About seven years ago, Beth Hoffman and her partner, John, made a big life change.
They moved from San Francisco to Monroe County in southern Iowa, bought 40 acres down the street from John’s parents and started Whippoorwill Creek Farm.
“We do all sorts of agritourism kinds of things," she said. "So farm to table dinners. We do cooking classes, writing classes, because I'm a writer, and overnight stays [through] Airbnb."
Because Hoffman and her partner operate a small business and do freelance work, they rely on the Affordable Care Act Marketplace to buy health insurance.
They currently pay about $200 a month for a bronze plan that’s not great, she said.
“It's basically catastrophic coverage,” Hoffman said. “So we have a $7,000 deductible — I believe — each.”
To keep their current plan next year, she said the premium will cost about $300 a month.
But if their income grows, the cost could skyrocket.
The couple earns close to 400% of the federal poverty level. If they go over that mark with the end of the federal enhanced ACA tax credits, this year, they will fall off a steep income cliff.
If their income increases by $10,000 next year, then their monthly premium would shoot up to nearly $1,400 a month.
“Everything that we would have made in that $10,000 would just be spent on our health insurance,” Hoffman said.
‘People will go into debt’
This month marks the start of open enrollment for the nearly 137,000 Iowans who purchase their health insurance through the ACA marketplace. But this year, many — like Hoffman — will see significant jumps in the cost of their premiums as enhanced tax subsidies for ACA plans, which have been in effect since 2021, are set to expire at the end of this year.
The end of the tax credits will have an impact on most enrollees. Around 92% of Americans enrolled in ACA plans use them, according to Katherine Hempstead, a senior policy officer with the Robert Wood Johnson Foundation.
“For some people, they'll go away completely,” she said. “People with a little bit higher incomes are going to get a big increase in what they're asked to pay, and a lot of people are predicted to drop coverage.”
It’s estimated that people on ACA plans will see their premiums increase on average 75% with the end of the enhanced tax credits, she said.
“People will go into debt,” she said. “People will avoid going in for care because they'll be terrified of what it might cost them, so people will wait until things are really serious.”
The Congressional Budget Office estimates 4.2 million Americans will become uninsured due to the end of these tax credits.
The issue has been at the forefront of federal politics as the government enters the second month of its shutdown.
Democrats said they refuse to end it until the tax credits are extended, something Republicans said they’re open to addressing only after the government reopens.
The rising premium costs are concerning, said Iowa Insurance Commissioner Doug Ommen, but extending the tax credits won’t fix structural flaws in the ACA Marketplace.
“For the subsidized individuals, there's no age rating, and so everything is income-rated. And so people of identical income pay the same irrespective of their age, and therefore irrespective of their risk,” he said.
Ommen’s called on lawmakers to change the way tax credits are distributed. But for now, he’s recommending Iowans enrolling in ACA plans contact his office or call a licensed insurance agent for help.
Having tough conversations about high premiums
Dale Sales, an insurance agent in Centerville, is also bracing for tough conversations this open enrollment period.
“I'm not prepared for the conversations I'm going to have to have with people. I mean, this is small town, rural America. I know these people. They become family,” he said.
Appanoose County, where Sales works, has one of the lowest median incomes in the state. People are going to struggle to pay the higher premiums, Sales said.
“They're either going to take a reduction in benefit just to cover something catastrophic or stay working or get another job,” he said.
Sales said he’s frustrated with lawmakers for their inability to address this problem much sooner.
Correction: An earlier version of this story reported the number of Iowans enrolled in health coverage through the ACA at nearly 187,000. That number is nearly 137,000.
