The White House. Credit: Shutterstock

Affordable Care Act opponents hope employers will help them make "Obamacare" health insurance premium subsidies harder to get.

Chris Jacobs, a Paragon Health Institute analyst, argues in a new report on health care cost-cutting ideas that one simple way to reduce federal government health care spending would be to let the current, broad eligibility rules for individual health insurance premium tax credit subsidies expire, rather than renewing the current rules.

Recommended For You

He says letting the current rules could increase employment-based health plan enrollment.

Related: Top think tank posts 6-step health policy agenda

Congress tied to help patients and the U.S. health care system cope with the COVID-19 pandemic by dramatically expanding ACA premium tax credit access. That pushed the number of people with ACA public exchange plan coverage to 24 million people today, from 11 million people in 2020.

The current emergency eligibility expansion is set to expire Dec. 31.

"Allowing these increased subsidies to expire would save federal taxpayers billions while preventing a further erosion in employer coverage," Jacobs writes.

He cites a Congressional Budget Office prediction that permanently extending the current "enhanced premium premium tax credit" eligibility rules would cause a 3.5 million decrease in employer health plan enrollment due to a reduction in offers of employment-based coverage.

"This phenomenon of crowd-out — whereby government subsidies encourage more employers to drop private coverage— represents one of many inefficiencies created by the enhanced exchange subsidies," Jacobs writes.

Jacobs maintains that studies show that the health coverage that uninsured people get through ACA program does little to improve their health, possibly because many uninsured people were already getting some basic preventive care and emergency care through charity care programs.

ACA programs have caused a measurable increase in hospital and health insurer revenue, Jacobs says.

"This dynamic explains why hospitals and health insurers strongly support extending the enhanced subsidies, because those federal payments benefit their own bottom lines — as opposed to those of beneficiaries — while insulating beneficiaries from the effects of premium increases," Jacobs says.

Why Jacobs' views may be important: Many of the top analysts at Paragon worked in the White House during Trump's first term as president, from 2016 through 2020.

Trump has just named Theo Merkel, one Paragon analyst, to be special assistant to the president for domestic policy, focusing mainly on health care policy.

Trump has named another Paragon analyst, Dr. Joel Zinberg, to be special assistant to the president for economic policy at the National Economic Council.

ACA premium tax credit basics: When HealthCare.gov and the rest of the ACA public exchange system came to life, in 2014, ACA rules made premium tax subisidies available only to people who earned less than 400% of the federal poverty level. That's $62,600 for an individual and $128,600 for a family of four in most of the United States in 2025.

Beginning in 2021, Congress made the subsidies available to anyone for whom basic health insurance premiums would eat up more than about 9% of modified adjusted gross income, or the total amount of household income included in premium tax credit eligibility calculations.

Health insurers can't charge sick people more for coverage, but they can charge older people more. In practice, the current rules can make subsidies available to individual insureds over 55 who live alone and have an income over about $125,000 per year.

Democrats have attacked the idea of letting the enhanced premium tax credits expire, citing Urban Institute forecasts that letting the tax credit expansion access to expire would cause 4 million people to become uninsured after 2025.

Former President Joe Biden also used a regulation to make premium tax credit subsidies available to the spouses and children of workers who have access to affordable individual coverage through their employers but no access to dependent coverage through their employers.

Democrats say Biden's regulation simply fixed a "family glitch" in the old tax credit eligibility rules; Jacobs contends that Biden intentionally ignored a statutory provision that Democrats included in one of the bills that created the ACA in an effort to cut the projected size of the ACA in the federal budget.

The future: The ultimate fate of the enhanced premium tax credit subsidies could depend on many factors, including what Trump's advisors want and what Trump wants.

Trump has criticized the Affordable Care Act, including the Obamacare health insurance program provisions, but he has been reluctant to eliminate the program without replacing it.

Republicans have only a narrow majority in Congress. Some Democrats in Congress might accept letting ACA premium tax credit eligibility rules fall back to the pre-COVID baseline, but some Republicans in Congress might balk.

In Florida, for example, about 4.6 million of the 23 million residents get their health coverage through HealthCare.gov. If Urban Institute impact projections are correct, and tax credit enhancement expiration causes 4.5 million people to lose their health coverage, about 1.5 million of the people who lose their coverage could be Florida residents.

That could put pressure on Sen. Rick Scott, R-Fla., and Sen. Ashley Moody, R-Fla., to look for ways to keep the current subsidies in place or find ways to soften the impact on the people who'd lose their coverage.

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Allison Bell

Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.