan balloon five-fold to nearly $3,000 per month, the agency said.
The insurance subsidy “is literally life-saving,” Green said, since getting routine care allowed her doctor to catch a heart condition before it got worse.
Green’s situation points to one of the main arguments for keeping the enhanced subsidies around, despite the burden to the federal budget – that the expense of the subsides will still be paid for, albeit less efficiently, even if the ACA is cut back.
In Green’s case, her condition may have gone untreated until she ended up the emergency room and she said she would not have been able to pay the bill. Uncompensated care for uninsured patients is a major driver of ballooning hospital costs, and most of it is paid for by the federal government through hospital bailouts.
The Biden-era enhanced subsidies are one of the easier parts of the ACA for the incoming Trump administration to cut simply though inaction, since they expire for 2026 insurance policies.
Further changes would require explicit executive order or Congressional action. During his first term, Trump attempted to loosen rules for health plans that didn’t follow ACA rules, making them cheaper for healthier patients while shifting costs onto those who needed more care; Vice President-elect JD Vance suggested Republicans could similarly move sicker patients to higher-cost risk pools.
While “Obamacare” was initially unpopular, many of its core concepts now enjoy wide support, particularly rules that require insurers to cover preventative healthcare and pre-existing conditions without raising premiums. The GOP’s attempt to repeal these provisions in 2017 failed when the late Sen. John McCain, R-Arizona, cast the final dissenting vote.
Last month, the Pennsylvania House of Representatives passed a set of bills adding the most popular ACA rules into state law, citing the risk of these statutes vanishing at the federal level.
Although introduced by the state House’s Democratic majority, more than half of House Republicans voted for the bills. The GOP-controlled Senate did not take them up before the end of session.
Ideally, Kraus said, Congress would renew the extra ACA subsidies by mid-summer, giving insurance companies and agencies like Pennie time to plan. For now, the best thing individuals can do is make sure they’re enrolled for next year and getting the subsidized rate.
“Every headline causes some panic, and there’s a lot of uncertainty in the market, so people just need to go and shop for plans,” Kraus said. “You have until Dec. 15.”
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