The Rising Costs: Examining Affordability of the Affordable Care Act

Congressional leaders remain at an impasse over Affordable Care Act funding as the government shutdown deadline looms, with subsidies for millions of Americans hanging in the balance.

Republican lawmakers, led by Senator Rick Scott, argue that the ACA survives only through massive government subsidies to insurance companies. A review of federal expenditures confirms this assertion, with approximately $800 billion flowing through the Premium Tax Credit program since the ACA’s implementation in 2014.

These subsidies directly benefit around 19 million Americans in 2024 who qualify for reduced health insurance premiums, according to data from KFF, a health policy research organization.

Two key factors have driven costs significantly higher in recent years. First, enrollment has more than tripled since the program’s inception, growing from approximately 6 million participants in 2014 to over 20 million this year. Second, pandemic-era legislation removed the income threshold that previously limited subsidies to those earning less than 400% of the federal poverty level.

This expansion made coverage more affordable for middle-class families but substantially increased the pool of Americans eligible for government assistance. The federal government allocated $111 billion for these subsidies in 2023 alone, with projections exceeding $120 billion for 2024—a combined two-year expenditure of more than $200 billion, according to the Tax Foundation.

As the ACA marks its 15th anniversary since President Obama signed it into law, the landscape of American healthcare has transformed dramatically. Before its implementation, nearly 50 million Americans lacked health insurance, and individuals with preexisting conditions frequently faced coverage denials from insurers.

The legislation created a three-pronged approach to expanding coverage: broadening Medicaid eligibility, establishing online insurance marketplaces for comparison shopping, and providing financial assistance through subsidies to make monthly premiums more affordable for low and middle-income Americans.

The impact has been substantial. Data from the State Health Access Data Assistance Center reveals that since the ACA’s major provisions took effect in 2013, more than 38 million additional Americans have gained health insurance coverage. The national uninsured rate has plummeted from 14.4% in 2013 to 7.9% in 2023.

However, this expanded coverage comes with significant fiscal implications. Federal spending on health insurance subsidies has more than doubled since the COVID-19 pandemic began. In the years since the pandemic’s onset, American taxpayers have contributed approximately $440 billion toward ACA subsidies.

Advocates for the program contend that this spending represents a worthwhile investment in public health, keeping essential medical coverage accessible for millions who would otherwise go without insurance. They argue that preventive care reduces costly emergency treatments and improves overall health outcomes.

Critics, however, question the long-term sustainability of this model. They point to the rapidly escalating costs borne by taxpayers while noting that insurance premiums remain prohibitively expensive for individuals who don’t qualify for government assistance.

As the shutdown deadline approaches, this debate over healthcare funding has emerged as a central battleground, highlighting fundamental disagreements about the government’s role in healthcare and appropriate levels of federal spending. The outcome will have immediate consequences for millions of Americans who depend on these subsidies to afford their health insurance coverage.