Healthy living is often part of people’s New Year’s resolutions, but for 41,000 Rhode Islanders who depend on the Affordable Care Act there’s a deep worry behind that hope this year.
The popular federally subsidized health insurance program is about to get a lot more expensive for people.
“Mr. President, the clock is ticking,” Sen. Jack Reed said in a Senate floor speech earlier this month. “In a matter of days, 24 million Americans will see their health insurance premiums double or triple.”
“The solution is simple: extend the existing tax credits,” Reed said.
Sen. Sheldon Whitehouse said in a press release: “Through their rigged Beautiful-for-Billionaires Bill and a cruel insistence on preventing people from having health care, President Trump and Congressional Republicans have sentenced families to massive health insurance costs in 2026.”
That’s because Congress has not acted to extend tax credits due to expire at the end of the month.
The prospect of skyrocketing ACA premiums was at the heart of the recent federal government shutdown, the longest in U.S. history. Democrats tried to put the issue center stage and force a vote to renew the expiring tax credits. Republicans balked, blaming the Democrats for the shutdown.
After several key Democrats lost their nerve, joining with Republicans to reopen the government, the two sides failed to find a compromise. Republicans rejected a bill that would have extended the tax credits another few years, and Congress adjourned for the holidays without addressing the looming healthcare affordability crisis.
Advanced Premium Tax Credits (APTC) were originally put in place in 2021 as the federal government, under President Biden, sought to keep health insurance affordable and keep Americans insured during the pandemic. Those tax credits temporarily lowered the amount state residents pay to purchase health insurance under the state marketplace, in Rhode Island’s case HealthSourceRI.
The Biden administration later extended the APTC for an additional three years under the Inflation Reduction Act of 2022. But the tax credits are now due to expire at the end of December.
When that happens, health insurance premiums will double for 41,400 low-to-moderate income Rhode Islanders enrolled in HeathSourceRI plans, as some $59.3 billion in federal subsidies go away. Because the tax credits are scaled according to income level, the lowest income enrollees face the steepest increases, in some cases more than 500%.
Middle income Rhode Islanders are at risk of losing subsidized coverage in the ACA marketplace too.
Prior to the Inflation Reduction Act, people making above 400% of the federal poverty line were required to pay the full cost of health insurance premiums. In real terms, that’s an individual making $62,500 or a family of four making $128,600. The enhanced subsidies saved those people an average of $4,248 per year.
Rhode Island Gov. Dan McKee warned in November that the increase will be painful, with a hypothetical example.
“A newly retired Warwick resident earning about $62,650 annually from her 401K (400% FPL) will see her monthly premium increase from $427 to $1,077,” McKee wrote in a statement.
“Her new monthly premium accounts for 21% of her monthly income,” McKee said, “forcing her to make painful decisions about her housing, food, and other necessary expenses.”
HealthSourceRI estimates that more than 13,000 Rhode Islanders will drop coverage because of the skyrocketing premiums. If that happens, HSRI estimates the state economy will not only lose the $60 million in subsidies, but also an additional $70 million federal funding that would have flowed to local health care providers but instead will simply disappear.
Add to that proposed cuts to Medicaid, food stamps, education and other programs under President Trump’s new budget, and Rhode Island stands to lose up to $5 billion in federal funding over the coming years, according to Sen. Whitehouse.
The potential loss to the Rhode Island economy, combined with the prospect that the number of uninsured Rhode Islanders would rise so dramatically, presents a powerful incentive for state lawmakers to consider some sort of state subsidy to make up for the expired tax credits.
But that would mean coming up with an additional $60 million dollars next year in a state budget that is already stretched thin.
State Rep. David Morales insists it can be done.
“With a state budget of over $14 billion, we can certainly afford to provide Rhode Islanders with the human services and health care that they need,” Morales said. “And that is going to be dependent on the decisions made between January and June of next year.”
