By Jessica Irving Marschall, CPA, ISA AM
September 5, 2025
Executive Summary
The American healthcare landscape faces unprecedented challenges as premium costs surge, Medicaid coverage contracts, and legislative proposals struggle to address mounting inequities in the tax system. Recent data reveals a troubling paradox: while health insurance premiums are projected to increase by 15% in 2026, the largest jump in years, major health insurers have avoided $34 billion in taxes since 2017, even as they deny more claims and reduce patient services.
The passage of the One Big Beautiful Bill Act (OBBBA) in July 2025 has fundamentally altered the healthcare financing landscape, with the Congressional Budget Office projecting that approximately 10 million Americans will lose health insurance coverage by 2034. Against this backdrop, new legislative proposals seek to eliminate taxes on Social Security benefits and extend critical health insurance tax credits, but significant questions remain about their viability and scope.
Rising Premium Costs and Market Pressures
ACA Marketplace Premium Surge
Preliminary filings show a median +15% requested increase for 2026, the largest in years. Insurers cite medical cost growth and the scheduled lapse of enhanced premium tax credits after 2025 among the drivers. This dramatic increase represents a significant departure from the more modest premium growth seen in 2025, creating substantial affordability concerns for millions of Americans.
The timing of these increases is particularly concerning given that enhanced premium tax credits established by the American Rescue Plan and extended through the Inflation Reduction Act are set to expire at the end of 2025. Without the extension, the lawmakers noted, millions of people could see their premiums increase by over $11,000 a year.
Employer Market Challenges
The employer-sponsored insurance market is experiencing parallel pressures. Large employers report experiencing the steepest cost growth in approximately 15 years and are implementing additional cost-sharing mechanisms, including higher deductibles and increased coinsurance requirements. These changes typically transfer a greater financial burden to workers at a time when healthcare affordability is already strained.
The Medicaid Unwinding and OBBBA’s Impact
Post-Pandemic Coverage Losses
The end of pandemic-era continuous coverage protections has resulted in substantial Medicaid disenrollment. Approximately 25 million people were removed from Medicaid rolls through late 2024 as states resumed eligibility redeterminations. This “unwinding” process highlighted the significant administrative challenges and underlying coverage instability that existed even before new policy changes took effect.
OBBBA’s Structural Changes
The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduces sweeping changes to both Medicaid and ACA Marketplace programs. The legislation implements stricter eligibility verification processes, introduces community engagement (work) requirements, and modifies immigrant eligibility parameters. These changes are projected to have far-reaching consequences for healthcare coverage across the United States.
Independent analysis suggests that OBBBA will result in substantial coverage losses, with the Congressional Budget Office estimating approximately 10 million additional uninsured Americans by 2034 relative to baseline projections. Of these losses, roughly 7.5 million are attributed directly to Medicaid provisions within the legislation.
The Corporate Tax Avoidance Paradox
Major Insurers’ Tax Benefits
Eight major health care corporations were able to avoid $34 billion in taxes thanks to the Tax Cuts and Jobs Act, while increasing costs, denying care to customers and cutting staff, according to a new report. The report, released by Americans for Tax Fairness and Community Catalyst, examined the practices of major insurers including Centene, Cigna, CVS Health (which owns Aetna), Elevance (formerly Anthem), Humana, and UnitedHealth, as well as hospital chains HCA Healthcare and Universal Health Services.
Deteriorating Patient Outcomes
Despite receiving substantial tax benefits, these companies have not improved patient care metrics. Since the TCJA passed in 2017, their profits surged 75%, while care denials rose, staffing dropped, and patient costs increased. Specific examples include Centene increasing Medicare Advantage prior authorization denials by 14%, while other companies reduced nursing staff at hospitals even as safety violations increased.
Claims Denial Patterns
Recent federal transparency data reveals concerning trends in claims processing. Insurers of qualified health plans (QHPs) sold on HealthCare.gov denied 19% of in-network claims in 2023 and 37% of out-of-network claims for a combined average of 20% of all claims. The variation across insurers was substantial, with in-network denial rates ranging from 1% to 54%.
Perhaps most troubling from a patient advocacy perspective is the limited appeal success rate. Consumers rarely appeal denied claims (fewer than 1% of denied claims were appealed) and when they do, insurers usually uphold their original decision (56% of appeals were upheld).
