Congress passed enhanced premium tax credits (PTCs) in March 2021 as part of the American Rescue Plan Act and extended them through 2025 by the Inflation Reduction Act of 2022. These enhanced PTCs helped spur record enrollment in the Affordable Care Act Marketplaces by substantially increasing the subsidies available to buy insurance, making coverage more affordable for eligible people. Enhanced PTCs are set to expire at the end of 2025, and Congress will soon decide whether to extend them again, make them permanent, or let them expire.

This brief provides updated estimates on the reductions in health care spending and increases in uncompensated care associated with allowing the enhanced PTCs to expire. We also estimate the changes in spending and uncompensated care associated with the expiration of the enhanced PTCs at the state level.

Why This Matters

Because lower spending on health care services means lower revenue for health care providers and fewer services rendered, the resulting decline in revenue in these communities could have adverse consequences for providers, particularly hospitals that are already financially at-risk.

What We Found

• If Congress doesn’t extend enhanced PTCs after 2025, 4.8 million people would become uninsured, resulting in health care spending declines of $32.1 billion. Around $14.2 billion less would be spent on hospital services, $5.1 billion on office-based physician services, $6.9 billion on other health care services, and $5.8 billion on prescription drugs.
• The expiration of the enhanced PTCs would also result in a $7.7 billion increase in uncompensated care sought by the uninsured, with the burden falling on all provider types: about $2.2 billion on hospitals, $1.0 billion on physician offices, $3.1 billion on other services, and $1.5 billion on prescription drugs.
• These changes in health care spending and uncompensated care demand would be more pronounced in states that have not expanded Medicaid, communities in the South, and rural communities.

How We Did It

We simulated health insurance coverage, provider revenue, and uncompensated care costs using the Urban Institute’s Health Insurance Policy Simulation Model. The estimates presented here compare a baseline with enhanced PTCs that incorporates policies expected to be in effect in 2026, including the major provisions of the One Big Beautiful Bill Act and provisions of the Marketplace Integrity and Affordability rule released by the Center for Medicare and Medicaid Services (except for provisions stayed by a Maryland District Court on August 22) to a projection with those policies, but in which enhanced PTCs expire at the end of 2025.