Expiring tax credits will increase health insurance costs for millions

Summary

Marketplace Morning Report

Episode: Expiring tax credits will increase health insurance costs for millions
Date: September 3, 2025
Host: Sabri Benishore (in for David Brancaccio)

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Overview

This episode spotlights three central economic and policy issues:

1. Looming spike in health insurance costs for millions of Americans due to expiring Affordable Care Act (ACA) tax credits.
2. Softening consumer spending forecasts for the 2025 holiday season, reflecting broader economic uncertainty.
3. A global rise in long-term government bond yields, signaling greater market concern about public finances.

The episode features concise economic reporting and personal stories, aiming to keep listeners up-to-date ahead of the US market open.

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Key Discussion Points and Insights

1. Holiday Shopping Outlook: Consumers Pulling Back

• Holiday Spending Forecasts:

  • PricewaterhouseCooper (PwC) projects a 5% drop in holiday spending—the steepest since 2020 (01:31).
  • Spending on gifts is expected to take the biggest hit, down 11%.

• Causes of Caution:

  • Persistent inflation and tariff worries depress consumer sentiment.
  • Shoppers are “deliberate with their dollars,” selectively deciding where to splurge or save (01:52).

• Retailer Reactions:

  • Mixed expectations: Target and Best Buy keep their forecasts; Walmart and Abercrombie & Fitch raise; Mattel lowers.
  • Notably, consumer intentions and actual spending may diverge: “Consumer sentiment was down during its last reading in July while spending was up” (02:12).

• PwC Survey Details:

  • 4,000 consumers polled, June–July, marking the unofficial start of the holiday shopping season.

2. Markets Update: Rising Global Long-Term Bond Yields

• Dollar Tree Earnings:

  • Net sales up, driven by bargain-hunting shoppers.
  • Tariffs pushing prices higher; profit forecasts disappoint, stock falls 8% (02:41).

• US and Global Bond Markets:

  • US Treasury yields: 10-year at 4.26%, 30-year nearly 5%.
  • International trends:
    • Japanese 30-year bond yield at 3.29% (highest ever).
    • German and French 30-year yields at multi-year highs.
    • UK 30-year yield hits nearly 5.75%—highest in almost 30 years (03:39).

• Interpretation:

  • Borrowing is costlier for governments; higher yields suggest market uncertainty over long-term public finances.

3. Expiring Health Insurance Tax Credits: A Looming Crisis

• Background:

  • Enhanced ACA tax credits, expanded during the pandemic, are set to expire—following a July budget bill signed by President Trump (05:00).

• On-the-Ground Impact:

  • Andrea Deutsch, a 57-year-old Type 1 diabetic and small business owner, expects her premium to more than double, from about $700 to over $1,400/month (05:20).
    • “I can’t go without health insurance.” (05:30, Andrea Deutsch)
    • “It’s not like I’m living high up the hog... My wardrobe is mostly made up of free T-shirts I get at trade shows.” (05:57, Andrea Deutsch)

• Scope of Policy Change:

  • 2021 expansion made insurance more affordable to 90% of Marketplace buyers, including those earning over $62,000/year.
  • If tax credits expire, about 22 million people will see higher costs.
    • Claire Hiaasen (Center for Budget and Policy Priorities): Warns of a “sticker shock” causing many—up to 4 million over a decade—to drop coverage, especially the healthier, exacerbating market risk.

• Effect on Small Businesses:

  • David Chase (Small Business Majority): Lobbying lawmakers to extend the credits, emphasizing broad impact:
    • “This is such a big issue that impacts so many people: small business owners, red states, blue states, older people, younger people, single people, families.” (06:55, David Chase via Kristen Schwab)

• Uncertainty Ahead:

  • Lawmakers have until December 31 to act, but open enrollment starts in November, putting immediate pressure on families like Andrea’s (07:05–07:21).
    • Andrea Deutsch: “If I foresee that I’m going to lose insurance... I can’t afford it. I’m going to have to figure out a different plan, which might mean shuttering her store or taking a different job for the health insurance.” (07:21–07:33)

