New research shows that expiring Biden-era Obamacare subsidies are having only a minimal effect on 2026 health insurance premiums—contradicting Democrat claims that the loss of these credits is fueling major price spikes. According to the Paragon Health Institute, the expiration of the enhanced subsidies accounts for only about 4% of the expected 20% average premium increase next year, far from the crisis Democrats have warned about.
Democrats have shut down the government while demanding an extension of these enhanced Obamacare tax credits, first created under President Joe Biden’s $1.9 trillion American Rescue Plan and later extended through the so-called Inflation Reduction Act. Their argument centers on the claim that without these enhanced subsidies, millions will see dramatic jumps in their health insurance costs. However, the latest analysis suggests that the overwhelming majority of next year’s premium hikes stem from structural flaws in the Affordable Care Act (ACA) itself and rising health care costs—not from the expiration of Biden’s COVID-era subsidies.
The Paragon Health Institute’s data projects that the 2025 benchmark premium for the average ACA enrollee—roughly $8,326 for a 50-year-old earning 200% of the federal poverty level—will rise to $9,991 in 2026. Of that $1,665 increase, only $333 can be attributed to the expiring Biden-era credits, while the remaining $1,332 results from inflation, higher medical utilization, and industry consolidation. Insurers also cite steeply rising costs for drugs such as GLP-1 weight-loss medications, specialty biologics, and gene therapies.
Gabrielle Kalisz, a program manager at Paragon, noted that under the Biden-era credits, the federal government paid about 93% of the typical enrollee’s premium. Even after those subsidies expire, taxpayers will still shoulder more than 80% of premium costs through standard ACA subsidies. “Taxpayers, not consumers, will remain the overwhelming source of revenue for insurers selling ACA exchange plans,” Kalisz said.
Brian Blase, a former senior Trump administration official and president of Paragon, emphasized that premiums have skyrocketed since the ACA’s passage. He and other experts argue that the law’s flawed structure—not the rollback of temporary pandemic-era benefits—is to blame for unaffordable premiums.
House Ways and Means Chairman Jason Smith has further criticized the enhanced credits as handouts for the wealthy and a windfall for large insurance corporations. He pointed out that, with no income cap, families earning as much as $600,000 a year in high-cost areas still qualify for these subsidies. Similar eligibility extends to a married couple in West Virginia earning $580,000 and an individual in Vermont making $180,000 annually. “These are not working-class Americans,” Smith said. “These are Obamacare subsidies for the wealthy.”
Michael Cannon, director of health policy studies at the Cato Institute, agreed, noting that the enhanced subsidies primarily benefit high-income individuals, not those struggling to afford coverage. “What the enhanced subsidies do,” Cannon said, “is they subsidize people making from $129,000 all the way up to $600,000 per year.”
The findings undermine the Democrat narrative tying the current government shutdown to the fight over Obamacare funding. As the analysis makes clear, the end of the Biden-era credits will have only a modest effect on premiums—while the deeper problem remains a broken, expensive system built on government dependence and taxpayer bailouts for wealthy Americans.
