Expiration of enhanced Obamacare subsidies could reverse record enrollment growth, states warn

States that operate their own health care marketplaces worry that a flood of consumers will drop insurance coverage if Congress does not prevent enhanced Obamacare subsidies from expiring this year.

The Washington Times interviewed health care exchange leaders in Maryland, Pennsylvania, Massachusetts, Idaho and California. They said letting the enhanced subsidies lapse would reverse record enrollment increases achieved since their 2021 enactment.

“We’ve had like a 50% increase,” said Michele Eberle, executive director of the Maryland Health Benefit Exchange. “It just demonstrates people want to do the right thing, and they want to buy health insurance for their families. The question is, can they afford to?”

Slightly fewer than half of U.S. states run their own health insurance marketplaces. The remainder are hosted on healthcare.gov, the federal exchange run by the Department of Health and Human Services.

Open enrollment begins Saturday on the federal marketplace and in most states; it started Oct. 15 in Idaho. The state directors said consumers are experiencing “sticker shock” as they learn what it will cost to buy health insurance for 2026.

“They’re worried, they’re frightened and starting to think about those decisions,” said Audrey Gasteier, executive director of the Massachusetts Health Connector.

Massachusetts is one of a few states with its own health care subsidies that can absorb some of the impact of the federal enhancements expiring, but “people are still going to feel the hit,” she said.

“Of our roughly 400,000 people that we cover through the marketplace, just over 330,000 will see a premium increase if these go away,” Ms. Gasteier said.

State marketplaces would face challenges implementing an extension or modification of the enhanced subsidies once open enrollment begins, but the directors said they are prepared to do so if Congress acts.

“These enhanced tax credits have been so impactful to people’s ability to afford coverage that no matter when they are extended, we would make it work,” said Devon Trolley, executive director of the Pennsylvania Health Insurance Exchange Authority.

Insurers are raising premiums because of rising health care costs, but Obamacare’s taxpayer-financed subsidies lower the cost for those who qualify.

Base versions of the subsidies, formally known as premium tax credits, enacted as part of the Affordable Care Act, will continue, but enhanced versions that Democrats first expanded in their 2021 COVID-19 relief law are set to expire Dec. 31.

The 2021 law boosted the portion of Obamacare insurance premiums the government will subsidize so that the lowest earners receive fully subsidized plans and out-of-pocket costs for the highest earners are capped at 8% of household income.

Roughly 22 million people currently benefit from the subsidies after the pandemic expansion extended them to families earning more than 400% of the federal poverty level, currently $62,600 for a single person or $128,600 for a family of four.

“Living in Maryland with a family of four at $128,500 is not wealthy,” said Ms. Eberle, noting that annual premiums for enrollees above that line would increase by about $6,000 annually if they lose access to the subsidies.

Families earning less than 400% of the federal poverty level would still receive some help from “fallback” subsidies that the Maryland General Assembly enacted to trigger if the federal enhancements expire, she said.

Those state subsidies, which would be paid from Maryland’s reinsurance program, which is used to lower rates for everyone, would help two-thirds of current enrollees and expire after two years.

Record enrollment

Obamacare enrollment increased in most states after the 2021 expansion.

“We’ve pretty much hit record enrollment every year since we’ve had the enhanced tax credits come into effect,” said Jessica Altman, executive director of Covered California.

About 500,000 Californians signed up for plans during that time, bringing state marketplace enrollment to about 2 million today. Ms. Altman said as many as 400,000 would be priced out of coverage if the enhanced credits expire.

California has a “cost-sharing wrap” that lowers consumers’ out-of-pocket costs by largely eliminating deductibles in the most commonly chosen plans.

In light of the federal uncertainty, the state increased funds for that program, and the Covered California board authorized those funds to be redirected toward state premium subsidies. Still, Ms. Altman said, “it’s not enough to fill the hole.”

“To [consumers], it looks like their premium is going up and their deductible is going up,” she said.

Other states, such as Idaho, do not have their own subsidies to fall back on.

Pat Kelly, executive director of Your Health Idaho, said enrollment in his marketplace has grown 84% since October 2022, largely because of the federal subsidies.

“Without an extension of the enhanced tax credits, about 25,000 Idahoans will cancel coverage due to affordability concerns,” he said.

Some enrollment growth is attributed to the expiration of a law Congress enacted to effectively prohibit states from kicking people off Medicaid in the depths of the COVID-19 pandemic. Many people who no longer qualified for Medicaid after those continuous coverage protections expired in 2023 enrolled in Obamacare plans.

State directors said the enhanced premium tax credits undoubtedly played a substantial role in the uptick.

