The Expiration of ACA Tax Credits Will Trigger a 21.2% Premium Jump in Washington

Washington state residents are bracing for a steep rise in health insurance premiums. In 2026, 14 insurers plan to increase rates by an average of 21.2 percent, a change that feels sudden and daunting for many. Small business owners and self-employed workers, already juggling tight budgets, now face even tougher financial decisions.

The catalyst for this increase is the expiration of enhanced Affordable Care Act (ACA) premium tax credits, set to end on December 31, 2025. These subsidies currently help about 77 percent of the 309,000 people enrolled in Washington’s health insurance Marketplace. Without them, roughly 80,000 residents could lose their coverage, creating ripple effects across the state’s healthcare system.

For many, this is more than a policy change. It’s a looming threat to financial security, forcing individuals and families to weigh whether they can keep their insurance or face the risks of going uninsured.

Small businesses and self-employed individuals have long faced challenges in securing affordable health insurance. Over the past 20 years, premiums for small firms have climbed 120 percent for individual plans and 129 percent for family plans. Today, only 30 percent of small employers offer coverage, compared to 50 percent in 2000. For businesses earning less than $600,000 annually, health insurance consumes nearly 12 percent of payroll, far higher than the 7 percent burden larger firms face.

Self-employed workers encounter even greater obstacles. With limited plan choices and tax deductions restricted to net business profits, many struggle to afford coverage. Nearly half of small businesses dip into profits to cover premiums, while 46 percent raise prices, which can drive away customers in a competitive market.

The proposed rate hikes in Washington intensify these struggles, pushing many small businesses and freelancers toward a breaking point where coverage becomes unaffordable.

The impending loss of ACA subsidies has ignited a fierce debate over how to address rising healthcare costs. Lawmakers like Senators Jeanne Shaheen and Tammy Baldwin advocate for permanently extending the credits, citing their success in reducing benchmark premiums by 44 percent and boosting Marketplace enrollment to over 21 million nationwide. They argue that continued subsidies would prevent widespread coverage losses.

In contrast, some Republican lawmakers and policy groups favor market-based approaches. They propose deregulating insurance markets, introducing block grants for states, and implementing work requirements for Medicaid recipients to curb federal spending. These ideas aim to foster competition and lower costs, though some worry they could leave low-income residents with fewer protections.

Washington has allocated over $150 million in state subsidies to ease the transition, but a $15 billion budget deficit limits the state’s ability to fully replace federal support. The state’s insurance commissioner is also tweaking rates to maintain affordability, yet these measures may only delay the inevitable without broader action.

If ACA subsidies expire, the consequences could be far-reaching. Nationwide, more than 7 million people might abandon Marketplace coverage, with up to 4 million becoming uninsured. In Washington, premiums could surge by 72 percent on average, potentially forcing 80,000 residents to forgo insurance. States without Medicaid expansion would see even sharper coverage declines, particularly among Black and Hispanic communities.

Hospitals and community health providers would face increased uncompensated care costs, while public health programs could struggle with budget shortfalls. As younger, healthier individuals leave the Marketplace, insurance risk pools could deteriorate, driving premiums higher and creating a cycle of rising costs.

Washington’s looming premium increases underscore a national struggle to ensure affordable healthcare for all. The state’s efforts to offset the loss of federal subsidies demonstrate a commitment to protecting residents, but budget constraints and political disagreements complicate long-term solutions.

For small business owners and self-employed workers, these rising costs are a pressing concern that affects their livelihoods. As Washington’s insurance commissioner finalizes 2026 rates, the decisions made will determine whether families can maintain access to care or face impossible choices.

Finding a way forward demands thoughtful dialogue and compromise. Whether through sustained subsidies, market innovations, or state-led efforts, the priority is clear: building a healthcare system that supports everyone without pushing them to the financial brink.