Medical insurance premiums will rise due to collapse of ACA subsidy agreement
Obamacare subsidies will expire after Congress fails to reach an agreement, leaving millions of people facing increased health care costs.
Millions of Americans were expected to lose their Affordable Care Act health insurance when the enhanced tax credit was repealed this year.
But so far, the worst-case scenario has not materialized, even as momentum to restore coronavirus-era subsidies has stalled.
Approximately 23 million Americans will enroll in ACA insurance in the federal and state-based marketplaces in 2026, down from 24.2 million enrollees in January 2025, according to Jan. 28 statistics from the Centers for Medicare and Medicaid Services.
“Enrollment is not going down as much as we expected,” said Cynthia Cox, vice president and ACA program director at the health policy nonprofit KFF.
But Cox and other enrollment experts say there are some big caveats to the preliminary numbers.
Millions of Americans with ACA insurance, also known as Obamacare, are automatically re-enrolling in more expensive insurance plans this year, and the expiration of enhanced tax credits could cause average insurance costs for consumers to jump 114%, according to a KFF analysis.
Some people may choose to discontinue coverage once they receive their first monthly insurance bill. If you are automatically re-enrolled but do not pay your premiums, you will have a three-month grace period before your coverage ends. Those numbers won’t be known until later this year, Cox said.
Before the enhanced tax credits went into effect in 2021, about 85% of enrollees in ACA plans paid premiums to maintain coverage, said Sabrina Corlett, co-director of Georgetown University’s Center on Health Insurance Reform.
It’s also unclear how many people have switched to “bronze” plans, which have lower monthly premiums and higher deductibles. Switching to a high-deductible plan may provide more affordable continued coverage, but it can also increase consumers’ out-of-pocket costs for doctor and hospital visits and prescriptions.
The number of enrollees who paid their premiums or the number of enrollees who switched to cheaper, less robust plans “are the two big unknowns,” Corlett said. He said those numbers are needed “before we can draw any conclusions about what the impact of federal policy changes actually means.”
State aid for enrollees drives enrollment
Several states that operate their own state-based ACA insurance exchanges are trying to soften the blow with financial assistance to consumers.
Enrollment in New Mexico reached a record high in 2026, thanks in part to generous state measures that replaced the ACA’s enhanced premium deductions. A total of 82,403 state residents were insured as of mid-January, an increase of 17% from 2025.
New Mexico’s Affordable Care Fund, established in 2021 and supported by a tax on health insurance companies, will reduce premiums and out-of-pocket costs for people in the state’s ACA market, BeWell. The fund also supports other health programs, and nearly half of the fund’s proceeds go to New Mexico’s general fund.
Abuko Estrada, health care director at the New Mexico Center on Law and Poverty, said state subsidies for ACA enrollment are earmarked through June, but the state Legislature needs to act to extend the subsidies throughout the year.
“There’s a lot of concern from families” about the potential loss of coverage, Estrada said. “They’re worried that the aid will run out.”
Other states offer limited assistance to residents facing higher premiums because they do not have enhanced tax credits. California and Maryland extend subsidies to low- to moderate-income households, but households with incomes at least four times the federal poverty level must pay the full amount.
Maryland’s one-year program replaces lost subsidies for individuals who earn up to $31,300 a year, twice the federal poverty level. California aid is limited to individuals and families earning up to 165% of the federal poverty level.
Colorado and Washington states also approved limited financial aid for some ACA enrollees, according to KFF’s analysis.
Is the push to extend ACA subsidies over?
Congressional Democrats last year pushed to expand tax credits that would lower insurance premiums for millions of Americans. At the end of 2025, Democrats forced the federal government to shut down for a record 43 days after most Republicans refused to extend the aid.
Without the enhanced tax credit, which is set to expire at the end of 2025, the average cost for the 22 million Americans with subsidized ACA insurance would have more than doubled as of January, according to KFF.
Some consumers said they are struggling to cover the increasing costs of their ACA insurance plans. CBO estimated that 3.8 million Americans will lose health insurance by 2035 as enhanced subsidies expire.
Congress on February 3 passed budget amendments for most federal agencies through September to end the partial government shutdown. The budget includes health-related provisions related to medical billing and drug price intermediaries called pharmacy benefit managers, but is silent on ACA subsidies.
On January 8, the House passed a bill extending the ACA Enhanced Premium Tax Credit for three years, but the Senate has not taken up the bill. Sen. Bernie Moreno, R-Ohio, worked out a bipartisan compromise in the Senate, but his proposal has not progressed.
Moreno told Semafor on February 2 that some Democratic lawmakers have not ruled out his plan to revise and extend the tax credit expansion. “The people I talk to actually want to solve problems,” he says.
Health care advocates are urging lawmakers to continue efforts to improve the affordability of the ACA.
Anthony Wright, executive director of Families USA, which advocates for health care consumers, noted that the House agreement to end the government shutdown includes provisions regarding health insurance affordability.
“Despite the inclusion of these policies, the package does not extend the enhanced premium tax credit and therefore fails to stop the significant rise in premiums in the individual insurance market,” Wright said.
Contact Ken Alltucker at alltuck@usatoday.com..
