Fed healthcare subsidy non-renewal could mean massive insurance hikes

A failure by Congress to extend federal healthcare subsidies in place for five years since the pandemic could mean many thousands of New York City residents would greet the new year with massive rate hikes or no insurance.

The federal government shutdown occurred largely over a fight over whether to renew these enhanced benefits as part of the federal budget, but the absence of the extension as the year draws to a close is bumping up against a very real deadline.

This also comes after Congress in July passed legislation barring those going through the immigration process legally from government-funded insurance benefits, stripping them of subsidies.

The House of Representatives this week passed a healthcare bill by a narrow margin of 216-211 entirely excluding enhanced benefits which expire at the end of 2025.

“Right now in New York and nationwide, there is a crisis within the healthcare system, involving a great deal of uncertainty whether individuals will be able to afford coverage,” EmblemHealth Executive Chair Karen Ignagni said. “We’re coming up on this deadline where subsidies end on December 31. People are in the dark about whether they can afford coverage.”

Since “enhanced” tax credits were enacted in 2020, marketplace coverage has grown to 24.3 million in 2025 as premiums dropped, according to health insurance industry estimates.

“Not only does it relate to a very important matter before Congress that they have punted on for months,” Ignagni said of extending enhanced subsidies. “It also relates to the kitchen table for New York and American families who are uncertain whether the protection they got from the federal government will be continued.”

If enhanced subsidies sunset, average premiums are expected to rocket 75%, including 38% in New York, and 90% for many people in rural areas.

Monthly costs would rise an average of $114 individuals and $228 for couples for the 140,000 New Yorkers who receive these subsidies, according to health insurance industry estimates.

In New York’s downstate region, including New York City, about 98,800 New Yorkers would be impacted with average premiums for couples expected to increase by $217 or 39%.

This comes at a time when New Yorkers and people nationwide face inflation, already chipping away at their incomes.

“This is such an urgent here and now matter,” Ignagni continued. “By the end of the year, if decisions aren’t made to do something, a number of families will be required to pay a significant increase as a result of losing that federal protection. Individuals relying on these subsidies may feel they can no longer afford insurance.”

An estimated 450,000 Essential Plan members in New York State (too wealthy for Medicaid, but not qualifying for subsidies) also would be affected if enhanced subsidies expire, according to industry estimates. That is expected to include about 69,100 New York City Essential Plan enrollees.

All of this follows federal legislation in July that stripped access to government-provided insurance benefits from people going through the legal immigration process, often covered through the Essential plan.

“People here legally working contribute to tax base,” Ignagni added. “Many got coverage through the Essential Plan. They are no longer eligible for coverage through public programs.”

She said that an end of enhanced subsidies could leave many New Yorkers without coverage, potentially swelling the ranks of New York City’s uninsured.

“It’s a significant amount of money,” Ignagni said. “If they decide to go without and roll the dice, if something significant happens, the families will be in a financially distressed situation.”

This could lead to a domino effect, she said, where more uninsured patients lead to lack of payments to hospitals.

“They could charge you as an individual without coverage, so you would not get a rate negotiated by a health insurance plan. You could have a significant financial obligation,” Ignagni added. “If the hospital doesn’t get paid, the hospital would have bad debts. The patient could have a bill. It is a lose-lose situation.”

Critics of enhanced subsidies for health insurance marketplaces have developed alternatives such as expanding access to association plans, which may provide some, but not as much help.

“There have been several options that were suggested,” Ignagni said. “Some members are talking about health savings accounts, putting money into accounts for families to use to buy coverage. The numbers bandied around have been relatively low and wouldn’t allow a family to purchase coverage to cover a heart attack or cancer diagnosis.”

The New York City Council, she said, could weigh whether and what, if any, help it could provide regarding healthcare, even by increasing disease prevention and detection efforts.

“The City of New York doesn’t have the money to subsidize all the individuals we’re talking about,” Ignagni said. “They could think about prevention initiative, to allow people with chronic conditions to get access to treatment.”

State legislators also could look at what, if anything, they can do to help with healthcare, although the state also can’t pick up the cost of subsidies, she said.

Ignagni said even if legislation were to be passed in January, it could make the extension retroactive.

“The simplest solution is to extend the subsidies and give Congress an opportunity to work on other pieces of health legislation to reduce costs and address some issues individuals have raised,” she said. “But don’t put families in the middle. Don’t not act.”