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By Suzanne Blake
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Changes to the Affordable Care Act supported by Republicans could have consequences beyond just rising health insurance bills.
A new economic report from impact modeling firm IMPLAN found that increases in Affordable Care Act (ACA) marketplace premiums could ripple through the broader economy as consumers have less money available to spend elsewhere and ultimately lead to a loss of more than 1,500 jobs and approximately $60 million in gross domestic product.
“When there is a price increase in one area of the economy, another area of it suffers. Maybe that’s one less restaurant visit a month, or less discretionary income,” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek. “Businesses will begin to feel that, especially as they deal with higher input prices from tariffs.”
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These anticipated job losses come as enhanced ACA premium tax credits expired at the end of 2025. Those expanded subsidies, originally enacted under the American Rescue Plan Act in 2021 and later extended through 2025 by the Inflation Reduction Act, had increased the amount of financial assistance available to eligible marketplace customers and expanded eligibility to some higher-income households.
Similar research from The Commonwealth Fund and George Washington University's Milken Institute School of Public Health estimated that the expiration of the enhanced credits could ultimately result in nearly 340,000 fewer jobs nationwide in 2026, with slightly less than half of those losses occurring in healthcare.
Why It Matters
The ACA changes are generally discussed in terms of how much Americans will pay for health coverage, but the economic effects could reach well beyond people insured through the marketplace.
When federal subsidies decline and consumers pay more toward their health coverage, fewer federal dollars flow into state economies. At the same time, people who drop insurance may use less healthcare, reducing revenue for doctors, hospitals, and pharmacies.
George Washington University and The Commonwealth Fund also projected that the loss of the enhanced tax credits would reduce federal funding for marketplace subsidies by $31 billion. The resulting direct and downstream effects reportedly could shrink state economies by $40.7 billion and reduce state and local tax revenue by $2.5 billion in 2026.
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What To Know
Under the enhanced premium tax credits, the federal government provided more generous assistance to people purchasing coverage through ACA marketplaces.
The subsidies originated with the 2021 American Rescue Plan and were extended through 2025 under the Inflation Reduction Act. They made larger subsidies available to qualifying households and expanded assistance beyond the ACA's previous income limits.
However, these subsidies expired at the end of 2025.
That does not mean ACA premium tax credits disappeared altogether. Instead, the enhanced provisions ended and the subsidy structure reverted to the ACA's less generous rules. The Congressional Research Service said the change would result in larger premium contributions and smaller subsidy amounts for eligible households purchasing 2026 coverage.
“The substantial increases to ACA premiums are gaining attention for the added healthcare costs millions of Americans will have to take on, but forgotten in the discussion is the dollars deflected from other expenses that will now be negated due to this spending,” Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
“If you are seeing a 15 percent bump in your insurance premiums, those are dollars that won't be spent in other areas of the economy, and the result could sadly be some industries that see reduced hiring and even job losses as they tackle limited budgets.”
KFF estimated that the expiration would increase what marketplace enrollees pay in premiums by an average of 114 percent, or about $1,016 per year.
Gross premiums have risen as well. Urban Institute researchers estimated the national increase in 2026 benchmark marketplace premiums at 21.7 percent, following five years in which the average annual change was 2 percent.
How Higher ACA Costs Could Hit Jobs
There are two different effects at issue: consumers paying more for insurance and federal dollars no longer flowing into health coverage at the same level.
The Commonwealth Fund and George Washington University analysis found that nearly half of the projected job losses associated with the expiration of the enhanced credits would occur within healthcare.
The impact would not necessarily be limited to healthcare workers though. According to the researchers, reduced federal funding for healthcare and related downstream effects would also affect broader state economies.
“The expiration of the ACA and higher tariffs have become a double whammy,” Thompson said. “Now add into that a war in Iran that is pushing prices higher around the country, it is almost the perfect storm.”
The report found that Texas, Florida, Georgia, California, South Carolina, Tennessee, Alabama, Louisiana, North Carolina and Mississippi were the states expected to experience the largest job losses, with Texas projected to be hit hardest.
“Republicans' decision to let the enhanced ACA subsidies expire made health insurance considerably more expensive for millions of Americans. And those higher costs don't stop at the doctor's office,” Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek.
“When a family has to find another 2-300 a month for insurance, that money has to come from somewhere. May mean fewer dinners out, postponed purchases, less spending at local businesses. Eventually, those businesses have fewer customers. And some eventually need fewer employees.”
Why Republicans and Democrats Disagree
The subsidies have become part of the broader partisan debate over the cost and scope of the ACA.
Democrats pushed to maintain the enhanced subsidies, arguing that allowing them to disappear would make coverage unaffordable for millions of Americans.
Meanwhile, congressional Republicans and the White House pushed for other approaches to government funding and health policy rather than continuing the enhanced credits as previously structured.
“The domino effect from higher health insurance costs can affect multiple industries, and the sad result can be fewer jobs and higher prices,” Beene said.
At the same time, there is a significant federal cost attached to permanently reinstating the credits.
The Congressional Budget Office estimated that permanently restoring the expanded premium-tax-credit structure would increase federal deficits by $350 billion between 2026 and 2035. CBO also estimated that doing so would increase the number of Americans with health insurance by 3.8 million in 2035, relative to its baseline.
“There's a bitter irony here. People are paying more to keep their health insurance, while the resulting squeeze on budgets can threaten jobs that provide people with their paychecks,” Ryan said.
What Happens Next
The immediate effects of the subsidy expirations are already being happening in 2026 marketplace coverage.
Without the enhanced credits, eligible consumers face smaller subsidies and larger contributions toward their premiums, while people above the applicable income threshold can lose eligibility for premium tax credits altogether.
“The damage can feed on itself,” Ryan said. “Someone who loses their job may also lose the income they need to maintain coverage. That's a troubling cycle, especially for an average income family who earn too much to qualify for meaningful assistance but can't comfortably absorb these increases.”
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here. Contact Newsweek editors on this story: Jason Lemon and Edward T. Cummins
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