• Donald Trump will decide whether to renew subsidies that make the ACA marketplaces more affordable.
• Biden's enhanced ACA subsidies, which lowered premiums for the middle class, will expire in 2025.
• Ending the subsidies would save the government money, but increase premiums for many Americans.

Federal subsidies meant to make health insurance more affordable for low- and middle-income Americans could be on the chopping block when Donald Trump returns to the White House.

President Joe Biden's enhanced version of the Affordable Care Act subsidies — which provide lower premiums and reduced out-of-pocket costs for lower-earning Americans who don't get health insurance subsidized by their employer or a government program like Medicaid — are set to expire at the end of 2025. At some point next year, Trump and a Republican-led Congress will decide whether to renew or end the subsidies.

Ending the subsidies would save the government money but restrict healthcare options for the people and families who rely on them. If the subsidies are allowed to expire, the Congressional Budget Office estimated that nearly 4 million people would drop coverage in 2026. 

The president-elect has been inconsistent with his support for the Affordable Care Act and has previously proposed cuts to healthcare programs like Medicare and Medicaid. The Trump transition team did not respond to BI's inquiry about ACA subsidies but previously shared a statement that Trump would "protect Medicare" as president.

Trump has not publicly said whether he plans to let the enhanced ACA subsidies expire, but he has made cost-cutting a cornerstone of his second-term promises.

The Affordable Care Act — also known as Obamacare — was passed in 2010. The law introduced the ACA marketplaces, which were meant to make health insurance more affordable for lower-earning people whose incomes would be too high to qualify for Medicare and Medicaid. It also requires insurance companies to cover preexisting conditions, like diabetes and heart disease.

Biden's expansion increased the financial assistance for people already on ACA plans and lifted the income eligibility cap for those benefits. Some middle-class families had previously been priced out of health insurance.

Since 2020 — the year before the subsidies went into effect — the number of people with ACA marketplace coverage has grown by 88%, to 21.4 million people from 11.4 million, per KFF.

Gary Young, the director of Northeastern University's Center for Health Policy and Healthcare Research, told Business Insider that the ACA subsidy debate underlines a growing problem: America's healthcare costs are ballooning, and it's taking a toll on people's finances and federal budgets.

"We are having this debate at the same time that we are beginning to see healthcare costs ramp up," Young said.

How ending ACA subsidies would impact Americans and government spending

Ending subsidies would be cheaper for the government and taxpayers. Some Republicans like Vice President-elect JD Vance have said they want to inject needed competition into the health insurance marketplace. Young said a more robust marketplace could lead to more diverse insurance plans being available, allowing people to choose coverage that best fits their needs without the government footing the bill.

"There's concerns about whether the subsidies maybe went too far," Young said. "They're providing people with financial resources to purchase more extensive insurance than they otherwise would purchase, and it's not necessarily an efficient way of using federal resources."

Still, Young said letting the ACA subsidies expire would probably make healthcare more expensive for millions of people. Nearly all Americans on ACA plans would pay higher premiums, he said. KFF reported that low-income people would see the steepest increase in healthcare costs relative to their income.

Any move by Trump to change ACA policies would need congressional approval. Because insurers have to submit their plan proposals next summer for the 2026 enrollment period, Trump will probably need to decide early in his term whether to extend the enhanced ACA subsidy.

Trump's 2nd term has a cost-cutting agenda

The US government spent $6.75 trillion total in fiscal year 2024, which resulted in a national deficit. At $912 billion, the Department of Treasury reported that healthcare — programs like Medicaid, the Children's Health Insurance Program, the Centers for Disease Control and Prevention, and more — is a top government expenditure behind Social Security. Medicare costs add another $874 billion. If the enhanced ACA subsidies were to become permanent, the Congressional Budget Office and Joint Committee on Taxation estimate that it would cost $335 billion over the next 10 years.

Tesla CEO Elon Musk and former GOP presidential candidate Vivek Ramaswamy were tapped by Trump to co-lead a new Department of Government Efficiency. The pair plans to propose cuts for the government's most costly programs, but it's not yet clear if that will include healthcare programs.

Trump's nominees for the top healthcare positions are Robert F. Kennedy Jr. leading the Department of Health and Human Services and Dr. Mehmet Oz leading the Centers for Medicare and Medicaid Services. Neither Kennedy nor Oz has outlined a specific plan for affordable healthcare in 2025, and neither responded to a request for comment.

In an opinion piece published in 2020 on Forbes, Oz said he supports a universal healthcare plan, but the stance is likely to be at odds with the Trump administration's cost-cutting agenda.

Are you doing anything to prepare your finances or healthcare plan for Trump's second term? If so, please reach out to this reporter at [email protected].

Correction: December 2, 2024 — An earlier version of this story misstated who is eligible for the enhanced Affordable Care Act subsidies. The subsidies apply mostly to people who purchase health insurance on the Affordable Care Act marketplaces. Some Medicare recipients are also eligible, but not Medicaid recipients.