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Notable Quotes & Memorable Moments

• On Consumer Caution (01:52):
  “Shoppers will be deliberate with their dollars, deciding where to splurge and where to hold back.”
  — Kristen Schwab

• On Health Insurance Sticker Shock (05:30):
  “As a type 1 diabetic, I can’t go without health insurance.”
  — Andrea Deutsch

• On Lifestyle Sacrifices (05:57):
  “It’s not like I’m living high up the hog. I have a very small house. My, my wardrobe is mostly made up of free T-shirts I get at trade shows.”
  — Andrea Deutsch

• On Broader Impact (06:55):
  “This is such a big issue that impacts so many people. Small business owners, red states, blue states, older people, younger people, single people, families.”
  — David Chase (via Kristen Schwab)

• On Possible Outcomes (07:21):
  “If I foresee that I’m going to lose insurance... I can’t afford it. I’m going to have to figure out a different plan, which might mean shuttering her store of 22 years and taking a different job for the health insurance.”
  — Andrea Deutsch

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Important Timestamps

• Holiday shopping and consumer outlook: 00:59–02:41
• Dollar Tree & Market/Bond Update: 02:41–04:42
• Health insurance tax credits and personal stories: 05:00–07:42

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Tone and Style

The tone is brisk, empathetic, and information-rich—balancing macroeconomic data with personal impact stories
(“I can’t go without health insurance.” – Andrea Deutsch), providing both context and connection.

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Summary

This Marketplace episode unpacks growing economic anxieties for the holiday season, a shifting investment climate, and—most urgently—the direct, personal effects of expiring ACA tax credits. Listeners come away informed about potential spikes in health insurance costs, the pressures facing small business owners, and the importance of swiftly evolving policy debates as the year approaches its close.

Transcript

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[Kristen Schwab]

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[Sabri Benishore]

It is September, which means holiday shopping season. From Marketplace, I'm Sabri Benishore, in for David Brancaccio. Students are barely back in their seats, school supplies in hand. But the retailers who sold them those supplies have moved on. Their eyes are on the next big shopping event, the holidays. And so far, what they're seeing does not look great. The accounting and consulting firm PricewaterhouseCooper says shoppers plan to spend about 5% less this year. Marketplace's Kristen Schwab has more.

[Kristen Schwab]

Holiday sales numbers are considered a barometer for how consumers feel, and right now, stubborn inflation and tariff uncertainty are on people's minds. PwC survey citing a 5% drop in shopping would make for the biggest holiday spending fall since the pandemic in 2020, since spending on gifts is the category expected to take the biggest hit, dropping 11%. Meanwhile, companies expectations for the year are mixed. Target and Best Buy have maintained their annual forecasts. Walmart and Abercrombie and Fitch have raised theirs. Toymaker Mattel has cut its outlook. Analysts say shoppers will be deliberate with their dollars, deciding where to splurge and where to hold back. Of course, intentions and actions are two different things. Consumer sentiment was down during its last reading in July while spending was up, and there's plenty of time for either of those indicators to shift. For its holiday spending survey, PwC polled 4,000 consumers between June and July, the unofficial start of the holiday shopping season. Black Friday is still about three months away. I'm Kristen Schwab for Marketplace.

[Sabri Benishore]

Dollar Tree reported financial results for the second quarter. Net sales grew, and it said sales would keep growing in the third quarter too. The shoppers look for bargains, but it warned tariffs would be driving up some prices and profit forecasts disappointed investors. Stocks down almost 8%. The Dow is down 111 points. That's 2.10of a percent. The S&P 500 is up 4.10%. Nasdaq's up 9.10%. Yield on the 10 year treasury is 4.26%. And that is of course the return you get when you lend the government money for a decade. But investors are demanding even higher rates for lending money for longer the 30 year yield is up to 4.98%. And it's not just the US long term yields are rising around the world. So what does all this mean? It means investors are getting a little hesitant about lending money for decades to governments. Here's the BBC's Guy Kilty with more.