Legislative Responses and Proposed Solutions
Social Security Tax Relief Proposals
In response to growing concerns about retirement security, Senator Ruben Gallego (D-Arizona) introduced the “You Earn It, You Keep It Act,” which would eliminate federal taxes on Social Security benefits for all recipients. Gallego’s bill would permanently eliminate federal taxes on Social Security benefits. It would also expand the Social Security payroll tax to apply to annual earnings over $250,000.
This proposal differs significantly from the limited relief provided in OBBBA, which includes only a temporary additional deduction for taxpayers age 65 and older. Under the current law, the deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers), limiting its scope.
Health Insurance Tax Credit Extensions
Recognizing the impending expiration of enhanced premium tax credits, lawmakers have introduced legislation to extend these subsidies for an additional year. Representative Tom Suozzi (D-New York) noted that “New Yorkers, including 17,000 of my constituents, rely on the ACA’s enhanced premium tax credits to afford their health insurance.”
The political dynamics surrounding these extensions remain complex, particularly given the broader changes implemented through OBBBA. “The bill makes a huge cut in Medicaid,” said David Kass, executive director of Americans for Tax Fairness, during a press briefing Wednesday in answer to a question from Accounting Today. “They didn’t raise the corporate rate. They didn’t do anything about the stock options loophole. They didn’t do anything about the foreign earnings loophole.”
Tax Policy Implications and Recommendations
Short-Term Considerations
- Premium Tax Credit Advocacy: Tax professionals should advise clients about the importance of the enhanced premium tax credit extension, particularly for those with incomes between 400% and 600% of the federal poverty level who would lose eligibility entirely without the extension.
- Medicaid Planning: Given the tightened eligibility requirements under OBBBA, families should review their Medicaid eligibility status and consider potential coverage alternatives before losing benefits.
- Social Security Tax Planning: While comprehensive Social Security tax elimination remains uncertain, the temporary additional deduction for seniors provides immediate relief for eligible taxpayers.
Long-Term Strategic Outlook
The current healthcare tax policy environment reflects deeper structural tensions between cost containment, coverage expansion, and corporate accountability. The fact that major health insurers have avoided $34 billion in taxes while simultaneously reducing patient services and increasing denials raises fundamental questions about the alignment of tax policy with public health objectives.
For tax professionals, this environment requires careful attention to:
- Client Communication: Ensuring clients understand the temporary nature of many current provisions and the need for ongoing planning
- Legislative Monitoring: Tracking the progress of Social Security tax elimination proposals and premium tax credit extensions
- Corporate Client Considerations: Advising healthcare industry clients about potential changes in tax policy as public scrutiny of the sector intensifies
Conclusion
The American healthcare system stands at a critical juncture. Rising premiums, contracting Medicaid coverage, and increasing claims denials create a challenging environment for both patients and tax professionals. While legislative proposals offer potential relief, their prospects remain uncertain in a politically divided environment.
The disconnect between corporate tax benefits and patient outcomes in the health insurance industry highlights the need for more comprehensive policy reform. As tax professionals, we must remain vigilant in tracking these developments and providing clients with informed guidance in an increasingly complex regulatory landscape.
The coming months will be crucial in determining whether Congress can address the expiring premium tax credits and advance Social Security tax relief while grappling with the broader challenges created by OBBBA implementation. The stakes for millions of Americans’ healthcare access and affordability could not be higher.
