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CBO Projects $350 Billion Cost for Extending Enhanced Health Insurance Tax Credits

Strategic Insights

— 2 min read

The Congressional Budget Office announced that permanently extending the enhanced tax credits for certain people who buy health insurance through the Affordable Care Act Marketplace would cost the government $350 billion over 10 years and increase the number of people with health insurance by 3.8 million. The CBO projects that extending the enhanced tax credits would reduce the average cost of gross premiums for benchmark plans by 7.6%, leading to a 2.4% decrease in 2026 premiums compared to previous projections. Lawmakers must act by the end of September to ensure that the tax credits are extended before the open enrollment period begins on November 1.

Key Takeaways:

  • The CBO estimates that extending the enhanced tax credits would increase the number of people with health insurance by 3.8 million.
  • The CBO projects that extending the enhanced tax credits would reduce the average cost of gross premiums for benchmark plans by 7.6%.
  • The CBO estimates that the extended tax credits would lead to a 2.4% decrease in 2026 premiums compared to previous projections.
  • The enhanced premium tax credits were established by Democrats in 2021 as part of a massive COVID-19 relief package.
  • Congress taking action to extend the tax credits before the end of September would impact CBO's projections in two ways: reducing the likelihood of downward adjustments to gross premiums and reflecting a smaller likelihood of enrollees seeing net premiums that incorporate the expanded credit structure.
  • The tax credits have become intertwined in debates on Capitol Hill over how to fund the government for a couple of months as lawmakers try to complete their work on full-year spending bills.
  • Democrats say that the timing is crucial since the open enrollment period begins on November 1, well before the credits expire.
  • Senate Budget Committee ranking member Jeff Merkley, D-Ore., wrote that the CBO letter shows "Republicans in Congress are driving costs up for working families."
  • Vermont independent Sen. Bernie Sanders, ranking member on the Committee on Health, Education, Labor and Pensions, wrote that "health insurance premiums will rise, on average, by 75% for 20 million Americans" if the tax credits are not extended.
  • House Budget Committee Chairman Jodey Arrington, R-Texas, urged his party not to extend the enhanced tax credits in an op-ed published in the Washington Examiner before the CBO letter was publicly released.

Statistics:

  • $350 billion: the estimated cost to the government of extending the enhanced tax credits over 10 years.
  • 3.8 million: the estimated increase in the number of people with health insurance if the enhanced tax credits are extended.
  • 7.6%: the estimated reduction in the average cost of gross premiums for benchmark plans if the enhanced tax credits are extended.
  • 2.4%: the estimated decrease in 2026 premiums compared to previous projections if the enhanced tax credits are extended.
  • 2021: the year in which Democrats established the enhanced premium tax credits as part of a massive COVID-19 relief package.
  • 2022: the year in which the enhanced premium tax credits were extended through the Inflation Reduction Act.
  • 2025: the year in which the enhanced premium tax credits are set to expire.
  • 10 years: the period over which the estimated cost of extending the enhanced tax credits is $350 billion.
  • 3.8 million: the estimated increase in the number of people with health insurance if the enhanced tax credits are extended.
  • 7.6%: the estimated reduction in the average cost of gross premiums for benchmark plans if the enhanced tax credits are extended.

Sources:

  • [https://www.cbo.gov/system/files/2025-09/61734-Health.pdf]
  • [https://www.kff.org/affordable-care-act/explaining-health-care-reform-questions-about-health-insurance-subsidies/]
  • [https://www.newsfromthestates.com/article/us-rolls-toward-terrible-government-shutdown-no-exit-ramp-sight]
  • [https://www.newsfromthestates.com/article/us-senate-dems-push-gop-extension-expiring-health-care-subsidies]
  • [https://www.newsfromthestates.com/article/government-shutdown-looms-oct-1-congress-struggles-stopgap-spending-plan]

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