Tracking Emerging Public Health Challenges – February 23, 2026 – Obamacare Subsidies
“Brian Fitzpatrick didn’t expect to find himself in the middle of a political brawl over health policy.
The Pennsylvania Republican and former FBI agent doesn’t count the legislative area as a pillar of his portfolio. But early last fall, he joined a fledgling group of lawmakers incensed that House GOP leaders were doing nothing to extend enhanced Obamacare subsidies before they expired.
The lack of action, they knew, would send health insurance premiums soaring come January 1.
The effect, they also knew, would be broadly felt. The cost of premiums for most of the 24 million people on the Affordable Care Act exchanges was offset by the boosted subsidies, which Democrats passed into law in 2021 and extended in 2022 during the Biden administration.
“We ended up taking a lead because nobody else was,” Fitzpatrick, who represents a competitive district in the Philadelphia suburbs, recalled this month to reporters.
The group’s bipartisan bill, released on Sept. 4, kickstarted a futile, five-month odyssey to extend the enhanced ACA subsidies. In February, the effort eventually died in Senate negotiations over an issue Fitzpatrick’s bill sidestepped completely: abortion.
The stalemate over the Hyde amendment, which bans federal dollars funding abortion, wasn’t the only reason behind the legislation’s demise. Lingering ideological opposition to Obamacare, White House indifference, the lack of a unifying alternative and an influential lobbying effort tying the subsidies to fraud also played a part in the subsidies’ demise.
In many ways, the outcome of the debate was foreseeable months ago, lawmakers of both parties told POLITICO in more than a dozen interviews for this story examining how Congress failed to prevent the huge increases in health care costs.
By the time the saga had effectively ended, Democrats had turned the Republican health care paralysis into what promises to be a potent issue in the midterm elections: failure by the Trump administration to meaningfully lower the rising cost of living for American consumers. In a word, “affordability” — symbolized by the skyrocketing ACA premiums.” (1)
“Ten Democratic-leaning states are using their own money to help people buy Obamacare health plans, at least partially replacing the federal tax credits that expired at the end of last year.
The state assistance, some of it offered through programs that existed before the federal subsidies expired, is helping hundreds of thousands of people lower their monthly premium payments, which otherwise would have surged to double or even triple what they were before the expiration of the federal aid. The savings can total hundreds of dollars per month.
But only New Mexico is completely filling the gap left by the expiration of the federal help by offering it to people of all incomes; for most Americans buying Obamacare plans, the end of the federal aid means much higher prices. And New Mexico and the other states that are trying to cushion the blow for their residents will face increasing budget pressures as health care costs continue their inexorable rise.
In addition to the expiration of the federal subsidies, the cost of Obamacare coverage has increased because of other factors, including labor shortages and the rising cost of prescription drugs, driven in part by the growing demand for GLP-1 drugs such as Ozempic and Wegovy.
The enhanced federal subsidies were made available by the American Rescue Plan Act in 2021 and later extended through the end of 2025 by the Inflation Reduction Act. Designed as a temporary pandemic-era measure, they helped boost the number of people buying health coverage from the insurance marketplaces created under the Affordable Care Act — Obamacare’s formal name — from 11.4 million people in 2020 to 24.3 million last year.
The enhanced subsidies were available to everyone, regardless of income. Additional federal aid provided to some of the lowest-income households entirely eliminated premium payments for some people.
Congressional leaders let the subsidies expire on Dec. 31. As of the end of last month, the number of people enrolled in marketplace coverage was down by about 1.2 million compared with last year, according to federal data.” (2)
“Subsidies. Love ’em or hate them, they dominated the news during the Affordable Care Act’s sign-up season, and their reduction is now hitting many enrollees in the pocketbook.
While lawmakers continue to disagree on a way forward, and the politics of affordability keeps the issue front and center, it would be understandable to think these are the only taxpayer-funded health insurance subsidies in the U.S. system.
But that would be wrong.
