The United States Capitol Building in Washington, Sunday, June 29, 2025 (Photo: Jennifer Shutt/States Newsroom)
WASHINGTON – The nonpartisan Congressional Budget Office announced Thursday that if lawmakers permanently extend increased tax credits for some people who buy health insurance through the Affordable Care Act Marketplace, it would cost the government $350 billion over 10 years and escalate the number of people with health insurance by 3.8 million.
14 pages letter from CBO Director Phillip L. Swagel to congressional leaders projected that expanding the increased tax credits would reduce the average gross premium cost for benchmark plans by 7.6%.
“The estimated decline in benchmark premiums is driven by expectations that marketplace enrollees would, on average, be healthier if the expanded premium tax credit were extended,” Swagel wrote.
Non-partisan research organization KFF – he writes on his website “The premium tax credit limits an individual’s contribution to the premium of a ‘benchmark’ plan, the second cheapest silver plan in their market.”
Action by Congress to extend the increased tax credits before the end of September, Swagel wrote, would lead to a 2.4% decline in premiums in 2026 compared to previous projections.
Increased premium tax breaks introduced by Democrats in 2021 as part of the massive COVID-19 relief package were extended into 2022 under the Inflation Reduction Act. They are scheduled to expire at the end of 2025.
Extension at the end of the year
The legislator’s action to extend tax breaks later in the year affects CBO’s forecasts in two ways.
“First, CBO estimates that the likelihood that gross premiums for 2026 will be adjusted downward will decline to zero once open enrollment begins,” Swagel wrote, adding that the start date is November 1 in most markets.
“Second, the estimates would reflect a lower likelihood that enrollees will see net premiums that include an expanded credit structure when selecting a marketplace plan (net premium is the premium amount after taking into account the tax credit),” Swagel wrote. “CBO estimates that an effective date later than September 30 would result in lower costs to the federal government and smaller increases in admissions in 2026 than those presented here.”
This is essential because tax breaks have been linked debates on Capitol Hill on how to fund the government for several months while lawmakers try to finish work on year-long spending bills.
While talks on health policy and the stop-gap spending bill have traditionally been separate, concerns about skyrocketing prices during the open enrollment period have brought the issues together ahead of the Oct. 1 school closure deadline.
Time is key Democrats saybecause the open enrollment period begins on November 1, well before points expire.
Speaker Mike Johnson, R-La., he said earlier this week sees negotiations on increased tax credits as “a December issue, not a September funding issue,” regardless of the open enrollment schedule.
Republicans, Democrats at odds
Senate Budget Committee ranking member Jeff Merkley, R-Ore., wrote in a statement that the CBO letter shows that “Republicans in Congress are increasing costs for working families.
“This includes a huge increase in health care costs due to the cutting of tax credits that so many families rely on. It’s disgraceful and only makes it harder for families to make ends meet. It’s just more losses for their families, and the billionaires win the program.”
Independent Vermont Senator Bernie Sanders, ranking member of the Health, Education, Labor and Pensions Committee, wrote that “Americans already pay by far the highest prices in the world for health care. And it will get much worse.”
“Thanks to the massive health care cuts in Trump’s ‘big beautiful bill,’ health insurance premiums will increase by an average of 75% for 20 million Americans — all so Republicans can provide massive tax breaks to billionaires and large corporations. Working class Americans can’t afford this. These cuts must be repealed.”
House Budget Committee Chairman Jodey Arrington, R-Texas, urged his party not to extend increased tax breaks in and he-ed published in the Washington Examiner on Thursday morning before the CBO letter was published.
“Even though Democrats had planned for the temporary Covid-19 measures to expire this year, they now want to not only extend them, they want to make them permanent,” Arrington wrote. “The truth is that even after the Biden Covid-19 relief expires, low- and moderate-income families will continue to have access to affordable insurance. Traditional Obamacare tax credits will work as intended.”
