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Diving briefs:
A report released Monday by the Commonwealth Fund and the George Washington University Milken Institute School of Public Health found that more generous federal support for health planning in the Affordable Care Act market could expire at the end of the year, leading to unemployment, particularly in the health care sector. According to the analysis, if the premium tax strengthening expires, the state's total national product would decrease by approximately $34 billion in 2026. Furthermore, economic output will drop by $57 billion as insurance becomes more expensive, Americans lose coverage and providers receive lower payments. Cuts in care delivery and pharmacy services will reduce the employment of 286,000 people next year if subsidies expire, including the loss of 130,000 roles in the healthcare industry.
Dive Insights:
During the Covid-19 pandemic, the federal government began offering higher tax credits to beneficiaries who purchased compensation through the ACA exchange.
The Inflation Reduction Act expands the premium tax credits that were strengthened by the end of 2025, with subsidies expiring at the end of the year without a lawsuit from Congress. Republicans argue that the increase in grants is expensive and creates new opportunities for fraud, suggesting that the enhanced tax credit could expire.
Still, given the number of people in the Red District who benefited from the support, cutting subsidies could be politically challenging, experts say.
Furthermore, according to Commonwealth Analysis, higher tax credits could have greater consequences for the economy and the healthcare ecosystem.
Once the premium tax credit expires, insurance becomes more expensive for beneficiaries, moving into other plans or losing coverage entirely. According to a December estimate by the Congressional Budget Office, the number of uninsured figures will average an average of 3.8 million from 2026 to 2034 without tax credits.
Insurance companies are not collecting tax credits or other payments from these beneficiaries, which could reduce refunds to providers, according to Commonwealth. The report says that these providers will need to cut down on jobs, which will also reduce healthcare access for those with insurance.
“As a primary care physician, I can't help but think about what this means for patients, for those who lose insurance and access, and those who still have insurance but have little access,” he said. “There's no doubt that people who have lost coverage will use emergency care as a source of emergency care, using healthcare workers who have overexposed to an already stressed system, exceeding capacity, reduced and lowered morale.”
Declining income and economic activity also means lower tax revenues. The analysis predicts a $5.4 billion decline in federal tax revenue in 2026, but state and local tax revenue could drop by $2.1 billion, making it difficult for states to balance their budgets and pay for critical services.
Reports say the economic impact will hammer states that are not expanding Medicaid. These 10 states rely heavily on strengthening premium tax credits in Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Wisconsin and Wyoming, as access to Medicaid is relied heavily on strengthening premium tax credits.
Of the 286,000 total unemployment, approximately 194,000 are obtained from these states. This includes 90,000 roles in the healthcare industry. Non-expansion state gross domestic product will drop by $23 billion, and its government will lose $1.3 billion in state and local tax revenues.
Fix: Previous versions of this article misunderstood one state that has not expanded Medicaid, and the total number of unemployment expected to affect those states was incorrect. Kansas is not expanding Medicaid, and it is expected that a 194,000 job cut will hit states that are not expanding Medicaid.