[Guy Kilty]

Long term government debt has been the most affected by the sell off. The rate of return on 30 year Japanese bonds hit an unprecedented 3.29% today. In Germany, the 30 year yield hit its highest level since 2011. French long bond yields hit their highest since 2009. Meanwhile, the return on 30 year UK debt jumped to almost 5.75%, the highest level for nearly three decades. And in the US the yield on 30 year treasury bonds were was up to nearly 5%. These interest rate increases mean it costs more for the countries in question to borrow from financial markets. Long term government bonds are usually seen as a safe bet for investors, but rising rates suggest markets have concerns about how their public finances might look in a couple of decades time. I'm the BBC's Guy Kilty for Marketplace.

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[Kristen Schwab]

People.

[Sabri Benishore]

For a Time People could get tax credits to help them pay for private health insurance under the Affordable Care Act. The budget bill President Trump signed into law in July lets those tax credits expire, which means health insurance costs will go up significantly for some people, especially people who work for themselves or small business. Reporter Alex Olgan has the story.

[Alex Olgan]

Andrea Deutsch expects to pay more than twice as much for health insurance next year. The 57 year old calculates she'll have to shell out more than $1,400 a.

[Andrea Deutsch]

Month for coverage as a type 1 diabetic. I can't go without health insurance.

[Alex Olgan]

Deutsch owns a pet store outside of Philadelphia. She recently got a letter from her insurer that premiums are going up next year. Insurers say they're hiking prices for a number of reasons. Care and drugs are pricier tariffs, and because Congress is poised to let generous tax credits expire. Those credits save Deutsch$700 every month. That's now money she needs to find in her budget.

[Andrea Deutsch]

I mean, it's not like I'm living high up the hog. I have a very small house. My, my wardrobe is mostly made up of free T shirts I get at trade shows.

[Alex Olgan]

In 2021, Congress made insurance more affordable for 90% of people buying on the Marketplaces. The expansion allowed people who earn more than $62,000 a year to get these credits, too. But if they go away, nearly 22 million people will pay more. Claire Hiaasen with the center for Budget and Policy Priorities worries that the sticker shock will lead some to just forego health insurance altogether. The first people to drop their coverage will be people with fewer health issues, leaving the remaining enrollees more expensive to insure. Estimates are that about 4 million people would end up dropping marketplace insurance over the next decade. David Chase is with a Small Business Majority, a group that advocates for retail, construction, and several other industries. He's trying to persuade lawmakers to keep these subsidies.

[Kristen Schwab]

This is such a big issue that impacts so many people. Small business owners, red states, blue states, older people, younger people, single people, families.

[Alex Olgan]

Technically, Lawmakers have until December 31st to reinstate the tax credits. But the reality is that people will start making decisions when they go online to choose insurance in November, including Andrea Deutsch, the Philly area pet store owner. She's hoping she can still afford coverage.

[Andrea Deutsch]

I am going to work my butt off to try and make this work. If I foresee that I'm going to lose insurance like it's getting to a point where it's ridiculous. I can't afford it. I'm going to have to figure out.

[Alex Olgan]

A different plan, which might mean shuttering her store of 22 years and taking a different job for the health insurance. I'm Alex Olgan for Marketplace.

[Sabri Benishore]

Marketplace has a free newsletter, the Daily Wrap. It brings all the day's news and numbers straight to your inbox. Every weekday evening. You can get all caught up on the economic news in less than five minutes. You can read the latest issue and Sign [e-mail] Subscribe in New York. I'm Sabri Benishore with the Marketplace morning.

[Kristen Schwab]

Report.

[Sabri Benishore]

From 8pm American Public Media.

[Emily Hanford]

The Trump administration is making deep cuts to education research.

[Kristen Schwab]

The cancellation notices started coming.

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When the contract is cut, the study just dies.

[Emily Hanford]

It's all happening. Just as schools are trying to make use of research to improve reading instruction.

[Andrea Deutsch]

There would not have been a Science of Reading without the federal funding. It wouldn't have happened.

[Emily Hanford]

I'm Emily Hanford. On our new episode of Sold a Story, what the Trump Cuts mean for the Science of Reading. Go to your podcast app and follow Sold a Story.