Sources
Government Sources
- Congressional Budget Office. “Estimated Effects on the Number of Uninsured People in 2034 Resulting From Policies Incorporated Within CBO’s Baseline Projections and H.R. 1, the One Big Beautiful Bill Act.” Letter to the Honorable Ron Wyden, Frank Pallone Jr., and Richard E. Neal. July 2025. https://www.cbo.gov/publication/61463
- Internal Revenue Service. “One, Big, Beautiful Bill Act of 2025 provisions.” IRS Newsroom. July 2025. https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions
- U.S. Congress. “H.R.1 – 119th Congress (2025-2026): One Big Beautiful Bill Act.” Congress.gov. 2025. https://www.congress.gov/bill/119th-congress/house-bill/1
- The White House. “No Tax on Social Security is a Reality in the One Big Beautiful Bill.” July 1, 2025. https://www.whitehouse.gov/articles/2025/07/no-tax-on-social-security-is-a-reality-in-the-one-big-beautiful-bill/
Healthcare Policy Organizations
- Kaiser Family Foundation (KFF). “How Much and Why ACA Marketplace Premiums Are Going Up in 2026.” August 2025. https://www.kff.org/affordable-care-act/how-much-and-why-aca-marketplace-premiums-are-going-up-in-2026/
- KFF. “Individual Market Insurers Requesting Largest Premium Increases in More Than 5 Years.” July 2025. https://www.kff.org/affordable-care-act/issue-brief/individual-market-insurers-requesting-largest-premium-increases-in-more-than-5-years/
- KFF. “How Will the 2025 Reconciliation Law Affect the Uninsured Rate in Each State?” September 2025. https://www.kff.org/affordable-care-act/issue-brief/how-will-the-2025-reconciliation-bill-affect-the-uninsured-rate-in-each-state-allocating-cbos-estimates-of-coverage-loss/
- Peterson Center on Healthcare and KFF Health System Tracker. “How much and why ACA Marketplace premiums are going up in 2026.” August 2025. https://www.healthsystemtracker.org/brief/how-much-and-why-aca-marketplace-premiums-are-going-up-in-2026/
- American Hospital Association. “CBO projects OBBBA to increase uninsured by 10 million, federal deficit by $3.4 trillion.” AHA News. July 21, 2025. https://www.aha.org/news/headline/2025-07-21-cbo-projects-obbba-increase-uninsured-10-million-federal-deficit-34-trillion
- Association of State and Territorial Health Officials (ASTHO). “One Big Beautiful Bill Law Summary.” July 2025. https://www.astho.org/advocacy/federal-government-affairs/leg-alerts/2025/one-big-beautiful-bill-law-summary/
Advocacy Organizations and Research Groups
- Americans for Tax Fairness and Community Catalyst. “Health insurers avoided $34B in taxes while denying claims.” Report released September 4, 2025.
- Center on Budget and Policy Priorities. “By the Numbers: Harmful Republican Megabill Will Take Health Coverage Away From Millions of People and Raise Families’ Costs.” June 20, 2025. https://www.cbpp.org/research/health/by-the-numbers-republican-reconciliation-law-will-take-health-coverage-away-from
- Medicare Rights Center. “Congressional Budget Office Final Score: Reconciliation Bill Increases Deficit by 3.4 Trillion; Causes 10 Million to Lose Health Insurance.” July 24, 2025. https://www.medicarerights.org/medicare-watch/2025/07/24/congressional-budget-office-final-score-reconciliation-bill-increases-deficit-by-3-4-trillion-causes-10-million-to-lose-health-insurance
- Center for American Progress. “The Implementation Timeline of the One Big Beautiful Bill Act.” July 29, 2025. https://www.americanprogress.org/article/the-implementation-timeline-of-the-one-big-beautiful-bill-act/
News and Trade Publications
- “Lawmakers propose to eliminate taxes on Social Security, extend health care tax credits.” Accounting Today. September 5, 2025. https://www.accountingtoday.com/news/lawmakers-propose-to-eliminate-taxes-on-social-security-extend-health-care-tax-credits
- “Health insurers avoided $34B in taxes while denying claims.” Accounting Today. September 4, 2025. https://www.accountingtoday.com/news/health-insurers-avoided-34b-in-taxes-while-denying-claims
- Tax Foundation. “FAQ: The One Big Beautiful Bill Act Tax Changes.” July 23, 2025. https://taxfoundation.org/research/all/federal/one-big-beautiful-bill-act-tax-changes/
Congressional Sources
- U.S. House Committee on the Budget. “Congressional Budget Office Letter Sets Record Straight on OBBBA’s Medicaid Provisions.” August 2025. https://budget.house.gov/press-release/congressional-budget-office-letter-sets-record-straight-on-obbbas-medicaid-provisions
- Senator Ruben Gallego. “You Earn It, You Keep It Act.” S. [Bill Number]. 119th Congress. Introduced September 2025.
Additional References
- Kirkland & Ellis LLP. “The ‘One Big Beautiful Bill Act’ is Signed Into Law by President Trump: Key Changes to Environmental Programs.” July 2025. https://www.kirkland.com/publications/kirkland-alert/2025/07/the-one-big-beautiful-bill-act-is-signed-into-law-by-president-trump
