• 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.

• Elon Musk and Vivek Ramaswamy outlined their vision for sweeping federal budget cuts in an opinion piece.
• DOGE will rely on executive orders and court rulings, instead of Congress, they said.
• They said they'd be "taking aim at" funding for public media and Planned Parenthood.

Elon Musk and Vivek Ramaswamy have outlined their vision for the Department of Government Efficiency in a lengthy op-ed, spelling out how the duo plan to slash government spending.

On Wednesday, Musk and Ramaswamy outlined their vision for DOGE, which Musk previously said would cut $2 trillion from the federal budget.

Their opinion piece, published in the Wall Street Journal, is lengthy and dense, filled with Supreme Court rulings and decades-old statutes. Here are the main takeaways.

DOGE will be staffed by 'small-government crusaders' and work with the Office of Management and Budget.

Since its inception, DOGE has existed as an agency outside of government rather than a department — this way, Musk and Ramaswamy aren't government employees and don't have to divest from their businesses.

The DOGE co-heads re-hash this point in their column, writing that they will "serve as outside volunteers, not federal officials or employees." They are working with Trump's transition team to organize "a lean team of small-government crusaders, including some of the sharpest technical and legal minds in America." DOGE employees will work closely with the Office of Management and Budget, which prepares the president's budget requests for Congress.

Musk and Ramaswamy will be DOGE's main advisors and oversee three categories of reform: "regulatory rescissions, administrative reductions and cost savings."

DOGE will turn to recent Supreme Court rulings as a guide.

Musk and Ramaswamy wrote that their goal for deep reform will be rooted in two Supreme Court rulings.

The pair cited West Virginia v. Environmental Protection Agency, a 2022 Supreme Court ruling in which the court restricted the agency's ability to regulate carbon emissions, and Loper Bright v. Raimondo, a 2024 ruling where the court overturned Chevron v. Natural Resources Defense Council (1984). The Chevron decision dictated that federal courts should defer to federal agencies in their interpretation of statutes; in overturning it, the Supreme Court stripped agencies of significant power.

Musk and Ramaswamy said in the opinion piece that the rulings from the court point to regulations that "exceed the authority Congress has granted under the law."

The pair said that rolling back a range of "illicit" regulations would create economic prosperity in the country. And they wrote that the move would be a major step in remedying what they deem to be "executive overreach."

DOGE will rely heavily on executive action to pursue its cost-cutting agenda.

Musk and Ramaswamy make clear that they won't aim to pass new laws in their roles, meaning they won't have to rely on Congress.

According to their opinion piece, DOGE will work with legal experts working at government agencies to use their interpretation of the rulings to identify which regulations to cut. After determining which regulations are wasteful, DOGE will make their recommendations to Trump, who could then take executive action to "pause" certain rules and begin the process to review and reverse them.

DOGE also plans to go after the federal government's procurement process, which agencies use to get goods and services. Musk and Ramaswamy write that many federal contracts haven't been properly investigated and that broad audits of agencies "during a temporary suspension of payments would yield significant savings."

Musk and Ramaswamy explain how they'll reduce the size of the federal workforce.

Musk and Ramaswamy make it clear that by eliminating federal regulations, there should also be "mass head-count reductions across the federal bureaucracy."

The pair stated that DOGE will work with agencies to identify the minimum number of staffers needed for departments to function and still maintain their effectiveness.

"Employees whose positions are eliminated deserve to be treated with respect, and DOGE's goal is to help support their transition into the private sector," they wrote. "The president can use existing laws to give them incentives for early retirement and to make voluntary severance payments to facilitate a graceful exit."

And Musk and Ramaswamy poured cold water on pandemic-era work-from-home policies as they aim to reform the government's finances.

"Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome," the pair wrote.

Musk and Ramaswamy plan to target public media and Planned Parenthood.

To fulfill its promise of saving taxpayer money through executive action, DOGE plans to "take aim at the $500 billion plus in annual federal expenditures that are unauthorized by Congress or being used in ways that Congress never intended." Though Musk and Ramaswamy don't detail all of the programs they hope to target, the two mention the Corporation for Public Broadcasting and Planned Parenthood, along with other "progressive groups."

Congress created the CPB in 1967. It is the single biggest funding source for public radio, television, and online services, largely for local public media stations. Public Broadcasting Service and National Public Radio each receive some of their funding from the CPB.

Musk and Ramaswamy address critiques about spending goals and executive overreach.

Since DOGE was announced, critics have questioned whether Musk's previously stated goal of cutting $2 trillion from the federal budget is feasible, particularly given their limited power without Congress. In 2024, federal spending reached $6.75 trillion, with a combined 45% of it going to health insurance programs, like Medicare, and Social Security.

Musk has a history of overcoming steep odds in the private sector. Both Tesla and SpaceX have survived near-financial ruin to become wildly successful, partly because Musk has bet on industries others deem too risky to touch.

The co-heads face the critiques head on, writing that any claims of executive overreach are unfounded. Instead, they say they will "be correcting the executive overreach of thousands of regulations promulgated by administrative fiat" by applying their Supreme Court interpretations. According to their stated logic, a future president would need to pass a law to reinstate any regulations that Trump scraps.

Critics have also pointed to the Impoundment Control Act of 1974 as a potential roadblock for the agency; the statute requires the president to spend funds that Congress has appropriated. Musk and Ramaswamy note that Trump has implied that the statute is unconstitutional and predict that the Supreme Court would agree. Regardless of the statute's future, DOGE plans to move forward with its mission.

Musk and Ramaswamy argue that questions about entitlement programs like Medicare "deflects attention from the sheer magnitude of waste, fraud and abuse," but don't specifically address that critique otherwise.

DOGE will end by July 4, 2026.

Musk and Ramaswamy wrote that they expect to "prevail" in their fight to enact sweeping governmental reforms.

And they emphasized that it's their objective for DOGE to be phased out by July 4, 2026.

"There is no better birthday gift to our nation on its 250th anniversary than to deliver a federal government that would make our Founders proud," the DOGE co-heads wrote.

Representatives for Musk and Trump did not immediately respond to Business Insider's request for comment; a representative for Ramaswamy declined the request.