Answer: If you aren’t aware of this story and the controversy regarding extending or ending Obamacare (Affordable Care Act) Enhanced Subsidies, please read all my Weekly ACA Updates on our Facebook Group, Ask the Medicare Specialist, to get a better understanding.

As far as short-term effects for those on Medicare, the answer is no. There are none. Whether the Enhanced Subsidies get extended or not didn’t have any influence on premiums going up on Medicare Part B, Supplements, Advantage Plans or Part D prescription coverage in 2026 and won’t in 2027. 

However, what’s plaguing Obamacare; super high premium increases due to the higher use and expense of prescription drugs and medical care is also the cause of increased cost to taxpayers for Medicare, Advantage Plans, and Part D prescription coverage. 

Many politicians are trying to frame Obamacare itself as the problem that ails health insurance in this country and the number one reason for skyrocketing premiums. The fact is the other sources where everyone else in the US gets health insurance; from their employers, Medicare, Medicaid, and the VA have seen costs go up just as much, or more, than Obamacare. In fact, I saw statistics that the total cost of Obamacare per person is less than employer sponsored health insurance and Medicaid. And Medicare, per person, costs twice as much as Obamacare. 

The biggest reason health insurance premiums as well as the cost of Medicare have increased much faster than general inflation is because brand name prescription drug costs have gone through the roof. 12 years ago, the average retail cost of brand name prescription drugs was about $120 for a 30-day supply. Today, it’s $600.  And the most commonly prescribed brand name drugs in the US, Ozempic and Mounjaro, are $1,000! When insurance companies are forced to pay claims of that size every single month, of course premiums and the cost to insure those on Medicare are going to rise. 

In addition; medical devices, hospitalizations, surgeries, chemotherapy, dialysis, etc., cost more than ever before. The bottom line is health insurance companies must pay out less in claims than they pay in premiums to stay in business. It’s a very simple concept. When claims rise, so do premiums. 

Insurance companies can’t raise rates because the CEO wants a new private jet or higher stock prices. Health and Medicare insurance companies are actually regulated so if they don’t pay out more than 85% of the premiums they collect, which includes government subsidies, they can’t raise their rates. Premiums on Obamacare and employer plans have been going up 10%, 12%, 20% year after year because these companies are paying out well over 85 cents in claims for every dollar they collected. 

So how does this all affect those on Medicare? 

Medicare costs taxpayers a fortune! In 2024 it accounted for 13% of the total Federal Budget, $1.1 trillion. That figure is expected to double in the next ten years, which is simply not sustainable. The Medicare Part A Hospital fund is now projected to be unable to pay current levels of benefits by 2033. If costs of drugs and other medical services aren’t gotten under control, things will get very ugly for the 80 million or more Americans who will be on Medicare at that time. Part B and D premiums will increase as will Supplements and Advantage Plans. Those on HMOs and PPOs will be hit harder as subsidies paid to Advantage Plan insurance companies will need to be reduced, which means not only increases in premiums but also out of pocket costs as well as a drastic reduction or elimination of extra ancillary benefits that everyone on these plans love so much. 

Which brings me to a fact that most people aren’t aware of when it comes to Medicare Advantage; it’s actually Obamacare on steroids. You hear politicians bemoan that the Obamacare insurance companies “are getting rich off government subsidies.” According to estimates, the average annual subsidy for those with Obamacare plans that receive them is more than $5,000, significant indeed. However, the average annual subsidy for every person who is on an Advantage Plan in 2026 is projected to be around $14,000. These huge subsidies are why people on Advantage Plans have monthly premiums of only $0 to $25 and benefits that include no cost dental, vision, hearing, OTC allowances, gym memberships and more.  With 35 million people on Advantage Plans, do the math on the cost to taxpayers. And people think Obamacare is expensive!   

The Obamacare controversy has become political and is being used to rally voter bases. It’s symbolic and just another way for both political parties to blame one another. There’s lots of arguing, finger pointing, and scapegoating, but no real solutions being offered by either party to lower health insurance premiums for those who use Obamacare, employers who provide health insurance to their workers, or for taxpayers who fund Medicare.  

To save Medicare as we know it, a plan to lower the cost of brand name prescription drugs, which retail for 500% to 1,000% more in the US than practically every other country in the world, as well as other health care and services needs to be implemented very soon. The longer the delay in doing so, the more likely those who are on Medicare today will see major changes in benefits and substantial premium increases in the future. 

If you have questions regarding this or any other Medicare related topic, or would like to make an appointment, give the office a call, 724-603-3403 or email me personally, Aaron@GetYourBestPlan.com.