As we edge closer to a new year, two major federal policy flashpoints are aligning in ways that could profoundly affect millions of Americans: the scheduled expiration of enhanced Affordable Care Act (ACA) Marketplace subsidies and the possibility of another government shutdown.
Either event alone would generate uncertainty and disruption for families, providers, insurers, and state agencies, but together they represent a level of risk the health and human services sectors haven’t faced in more than a decade.
What’s at Stake if ACA Marketplace Enhanced Subsidies Expire?
The enhanced ACA subsidies, first expanded under the American Rescue Plan (2021) and extended through the Inflation Reduction Act (2022), have been instrumental in driving record-high enrollment in health insurance exchanges.
More than 90 percent of Marketplace or “Obamacare” enrollees currently qualify for financial assistance, and these enhanced subsidies, also called premium tax credits, have lowered monthly premiums for both individuals and working families, according to the Commonwealth Fund.
However, ACA Marketplace premiums are slated to rise 26 percent in 2026, according to KFF. Enrollees currently subsidized could see their monthly premiums more than double, increasing about 114 percent, if the enhanced tax credits expire at the end of December.
Senate Democrats proposed a bill to extend enhanced subsidies for three years, while Senate Republicans offered new healthcare legislation that would allow these tax credits to expire and add new funds to boost health savings accounts (HSAs).
Under the Senate Republicans’ proposed legislation, eligible adults under age 50 earning up to 700 percent of the federal poverty level ($225,050 for a family of four) would receive $1,000 per year deposited into an HSA (adults ages 50 to 64 would receive $1,500) to buy the lowest tiers of insurance available under the ACA, often called “catastrophic” plans.
While $2,000 in an HSA account seems generous (for two adults in a family), keep in mind that the average annual employer-sponsored health insurance premiums in 2025 totaled $26,993 for family coverage, with the employer paying $20,143 and the worker contributing $6,850, according to KFF’s 2025 Employer Health Benefits Survey.
Anticipating the highest healthcare insurance cost increases in the past 15 years, many employers expect to pay 6.7 percent more in 2026, meaning employees should anticipate a 6 percent to 7 percent premium increase in January, according to Politico.
Regardless of the merits of these legislative proposals, neither garnered the 60 votes needed to pass in the Senate.
Meanwhile, House Speaker Mike Johnson is preparing a “health care framework” (without extending subsidies) for members to vote on before Congress recesses for the holidays, according to a recent Politico story.
While Congressional gridlock persists, between 22 and 24 million people who rely on the Marketplace to buy insurance must choose a health plan by Dec. 15 to ensure coverage begins January 2026.
If enhanced subsidies end on Dec. 31, 2025, the impacts are wide-ranging and significant:
- Sharp premium hikes for tens of millions of people, especially middle-income families who benefitted from expanded subsidy eligibility thresholds.
- Potential enrollment losses, reversing gains in coverage, and increasing the number of uninsured individuals for the first time in nearly a decade, according to Matt Fiedler of the Center on Health Policy.
- Market instability, as insurers face unpredictable enrollment patterns and health care providers encounter increased cost-sharing burdens and higher uncompensated care costs, which are expected to increase by $7.7 billion, according to the Robert Wood Johnson Foundation.
- Financial strain on healthcare providers, particularly safety-net providers, is exacerbated by workforce shortages, rising costs, and growing demand.
Even modest increases to uninsured rates will accelerate providers’ charity care and bad debt, according to our policy report, “The One Big Beautiful Bill Act: Strategic Approaches to Minimize Impact on Patients.”
The subsidy expiration would not only hit family budgets but also could produce ripple effects across the entire health care ecosystem, including employers, hospitals, and state Medicaid agencies.
A Government Shutdown Threat: A Compounding Risk
Layered on top of the subsidy cliff is the possibility of another federal government shutdown on Jan. 30, 2026, driven by ongoing Congressional stalemate around funding several agencies, including the U.S. Department of Health and Human Services. Without a budget, funding for community health centers, public health research, and tribal healthcare services, for example, is at risk.
A shutdown occurring less than a month after ACA subsidies are slated to expire would create unprecedented challenges, including:
- Disruptions in Marketplace operations, including customer support, plan selection assistance, and appeals processing.
- Delays in federal guidance to insurers and state-based Marketplaces leave states and carriers in limbo during critical enrollment periods.
- Confusion among consumers attempting to enroll in or renew health insurance coverage at a time when federal support systems are not functioning.
- Strain on community-based navigators, who would face higher demand with fewer federal resources for coordination.
Our One Big Beautiful Bill Act (OBBBA) analysis warns that any disruption that increases confusion will disproportionately harm individuals with low health literacy, limited English proficiency, or limited digital access – groups already at the highest risk of losing coverage.
What Can You Do Now?
Although the situation is evolving, there are clear steps state agencies, health systems, nonprofits, and community leaders can take:
- Monitor policy developments closely: The legislative landscape may shift quickly as Congress confronts both the subsidy deadline and a potential government shutdown.
- Prepare your clients, patients, and members: Begin consumer education now about potential changes in 2026.
- Develop a plan for financial and operational impacts: Consider how a subsidy cliff or shutdown could affect budgets, staffing, outreach, and service demand.
- Expand community partnerships and patient navigators: Coordination will be essential if federal support becomes limited.
- Engage in advocacy: Champion state and federal level policies that mitigate potential damage on behalf of providers, payers, employers, and patients.
The Bottom Line
The convergence of an ACA subsidy cliff and a possible federal government shutdown is a real and time-sensitive threat. Together, they could create a perfect storm of coverage disruptions and uncertainty across the health and human services landscape.
The good news? There is still time for leaders, advocates, and organizations to prepare and to push for solutions that preserve access to affordable, stable health coverage for millions of Americans.
Monette Goodrich, MA, serves as the Director of Communications at Atrómitos, where she integrates her Capitol Hill knowledge with decades of experience writing compelling stories, crafting persuasive messages, and developing pragmatic communications strategies for the organization and its clients.