Enhanced tax credits that have helped reduce the cost of health insurance for the vast majority of Affordable Care Act enrollees expired overnight, cementing higher health costs for millions of Americans at the start of the new year.

Democrats forced a 43-day government shutdown over the issue. Moderate Republicans called for a solution to save their 2026 political aspirations. President Donald Trump floated a way out, only to back off after conservative backlash.

In the end, no one’s efforts were enough to save the subsidies before their expiration date. A House vote expected in January could offer another chance, but success is far from guaranteed.

The change affects a diverse cross-section of Americans who don’t get their health insurance from an employer and don’t qualify for Medicaid or Medicare — a group that includes many self-employed workers, small business owners, farmers and ranchers.

It comes at the start of a high-stakes midterm election year, with affordability — including the cost of health care — topping the list of voters’ concerns.

“It really bothers me that the middle class has moved from a squeeze to a full suffocation, and they continue to just pile on and leave it up to us,” said 37-year-old single mom Katelin Provost, whose health care costs are set to jump. “I’m incredibly disappointed that there hasn’t been more action.”

Some families grapple with insurance costs that are doubling, tripling or more

The expired subsidies were first given to Affordable Care Act enrollees in 2021 as a temporary measure to help Americans get through the COVID-19 pandemic. Democrats in power at the time extended them, moving the expiration date to the start of 2026.

With the expanded subsidies, some lower-income enrollees received health care with no premiums, and high earners paid no more than 8.5% of their income. Eligibility for middle-class earners was also expanded.

On average, the more than 20 million subsidized enrollees in the Affordable Care Act program are seeing their premium costs rise by 114% in 2026, according to an analysis by the health care research nonprofit KFF.

Those surging prices come alongside an overall increase in health costs in the U.S., which are further driving up out-of-pocket costs in many plans.

Some enrollees, like Salt Lake City freelance filmmaker and adjunct professor Stan Clawson, have absorbed the extra expense. Clawson said he was paying just under $350 a month for his premiums last year, a number that will jump to nearly $500 a month this year. It’s a strain for the 49-year-old but one he’s willing to take on because he needs health insurance as someone who lives with paralysis from a spinal cord injury.

Others, like Provost, are dealing with steeper hikes. The social worker’s monthly premium payment is increasing from $85 a month to nearly $750.

Effects on enrollment remain to be seen

Health analysts have predicted the expiration of the subsidies will drive many of the 24 million total Affordable Care Act enrollees — especially younger and healthier Americans — to forgo health insurance coverage altogether.

Over time, that could make the program more expensive for the older, sicker population that remains.

An analysis conducted last September by the Urban Institute and Commonwealth Fund projected the higher premiums from expiring subsidies would prompt some 4.8 million Americans to drop coverage in 2026.

But with the window to select and change plans still ongoing until Jan. 15 in most states, the final effect on enrollment is yet to be determined.

Provost, the single mother, said she is holding out hope that Congress finds a way to revive the subsidies early in the year — but if not, she’ll drop herself off the insurance and keep it only for her four-year-old daughter. She can’t afford to pay for both of their coverage at the current price.

Months of discussion, but no relief yet

Last year, after Republicans cut more than $1 trillion in federal health care and food assistance with Trump’s big tax and spending cuts bill, Democrats repeatedly called for the subsidies to be extended. But while some Republicans in power acknowledged the issue needed to be addressed, they refused to put it to a vote until late in the year.

In December, the Senate rejected two partisan health care bills — a Democratic pitch to extend the subsidies for three more years and a Republican alternative that would instead provide Americans with health savings accounts.

In the House, four centrist Republicans broke with GOP leadership and joined forces with Democrats to force a vote that could come as soon as January on a three-year extension of the tax credits. But with the Senate already having rejected such a plan, it’s unclear whether it could get enough momentum to pass.

Meanwhile, Americans whose premiums are skyrocketing say lawmakers don’t understand what it’s really like to struggle to get by as health costs ratchet up with no relief.

Many say they want the subsidies restored alongside broader reforms to make health care more affordable for all Americans.

“Both Republicans and Democrats have been saying for years, oh, we need to fix it. Then do it,” said Chad Bruns, a 58-year-old Affordable Care Act enrollee in Wisconsin. “They need to get to the root cause, and no political party ever does that.”

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The governor’s proposed budget would cut one-time spending by $19.1 billion and ongoing spending by $13.7 billion through fiscal year 2025-2026, according to the fact sheet. It would enact a nearly 8% cut to state operations, eliminating 10,000 unfilled positions.

The sheet said the governor plans to balance the budget by “getting state spending under control — cutting costs, not proposing new taxes.” He also wants to do this by “reducing reliance on the state’s ‘Rainy Day’ reserves this year.”

The true deficit number may actually be closer to $45 billion, as the administration subtracted a $17.3 billion package of budget fixes Newsom, Assembly Speaker Robert Rivas, D-Hollister, and Senate President Pro Tem Mike McGuire, D-Healdsburg, agreed to in April.

The administration acknowledged it had cut the $17.3 billion from the overall shortfall number in a fact sheet released just before the governor’s press conference Friday.

It was immediately unclear how exactly the administration calculated the deficit, aside from subtracting the legislative agreement.

Newsom pegged the spending gap at $38 billion in January, although the independent Legislative Analyst’s Office later suggested it could be as high as $73 billion.

California’s fiscal year-over-year revenues were $5.8 billion or 4% below Department of Finance forecasts as of March, indicating the overall deficit likely grew.

Budget-watchers had predicted Newsom’s strategy in advance, suggesting he may present a rosier shortfall number by incorporating a handful of previously planned fixes.

The governor’s revised budget announcement kicks off a month of negotiations involving his administration, Assembly Speaker Robert Rivas, D-Hollister, and Senate President Pro Tem Mike McGuire, D-Healdsburg.

The Legislature must pass a budget by June 15 for lawmakers to continue getting paid. The new fiscal year begins on July 1, meaning Newsom has to sign budget legislation by the end of the month.

Just two years ago, the governor was celebrating a budget with a large surplus. This allowed him to invest in a series of bigger policy initiatives, including transitional kindergarten, or pre-kindergarten, Medi-Cal coverage for undocumented immigrants and CARE Court to compel treatment for the seriously mentally ill.

The state in January enacted the final piece of its expansion of Medi-Cal — California’s version of the federal Medicaid program — allowing all those who income-quality to enroll, regardless of immigration status.

But the post-COVID-19 pandemic economy hit California hard. That’s because the state is heavily dependent on its highest-income earners due to its graduated tax structure, the tourist industry was hit hard and supply chains were disrupted.

Federal efforts toeaseinflation by raising interest rates have cooled industries sensitive to rate hikes. This has affected some activities, such as home buying and startup and tech investing.

Also hamstringing the state’s efforts to gauge the government’s economic condition, those involved in crafting the state’s 2023-2024 budget were unable to get the most accurate picture of the state’s finances until November, long after lawmakers and the governor had agreed to a spending plan.

The delay was caused by a large number of Californians who could delay filing their 2023 taxes until November due to deferrals the IRS granted to those affected by winter storms. The situation helped complicate the state’s financial outlook heading into 2024.

Newsom in 2023 and in January committed to some cuts while preserving his major initiatives and social safety net programs.

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