“We’ve heard directly from a lot of Pennsylvanians who did look before in the early years and couldn’t afford it, and came in and looked again and were really relieved to find that they could finally afford coverage since 2021,” Ms. Trolley said.

Pennsylvania has reported a 50% increase in its enrollment since then. Newer enrollees “don’t even have a context that prices used to be higher, so there’s going to be a lot of people who are surprised,” Ms. Trolley said.

If the enhanced subsidies expire, premiums would double on average for Pennsylvania’s 500,000 enrollees. The impact would be even higher on older enrollees 10 to 15 years out from qualifying for Medicare and those in rural areas. Premiums are expected to be nearly five times as high in one Pennsylvania county.

Enrollment increases in the five states that spoke to The Times are significant but low compared with 20 other states where marketplace participation has more than doubled since 2020, according to data from nonprofit health policy research organization KFF.

Of those 20 states, 15 voted for President Trump in the 2024 election.

Louisiana, home to House Speaker Mike Johnson and Majority Whip Steve Scalise, reported 234% enrollment growth over the past five years, tied with West Virginia and behind only Mississippi and Texas, which reported 242% and 255% increases, respectively.

Republicans seek overhaul

Mr. Trump, Mr. Johnson and Mr. Scalise are among a majority of Republicans who say the enhanced Obamacare subsidies should not be extended without significant “reforms.”

“We can do something with Democrats better than Obamacare,” Mr. Trump told reporters Wednesday.

Republicans are concerned about fraudulent enrollments, which the state directors said is not a problem in their marketplaces and is largely confined to the federal exchange.

Ms. Altman said states such as hers have implemented program integrity checks, such as Social Security number and address verifications, that healthcare.gov didn’t.

Republicans also dislike that the subsidies are paid directly to insurers that control premiums. They argue that it incentivizes them to keep rates high.

Insurers have already set 2026 gross premium rates for the federal and state-based marketplaces, and in most cases are not expected to make adjustments.

Rates are increasing 26% on average across all states, according to KFF. However, the increase is much lower for states that run their own marketplaces: 17% on average for benchmark plans, compared with a 30% increase for equivalent plans on the federal exchange.

Insurers have attributed roughly 4 percentage points of the premium increases to the expiration of enhanced Obamacare subsidies. Healthier people expected to drop coverage hurts the risk pool actuaries use to estimate costs.

Ms. Eberle said Maryland may ask marketplace insurers to adjust their gross rates, but it would take three to four weeks for new rates to be uploaded into the system.

“Right now, where the carriers have filed rates, it’s about a 13.4% increase, which we haven’t had a double-digit increase in years,” she said. “If rates were refilled, we anticipate that those [increases] would drop down to about 10.5%.”

In most states, extending the enhanced subsidies would reduce only the net premiums consumers see on the marketplace after applying the government’s contribution.

All five directors said the notices they sent this month informing enrollees what it will cost to continue their current plans reflect the expiration of enhanced tax credits as scheduled and did not mention that Congress may extend them.

“It’s been our experience that it’s not helpful to people to have sort of equivocating language,” Ms. Gasteier said. “We don’t want to weigh in on chances of anything.”

Late changes

The state directors said they are prepared to implement massive communications campaigns to alert consumers to late changes and bring back people who dropped coverage for a second look, but there’s still a risk some won’t return.

That process and adjustments to marketplace systems will move more quickly if Congress extends the enhanced subsidies as is. The directors warned that the more changes lawmakers make, the more complicated the updates become.

Ms. Altman said lawmakers should consider making any changes take effect after the 2026 plan year because enrollment begins Saturday.

“We can’t forget there are real systems, real people that need to adjust to whatever the law that comes out of Congress is,” she said.

Enrollment periods vary across states. Massachusetts, for example, ends enrollment on Dec. 23, and California’s enrollment runs through Jan. 31.

Mr. Kelly said he would work with partners in Idaho to decide how to proceed if Congress acts late in the year. One option could be reopening enrollment, which is currently scheduled to end Dec. 15.

“We will move mountains to ensure that Idahoans receive all the savings that they’re eligible for,” he said.

The other state directors also said extended open enrollment periods is an option, but if people sign up after their 2025 policies end, if they return at all, that could create a gap in coverage.

“I feel confident saying we won’t get everybody back,” Ms. Altman said. “When you have a sticker shock at the level that we’re talking about for many of our enrollees, you don’t just have people say, ‘I can’t afford this anymore.’ You have people say, ‘I can’t deal with this chaos anymore. I don’t trust in the system anymore.’”