“The vast majority of people with health insurance get some kind of federal subsidy for it, from Medicaid to Medicare to the ACA to employer-sponsored insurance,” said Larry Levitt, executive vice president for health policy at KFF, a health information nonprofit that includes KFF Health News.
These broad taxpayer supports are rarely discussed, though, as they apply to work-based coverage. So, let’s take a look.
Adding up the tax breaks
Nearly half of the more than $1.1 trillion annual spending on Medicare, the second-largest program in the federal budget behind Social Security, comes from general federal funds. The rest comes from payroll taxes and the monthly premiums paid by enrollees, who number more than 66 million.
Medicaid — the nation’s largest health insurer, covering more than 70 million low-income people — costs more than $918 billion annually. It’s jointly financed by the federal government (65%) and states (35%).
For both programs, expenses are partially funded with taxpayer dollars. A less obvious form of federal support comes through employer-sponsored health coverage. Here, the impact on the federal bottom line is less visible, as hundreds of billions of dollars never reach the U.S. Treasury because it takes the form of tax breaks for employers and workers.” (3)
“Trump health officials are proposing changes that would water down the options for people who buy their own health insurance through Affordable Care Act marketplaces.
The proposals, released this week and which would go into effect in 2027, prioritize making ACA premiums as low as possible — by expanding bare-bones coverage, allowing insurers to skip creating networks of hospitals and doctors, and repealing standardized plan options.
The goals and tradeoffs of these policies, which have longstanding conservative roots, are clear, health policy experts told STAT. Premiums would be cheaper for skinnier plans, attracting healthier people who don’t anticipate needing a lot of care. But those with health problems, and those who unexpectedly need care, could face financially ruinous consequences if they choose those plans.” (4)
“In announcing its “Great Healthcare Plan” in January 2026, the Trump administration became the latest in a long history of efforts by the U.S. government to rein in the soaring cost of health care.
As a physician and professor studying the intersection of business and health, I know that the challenges in reforming the sprawling U.S. health care system are immense. That’s partly for political and even philosophical reasons.
But it also reflects a complex system fraught with competing interests – and the fact that patients, hospitals, health insurance companies and drug manufacturers change their behaviors in conflicting ways when faced with new rules.
U.S. health care is the most expensive in the world, and according to a poll published in late January 2026, two-thirds of Americans are very worried about their ability to pay for it – whether it’s their medications, a doctor’s visit, health insurance or an unpredictably costly medical emergency.
Disputes over health policy even played a central role in the federal government shutdown in fall 2025.
Trump’s health care framework outlines no specific policy actions, but it does establish priorities to address a number of longtime concerns, including prescription drug costs, price transparency, lowering insurance premiums and making health insurance companies generally more accountable.
Why have these challenges been so difficult to address?” (5)
1.Why Congress failed to reach an Obamacare deal, By Robert King and Simon J. Levien, https://www.politico.com/news/2026/02/17/inside-congress-failed-battle-to-keep-obamacare-premiums-from-skyrocketing-00781825
2.Some states are helping to make Obamacare plans more affordable, by Shalina Chatlani, https://stateline.org/2026/02/18/some-states-are-helping-to-make-obamacare-plans-more-affordable/
3.Federal tax dollars subsidize health care plans in ways you may not realize, By Julie Appleby, https://www.cbsnews.com/news/tax-subsidies-health-care-plans/
4.Why is US health care still the most expensive in the world after decades of cost-cutting initiatives?, by Patrick Aguilar, https://theconversation.com/why-is-us-health-care-still-the-most-expensive-in-the-world-after-decades-of-cost-cutting-initiatives-273743
5. rump officials push for skimpier coverage in ACA marketplaces, By Bob Herman and Tara Bannow, https://www.statnews.com/2026/02/11/2027-aca-health-plans-could-be-cheaper-but-skimpier/
curated by Jonathan M. Metsch, Dr.P.H.
Clinical Professor of Environmental Medicine, Icahn School of Medicine at Mount Sinai