Why health care costs are at heart of government shutdown

Medicaid cuts passed this summer and enhanced premium subsidies in the Affordable Care Act set to expire at year’s end are at the heart of the government shutdown. The Senate has been unable to secure enough Democrat votes to extend funding to temporarily keep the government open.

As Deseret News reported, Democrats want to reverse the Medicaid health care cuts that were part of President Donald Trump’s tax package this summer and to permanently extend ACA tax credits.

Per the article, “Those demands have been ruled as a nonstarter in this round of spending talks, Republicans say — instead suggesting negotiations on the ACA tax credits should wait until later this year. But that’s not enough for Democrats, who say they cannot trust the Trump administration to allocate government funding the way that Congress dictates.”

The Republican plan, which needed 60 votes to pass, would have extended funding for government operations until Nov. 21. The vote, however, was 55-45, and the government shut down. The Democrats’ plan fared even worse. It would have extended funding for government operations to the end of October, but added more than $1 trillion in health care spending. It fell in a 47-53 vote.

Part of the back-and-forth is about timing. Democrats want a commitment to restoring those subsidies before they agree to reopen the government. White House press secretary Karoline Leavitt and key Republicans in Congress have said there’s plenty of time to deal with that after the government reopens.

Deseret News before the shutdown reported that top GOP leaders said they would not include language to extend the premium tax credits in any short-term spending deal. “That’s a December policy issue, not a September funding issue,” House Speaker Mike Johnson, R-La., told reporters.

Since the shutdown, officials at all levels of government have chimed in, including in Utah.

Utah Republican Gov. Spencer Cox said that “Utahns expect Congress to do its job, not play political games,” as Deseret News reported. “Rejecting a commonsense plan to keep the government open puts Utah families and our economy at risk.”

Salt Lake County Councilman Ross Romero, a Democrat, issued a statement Friday urging Utah’s congressional delegation to help reopen the federal government and also keep health care affordable.

In a press release Wednesday, Utah GOP Rep. Blake Moore said the responsibility for the shutdown should be placed “squarely on the Democrats’ shoulders.”

And Sen. John Curtis, R-Utah, said that Democrats tied funding to keep the government open for seven more weeks to “over a trillion dollars in new spending,” which he deemed “not reasonable, sensible or responsible.”

The impact of higher insurance premiums

Democrats have said not extending the ACA subsidies will increase health care premiums by 75% for 20 million Americans and will stop 15 million people from getting health care.

FactCheck.org checked the claim, noting it refers to the average increase in out-of-pocket premium costs if the enhanced subsidies are allowed to expire. It comes from an estimate by the health policy research organization KFF. KFF recently updated that estimate, which it said was low: As health insurance premiums have been going up across the board for 2026, the organization now maintains the average increase would be 114% for 2026.

KFF has warned that when the federal expanded subsidies expire, premium costs will shoot up for the 24 million Americans who get health care coverage through the ACA marketplace.

It’s widely believed that red states that didn’t expand Medicaid will be the hardest hit.

Angela Hanks, chief of policy programs at Century Foundation, a progressive think tank, told Deseret News the organization’s analysis found premiums would increase on average $1,000 or more a year.

“For some people, they will have to cut back in other ways in order to be able to afford health insurance. And for others, they will not be able to afford health insurance, and may end up foregoing it even if they desperately need that care as a part of their lives or their family’s lives.”

The foundation said that residents of rural communities will be hit somewhat harder than those in urban communities in terms of rising premium costs in the marketplace.

Hanks believes people who don’t get their insurance through the marketplace should be concerned, as well, because of the impact it could have on health care costs. As more people can’t afford insurance, and become uninsured, “those with employer-sponsored coverage are also seeing premiums rise as a result of this anticipated decrease in the insured rate for private insurance and Medicaid.”

Hanks said 22 million of those who get insurance through the ACA market receive some sort of tax credit.

“They not only can’t afford to pay more for health care right now, but moreover they can’t afford to pay more for anything right now. Our research shows that people are really struggling on a number of fronts” she said.

The foundation’s polls showed some taking on debt, others borrowing from family and friends. “But the most startling statistic was that 1 in 4 said they or someone in their household already skipped meals in the last year to pay for basics,” Hanks said.

Who gets health insurance subsidies?

People who buy their own insurance in the ACA marketplace get subsidies for their premiums if their household income is between 100% and 400% of the federal poverty line. For states that previously expanded Medicaid, the subsidies start at 138% of the poverty line. Most people in the marketplace have a subsidy on a sliding scale.

The enhanced subsidies, which were part of the American Rescue Plan during the pandemic, also allowed middle-income Americans earning above 400% of poverty to receive subsidies, but they must contribute up to 8.5% of household income toward premiums. Those enhanced premiums were extended to the end of this year under the Inflation Reduction Act.

KFF used the example of an individual making $28,000. In the ACA marketplace, that person can get coverage for $325 a year out of pocket for a benchmark plan. If the enhanced tax credits expire, the cost would be $1,562.

On average, a “60-year-old couple making $85,000 (or 402% FPL) would see yearly premium payments rise by over $22,600 in 2026, after accounting for an annual premium increase of 18%. This would bring the cost of a benchmark plan to about a quarter of this couple’s annual income, up from 8.5%," according to KFF.

The organization noted that 45% of ACA marketplace enrolled have incomes between 100%-150% of poverty, while 28% have incomes between 150%-250% of poverty. About 1 in 10 have incomes above 400% of poverty.

Per KFF, the Trump administration already changed how the credits are calculated in its ACA Marketplace Integrity and Affordability rule. If the credits are not renewed, “enrollees are expected to pay a higher share of their income towards a benchmark premium plan in 2026 than they otherwise would have.”

A KFF poll released this week found that nearly 4 in 5 adults support extending the enhanced tax credits. That includes 59% of Republicans, 82% of independents and 92% of Democrats.

Among Republicans and Republican-leaning independents, 57% of MAGA supporters said yes to extending them, as did 70% of non-MAGA supporters.

Does Medicaid cover illegal immigrants?

The nonpartisan Congressional Budget Office estimates 7.5 million people will lose health coverage over the next decade under Medicaid, which serves lower-income families and the disabled.

Part of the congressional debate is whether Medicaid and the ACA cover people who are in the U.S. illegally.

Despite back and forth on whether the cut’s goal is to remove immigrants who are here illegally from the Medicaid rolls, Medicaid has stringent rules that make undocumented immigrants ineligible for Medicaid, as Leo Cuello, research professor at Georgetown University’s McCourt School of Public Policy told USA Today.

“They don’t qualify for comprehensive Medicaid coverage, Medicare or the Children’s Health Insurance Program. And they can’t purchase federally subsidized health plans on exchanges backed by the Affordable Care Act,” he said.

The nonpartisan Congressional Budget Office refutes the claim that subsidized ACA coverage would benefit people in the country illegally. They have never been granted access to ACA and the office said neither Democrat nor Republican proposals request that. The Democratic proposal uses the words “lawfully present.”

Some legal immigrants do receive Medicaid coverage. The nonpartisan Congressional Research Service notes qualified lawful immigrants include “legal permanent residents, refugees, people granted asylum, people granted humanitarian parole including Ukrainians and Afghans, certain Cubans and Haitians; and certain victims of human trafficking and domestic violence, among others.”

The tax cut package in the One Big Beautiful Bill Act allows Medicaid coverage only for U.S. citizens, legal permanent residents and some Cuban and Haitian immigrants. The other lawful immigrants are not covered.

What’s the potential impact in Utah?

Romero said the subsidies for low- and middle-income Utahns “help ensure access to affordable health care for more than 420,000 Utah residents, many of whom are children. In Utah, children account for the largest share of marketplace enrollees. Almost 28% of Utah residents enrolled in the marketplace are children. This is the highest share of enrollees among all states.”

Numbers vary depending on the source or what year is being considered. A Century Foundation map shows that in Utah, 366,900 Utah residents had health insurance through the ACA Marketplace in 2024. That includes 104,234 children and 45,635 adults age 55-64. The new reconciliation law also requires 59,764 enrollees to file new paperwork to stay enrolled.

The Utah summary said that without congressional action, eligible ACA enrollees will pay an average of $672 more a year for marketplace coverage. That’s for a single person, so it goes up multiple times more for family members.

Throughout the country, the foundation reported that “out-of-pocket premiums will increase on average by 107% for rural county residents compared to 89% for urban county residents — on top of national median increases of 18%."