Congressional Republicans are proposing health care changes that would slash Medicaid funding and allow Affordable Care Act (ACA) enhanced premium tax credits to expire. As a result, millions of Americans will face increased costs and reduced access to coverage—especially for older adults with ACA marketplace coverage.
A new analysis by the Center for American Progress finds that ACA marketplace premiums will rise by thousands of dollars each year if congressional Medicaid cuts lead states to eliminate Medicaid expansions and if Congress fails to extend the enhanced premium tax credits beyond 2025. While these changes would impact a wide range of households with ACA marketplace coverage, older enrollees—who already face higher premiums—would bear the brunt of the financial fallout.
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Combined health care affordability threats
Congress is considering a budget reconciliation package that would enact the deepest Medicaid cuts in the program’s history. Republican leadership, including House Speaker Mike Johnson (R-LA) and Energy and Commerce Chair Brett Guthrie (R-KY), are considering cutting federal matching funds—known as the federal medical assistance percentage (FMAP)—for the ACA Medicaid expansion population and imposing work-reporting requirements on Medicaid enrollees, both of which would threaten coverage and lives. If Congress enacts these proposals and drops the FMAP for Medicaid expansion enrollees to below the current 90 percent, at least 12 states could be forced to reverse their Medicaid expansions—which would both eliminate Medicaid coverage for millions and increase costs for marketplace premiums.
At the same time, the ACA’s enhanced premium tax credits are under threat. First introduced under the American Rescue Plan and later extended through the Inflation Reduction Act, these enhanced tax credits made marketplace coverage more affordable for millions of Americans. The enhanced tax credits eliminated silver benchmark plan premiums for people with family incomes between 100 percent and 150 percent of the federal poverty level (FPL). These tax credits also deliver significant premium savings for middle-income families earning more than 400 percent of the FPL—who were previously ineligible for any financial assistance—by ensuring those families would not have to spend more than 8.5 percent of their household income on silver benchmark plan premiums. In 2024, the enhanced tax credits lowered premium payments by roughly 44 percent compared with the original ACA tax credits, saving eligible enrollees about $700 per year and helping drive marketplace enrollment to a record 24 million people in 2025.
If Congress does not extend the enhanced tax credits beyond this year, AARP estimates that nearly 5 million adults aged 50 to 64 could face higher premiums. Many in this age group may be forced to drop their coverage and become uninsured because they cannot afford the increased costs.
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Older Americans will face the steepest marketplace premium increases
If Congress fails to extend the enhanced ACA tax credits, KFF projects that monthly premiums net of tax credits would rise by more than 75 percent. Marketplace enrollees in all 50 states would be affected by this increase. Enrollees in Medicaid expansion states, however, would be hit with an even steeper increase: A 2018 study by health economists Aditi P. Sen and Thomas DeLeire found that marketplace premiums were 11 percent lower in Medicaid expansion states than in nonexpansion states. This analysis found that Medicaid expansion reduces premiums because lower-income people—who typically have higher health care costs—move out of private marketplace plans and into Medicaid. With a healthier, lower-cost group remaining in the private market, premiums go down.
Applying that 11 percent premium increase to 2025 marketplace premiums without the enhanced tax credits, CAP estimates annual premiums would skyrocket by thousands of dollars across cities in all 40 Medicaid expansion states and Washington, D.C.
These increases could be especially devastating for older Americans because of how premiums on the ACA marketplaces are set. Federal law allows insurance carriers to adjust premiums based on a person’s age (otherwise known as “age rating”). In practice, this means insurers can charge an older person up to three times the premium charged to a younger person. Additionally, income generally increases with age, making the 400 percent FPL tax credit cliff that the enhanced premium tax credits removed of particular concern to older Americans.
In 2022, the Centers for Medicare and Medicaid services reported that adults over the age of 55 accounted for close to 50 percent of HealthCare.gov enrollees with incomes over 400 percent FPL, as compared to just under 30 percent of enrollees under 400 percent FPL. The enhanced premium tax credits have been a financial lifeline for these older marketplace enrollees: The Urban Institute estimates that, for adults making just above 400 precent FPL, the enhanced premium tax credits reduced premium payments by 11 percent for 40-year-olds, and by nearly 60 percent for 60-year-olds.
Table 1 approximates how premium costs would rise sharply for a 55-year-old making just above 400 percent of the FPL ($60,240.00 in 2024) if Medicaid expansion were rolled back and enhanced premium tax credits expired.
For example, in Iowa’s 1st Congressional District (represented by Republican Rep. Mariannette Miller-Meeks), annual premiums would increase by more than $4,000. Meanwhile, in New Jersey’s 7th Congressional District (represented by Republican Rep. Thomas Kean Jr), annual premiums would increase by more than $6,200. In New York’s 14th Congressional District (represented by Democratic Rep. Alexandria Ocasio-Cortez), annual premiums would increase by nearly $6,500. Finally, in Massachusetts’ 4th Congressional District (represented by Democratic Rep. Jake Auchincloss), annual premiums would increase by roughly $3,200.
Conclusion
Older adults who rely on the ACA marketplace for coverage are facing an affordability cliff at the end of this year. Congressional Republicans’ plans would push them over this cliff by letting the enhanced premium tax credits expire; drive up costs; and force many older Americans out of the insurance market altogether. Slashing Medicaid would compound this problem and dramatically increase premium costs for older Americans with marketplace coverage living in expansion states. Without action to preserve Medicaid expansion and extend the enhanced premium tax credits, the nation risks a coverage crisis that disproportionately harms older Americans during a time in life when health care is most essential.
Methodology
To illustrate the cost of marketplace coverage under both congressional Republican proposals, the authors used Katherine Hempstead and Matthew Valeta’s Robert Wood Johnson Foundation Marketplace Pulse 2025 marketplace tax credit comparison dataset to determine monthly premiums for benchmark silver plans (age-adjusted to account for a 55 year old) with and without the Inflation Reduction Act subsidy (enhanced premium tax credit) by congressional district and annualized these estimates. To do so conservatively, the authors found the county in each congressional district with the lowest age-adjusted second level silver (SLS) full premium (otherwise known as the benchmark premium). The authors then applied an 11 percent increase to 2025 marketplace benchmark premiums without the enhanced tax credits, based on Sen and DeLeire’s 2018 study to reflect the impact of Medicaid expansion rollback in 40 Medicaid expansion states and Washington, D.C.
To estimate the additional cost for beneficiaries, the authors subtracted the SLS premium with the enhanced premium tax credit from the SLS marketplace coverage without the enhanced tax credit or Medicaid expansion.
Acknowledgements
The authors would like to thank Matthew Valeta for his assistance. Mr. Valeta is a data analyst who has worked for the California and Colorado marketplaces. He currently works as a Health Plan Trainer for Denver Health Medical Plan. The data and findings in this article do not reflect the views of Denver Health Medical Plan. The authors would also like to thank Natalie Baker for her assistance with fact checking.