As health insurance premiums rise, particularly for those who rely on the Affordable Care Act (ACA) marketplace, certain groups are expected to face a heavier financial burden. This issue is compounded by the expiration of enhanced subsidies that were designed to ease the financial strain for individuals purchasing insurance through the ACA, as reported by Newsweek.
The Vulnerability of the Self-Employed and Small Business Workers
According to experts, self-employed individuals and small business employees, many of whom do not receive employer-sponsored health insurance, are most vulnerable to rising premiums. A significant portion of these individuals rely on the ACA marketplace for coverage, making them highly exposed to fluctuations in pricing. In fact, data from the health research organization KFF shows that nearly half of all adults under 65 who purchase individual marketplace plans are either self-employed or work for small businesses.
The expiration of ACA enhanced tax credits at the end of this year is likely to exacerbate this issue. These credits, which helped to lower premiums for those in the individual market, are set to expire, causing premiums to rise sharply. The situation is particularly concerning for those with lower incomes, who will no longer have access to the same level of financial assistance.
As Zack Cooper, a public health and economics professor at Yale University, explains to Newsweek: “The burden tends to fall disproportionately on workers earning less than $100,000 per year,” adding that the rise in costs will be most felt by those in sectors like retail, food services, and the arts, where part-time and self-employed work is more common.
In addition, individuals in their 50s and 60s are likely to be hit hardest, as premiums for older individuals are typically higher, while subsidies remain income-based and do not account for age. Experts like Joseph Newhouse from Harvard University highlight the growing discrepancy between those who can access affordable health care and those who cannot, stressing that geography plays a major role. Individuals in areas with fewer health insurance providers or high medical costs will feel the impact of rising premiums more acutely.
Consequences for the Wider Economy and Health System
The effects of these rising premiums extend beyond individual budgets, they could also disrupt the broader economy. Jonathan Gruber, a professor at MIT, warns that the expiration of subsidies could reverse the benefits that the ACA brought to self-employed individuals and small businesses, making it harder for them to afford insurance and potentially discouraging entrepreneurship. Without the ACA’s assistance, these workers face an increasingly expensive and volatile market, making it more difficult to launch new businesses or take risks that could drive economic growth.
The increasing unaffordability of health insurance could cause more Americans to forgo coverage altogether, leading to higher rates of uninsured individuals. This could create a ripple effect, where the cost of medical care is shifted to others, either through higher premiums or the burden placed on public healthcare systems.
Health policy experts have expressed concern that, as healthier individuals drop out of the market due to rising costs, the risk pool could become less stable, driving premiums even higher. Kosali Simon, a health economist at Indiana University, states that this could increase the number of uninsured people and lead to a rise in uncompensated care, placing further strain on the healthcare system.
