How would ending the expanded ARPA subsidies in 2026 affect marketplace enrollment and premiums?
Executive summary
If the American Rescue Plan (ARPA) enhanced premium tax credits expire at the end of 2025, multiple federal and independent analyses project higher premiums and reduced enrollment in 2026: the Congressional Budget Office (CBO) estimates gross benchmark premiums would rise about 4.3% in 2026 and insurers’ filings and trackers show state averages and insurer projections ranging from roughly 7% up to 21% or more in some states [1] [2] [3]. CBO and other analysts also project millions fewer enrollees — from about 2.2 million uninsured in 2026 (CBO’s immediate projection) up to ~4 million losing marketplace coverage in some estimates — as healthier people drop coverage and the risk pool worsens [4] [5] [1].
1. Why premiums are expected to rise: insurers expect healthier people to leave
Insurers and federal analysts say the main mechanism is adverse selection: when the enhanced subsidies end, healthier, lower-cost people who were drawn into the marketplaces by richer subsidies are likelier to drop coverage, leaving a sicker, more expensive pool and pushing gross premiums up — filings and CBO both point to this consequence and use it to justify premium increases for 2026 [2] [6] [1].
2. How big the premium changes could be — many estimates, uneven geography
Estimates vary by methodology and state. CBO’s nationwide average projection is a 4.3% increase in gross benchmark premiums in 2026 if enhancements expire [1]. Insurer filings and state regulators show larger and more uneven changes: some insurers in Vermont projected about a 7% higher gross premium in 2026 tied to expiration [2], Washington filings showed an average requested change of ~21% [7], and state filings elsewhere show requested increases from roughly 6–25% depending on local factors [3] [8]. KFF and Peterson‑KFF syntheses show average net premium spikes for subsidized enrollees that could be far larger — in many places doubling net payments for subsidized households once the enhanced generosity is removed [6] [9].
3. Enrollment effects: millions could lose marketplace coverage
CBO’s estimates point to a sizable coverage hit: 2.2 million more uninsured in 2026 if the enhanced credits are not extended, rising to around 3.7–3.8 million in later years in their baseline scenarios [4] [10]. Other analysts estimate up to around 4 million people could drop marketplace coverage in the near term if enhancements end — an outcome driven by higher net premiums and the elimination of subsidies above 400% of the federal poverty level [5] [1].
4. