Why Market Stability Isn’t Enough in Healthcare
A Healthcare Cliff That No One Can Ignore
At the end of September, a quiet deadline in Washington could trigger massive upheaval in the healthcare market. The enhanced premium tax credits that lower costs for millions of Americans are set to expire. If Congress fails to act, marketplace premiums could spike by as much as 75% on average in 2026, with an estimated 4.2 million people losing coverage.
This isn’t just a healthcare issue. It’s a market stability issue. When policy cliffs hit, families, employers, and even investors face sudden shocks that ripple through the economy.
What’s at Stake for Consumers
The enhanced premium tax credits, expanded under recent legislation, have kept insurance affordable for millions of households. Without them:
Premiums skyrocket. Average monthly premiums could increase by hundreds of dollars, pricing many families out of coverage.
Coverage drops. Millions would lose access altogether, forcing them into expensive emergency care or leaving them uninsured.
Confidence erodes. Families making long-term financial decisions can’t plan if their healthcare costs are subject to sudden spikes.
For consumers already stretched thin by housing costs, food inflation, and energy bills, this is more than a policy debate. It’s a pocketbook crisis waiting to happen.
What It Means for Employers
Employers aren’t immune. According to the Business Group on Health, companies expect a 9% increase in healthcare costs in 2026—the highest in more than a decade.
If tax credits expire:
Cost-shifting accelerates. Employers may pass more costs to employees in the form of higher deductibles and premiums.
Hiring slows. Rising benefit expenses make it harder for businesses to expand their workforce.
Competitiveness declines. U.S. employers could be at a disadvantage globally, where healthcare systems are often more predictable.
For businesses already navigating high borrowing costs and supply chain challenges, healthcare instability adds another headwind.
Why Markets Alone Can’t Absorb This Shock
At AGIF, we believe in the power of markets to drive affordability and innovation. But markets can’t operate effectively in the face of sudden policy cliffs.
Healthcare isn’t like other consumer goods. Families can’t “shop around” for emergency surgery. Employers can’t simply cut healthcare overnight. When subsidies vanish, the entire system absorbs the cost in the form of:
Higher uninsured rates (which raise uncompensated care costs for hospitals).
Increased strain on government safety nets like Medicaid.
More volatility in insurance risk pools, driving premiums even higher.
In short: markets need stability to function. Without a consistent policy environment, both consumers and companies pay more.
Lessons from Past Cliffs
We’ve seen this movie before. When Congress allowed CHIP (Children’s Health Insurance Program) funding to lapse temporarily in 2017, states scrambled to keep children insured, creating chaos for families. During debates over the Affordable Care Act, sudden shifts in subsidy structures left insurers pulling out of markets, reducing competition and choice.
The lesson is clear: uncertainty undermines both affordability and access. Policy whiplash is bad for business and bad for consumers.
A Balanced Path Forward
The looming tax credit cliff should not be seen as a partisan issue. It’s an economic one. A balanced approach would:
Extend tax credits predictably. Families and businesses need long-term certainty, not year-to-year political battles.
Encourage competition. Subsidies should be paired with policies that increase insurer participation, spurring innovation and lowering costs.
Focus on efficiency. Markets thrive when providers, insurers, and innovators are incentivized to deliver better outcomes at lower costs.
This is not about expanding government control—it’s about creating a stable foundation on which markets can operate.
Why Stability Matters for Innovation
Healthcare is one of the most innovation-rich sectors of the U.S. economy. From AI-assisted diagnostics to telehealth to precision medicine, new breakthroughs promise to improve outcomes and lower costs.
But innovation requires capital. And capital requires confidence. Investors are far less likely to back transformative healthcare ventures if the policy environment is unpredictable. Stable subsidies ensure a broader, healthier market that innovators can serve—benefiting patients and entrepreneurs alike.
The Bottom Line
The looming expiration of Medicare’s enhanced premium tax credits is more than a policy deadline—it’s a test of whether America can align market dynamism with policy stability.
If Congress allows the credits to lapse, millions will lose coverage, employers will face surging costs, and consumers will pay the price. If policymakers act with foresight, they can preserve affordability, strengthen markets, and ensure that innovation continues to thrive.
Markets can deliver affordability and access. But markets can’t work when the ground beneath them keeps shifting.