At the start of 2026, millions of Americans will face steep increases in health insurance costs, reduced coverage options, and significant uncertainty about their ability to access care. Premiums for individual market plans under the Affordable Care Act have risen sharply after Congress failed to extend pandemic-era financial support that had kept coverage affordable for more than 20 million people.
According to federal estimates, average premiums for ACA marketplace enrollees are increasing by more than 100 percent after the enhanced subsidies that capped costs at roughly 8.5 percent of income expired on January 1, 2026. (AP News)
But the transition to higher costs was not immediate. It was the result of a prolonged political fight that began with the ACA’s creation, intensified during the COVID-19 pandemic, and ultimately collided with an unprecedented 43-day government shutdown in late 2025, leaving no solution in place as the subsidies expired.
The Affordable Care Act, enacted in 2010 under President Barack Obama, aimed to expand access to health insurance by establishing regulated marketplaces and offering income-based subsidies to help low- and middle-income Americans purchase private health insurance.
The law dramatically reduced the nation’s uninsured rate, particularly among working adults and communities of color. During the pandemic, Congress expanded those subsidies through the American Rescue Plan, allowing more people to qualify for assistance while lowering premiums for millions who previously struggled to afford coverage. Those enhancements were later extended through 2025.
By that year, ACA marketplace enrollment had roughly doubled compared with pre-pandemic levels, with more than 21 million Americans relying on subsidies to maintain coverage.
Republican lawmakers and the Trump administration argued that the ACA and its expanded subsidies distorted insurance markets and increased federal spending. As the expiration date approached in the fall of 2025, negotiations deteriorated. President Trump urged a shift away from premium subsidies, arguing that health care dollars “should be sent directly to the people so that they can purchase their own, much better, health care” rather than flowing through insurers. (Axios)
Efforts to reach a compromise collapsed, contributing to the longest federal government shutdown in U.S. history, which lasted 43 days between October 1 and November 12, 2025. While budget negotiations triggered the shutdown, health care policy was a crucial point of contention.
During that period, key operations at the Department of Health and Human Services were curtailed, resulting in delayed grants to rural providers and a freeze in funding for community health centers, despite continued rising demand for care.
In July 2025, Congress passed a sweeping budget reconciliation package commonly referred to as the One Big Beautiful Bill. The legislation included nearly $1 trillion in cuts to health care and safety net programs over the next decade and imposed nationwide Medicaid work requirements.
The American Hospital Association warned the bill would have severe consequences, stating that “this legislation will cause 11.8 million Americans to be displaced from their health care coverage as they move from insured to uninsured status.” (American Hospital Association)
Supporters of the bill defended it as a necessary reform. Republican lawmakers and the White House argued the changes would strengthen Medicaid and encourage workforce participation.
As 2026 begins, Americans who rely on the individual insurance market are experiencing what analysts describe as “rate shock.” Without the enhanced subsidies, families that once paid modest monthly premiums now face far higher costs.
National reporting shows premiums rising by a median of 114 percent, with some households absorbing increases of several hundred dollars per month. (AP News) Insurers warn that as healthier people drop coverage due to cost, remaining enrollees are sicker and more expensive to insure, further driving premiums upward.
To replace the expired subsidies, the Trump administration has proposed shifting toward Health Savings Accounts and direct deposits into those accounts for consumers.
Proponents argue that the approach gives individuals greater control over their health spending, while critics contend that fixed payments will not keep pace with actual medical costs, particularly for individuals with chronic conditions.
Democratic lawmakers continue pressing for a clean extension of the expired subsidies, with some proposing a retroactive fix. Although a small group of Republicans has expressed openness to limited renewal, procedural hurdles and policy demands have stalled progress.
For Americans navigating the system in 2026, experts recommend exploring state-level subsidies where available, applying for hardship exemptions if premiums exceed affordability thresholds, and considering direct primary care arrangements paired with catastrophic coverage.
While these strategies may alleviate immediate financial strain, they do little to resolve the broader instability now shaping the U.S. healthcare system.
