For years Americans have been told that the Affordable Care Act would reduce costs, expand access, and bring stability to the insurance market. Yet as 2026 approaches, with Biden COVID credits potentially affecting premiums, the reality for millions of families is clear. Premiums are climbing faster than ever, insurers are consolidating into fewer and larger corporations, and taxpayers are footing an ever-growing bill to keep the system from collapsing.
The Biden administration and its media allies have been quick to claim that the coming premium spike is a temporary result of the COVID Credit program expiring. These temporary pandemic-era subsidies were designed to make premiums appear lower during the emergency period, but their expiration has been used as a political talking point to deflect blame. The truth is far less convenient.
According to the Paragon Institute, which analyzed insurer filings and Kaiser Family Foundation data, the expiration of the so-called Biden COVID Credits accounts for only 3.3 percent of the total 2026 premium. That means 96.7 percent of next year’s premium cost has nothing to do with the end of the temporary credits. The overwhelming majority of the increase is being driven by long-standing problems inside the Affordable Care Act marketplace itself.
The Paragon Institute review examined rate filings from across the country and found that the average 2026 benchmark premium for a fifty-year-old earning two hundred percent of the federal poverty level will jump from $8,326 to $9,991. That is an increase of about twenty percent, or $1,665 per year. Of that total increase, only about $333 can be traced to the expiration of the COVID-era credits. The remaining $1,332 comes from other factors such as rising medical utilization, inflation in health care prices, and the growing cost of high-end prescription drugs and new biologic treatments.
These numbers confirm what many analysts have suspected for years. The Affordable Care Act was built on a fragile framework that depends on continuous federal intervention to maintain the illusion of affordability. Once temporary supports are removed, premiums revert to reflecting the true cost of health care in the United States. That cost has been climbing relentlessly, and no amount of subsidy reshuffling can hide it.
Insurers themselves are not blaming the end of the credits. Their filings cite multiple factors for the expected rise in rates. Among the most common reasons listed are an increase in medical services used by policyholders, higher prices for hospital care, and the explosive growth in demand for new high-cost drugs. Medications such as GLP 1 weight-loss injections and next-generation gene therapies have become major cost drivers. Insurers also mention inflationary pressures from labor costs and supply chains, along with the financial impact of government regulations on pricing and transparency.
In plain terms, health care is becoming more expensive across the board, and insurance premiums are following those costs upward. Even when insurers want to keep rates stable, the underlying cost of care gives them little choice. The Paragon report notes that even after the expiration of the COVID Credits, the federal government will still cover more than eighty percent of the average enrollee’s premium through standard subsidies. That means taxpayers remain the primary financiers of Obamacare plans, even as premiums rise.
The Biden administration’s public statements often imply that removing the enhanced credits will push millions of Americans off coverage or price them out of the market. In reality, the credits were never meant to be permanent, and the expiration schedule was built into the law. Insurers and regulators have been preparing for it since the subsidies were first extended under the Inflation Reduction Act. What the filings make clear is that premiums were always going to rise regardless of whether the temporary credits remained.
Paragon’s analysis builds on earlier research from the Kaiser Family Foundation, which reviewed more than three hundred insurer rate filings and found that most companies assumed the enhanced credits would expire. That assumption added roughly four percentage points to their proposed rate increases. With the median proposed increase sitting near eighteen percent, that four-point adjustment translates to around three to four percent of total premiums, which aligns with Paragon’s 3.3 percent figure.
In other words, insurers expect premiums to rise sharply in 2026 even without considering the subsidy change. The biggest cost pressures are baked into the system. Hospitals are charging more, drug companies are introducing new therapies with record-breaking price tags, and administrative costs continue to grow. These are not problems that can be solved by extending or canceling temporary subsidies. They are signs of a marketplace that was flawed from its inception.
The Paragon report goes further, arguing that the enhanced COVID Credits actually distorted the market by keeping ineligible or non-participating enrollees on the books. By offering $0 premium plans to anyone who qualified on paper, the system encouraged enrollment from people who never filed claims or who misreported income eligibility. That artificially lowered the risk profile and created the appearance of a healthier pool, which in turn suppressed premiums temporarily. When those artificial conditions are removed, premiums jump back to reflect the true cost of covering active, claim-filing enrollees.
Even setting aside Paragon’s criticism of fraud and misreporting, the broader conclusion is unavoidable. The Affordable Care Act has not made health insurance affordable. It has made it heavily subsidized, with the burden shifted from consumers to taxpayers. While that structure can mask premium increases for a time, it cannot prevent them.
By 2026, federal spending on Obamacare subsidies is projected to exceed two hundred billion dollars per year. Despite that spending, average benchmark premiums will approach ten thousand dollars annually for a middle-income enrollee. The administration may tout that most enrollees pay only a fraction of that out of pocket, but that is because the government covers the rest through direct transfer payments to insurers. Those payments are funded by taxpayers who are themselves struggling under inflation and higher costs of living.
The debate over the COVID Credits also exposes the larger political game being played. By framing the expiration of temporary subsidies as the cause of premium hikes, officials create a convenient scapegoat for systemic failure. The administration can argue that if only Congress would extend or expand the credits, premiums would stabilize. But as the data shows, the credits account for only a sliver of the increase. Extending them again would not solve the underlying cost explosion, it would only delay public recognition of it.
Insurers know this, regulators know this, and analysts know this. The people least served by this political theater are the working Americans who have seen their insurance options shrink while their costs climb. Many middle-class families earn too much to qualify for the largest subsidies but too little to comfortably afford unsubsidized premiums. They are trapped between government dependency and market unaffordability.
Paragon’s report concludes that the expiration of the Biden COVID Credits is not the primary driver of skyrocketing premiums and that the real drivers are the structural weaknesses of the Affordable Care Act itself. Rising medical costs, inflation, and the market power of large health systems continue to push prices higher every year. Unless those fundamentals change, extending subsidies will only paper over the cracks.
The lesson from the data is straightforward. The Affordable Care Act has failed to make health care affordable. The temporary COVID Credits may have softened the optics, but they never addressed the root causes. Premiums are rising because health care spending is rising, and the federal government’s response has been to spend even more taxpayer money to hide it.
In 2026, Americans will face the bill for a decade of false promises. Insurers will continue to raise rates to match real costs, taxpayers will continue to absorb the difference, and politicians will continue to insist that only another round of subsidies can save the system. The numbers prove otherwise. The 3.3 percent figure is not a defense of the Biden administration’s policies. It is a reminder that temporary credits do not fix permanent problems.
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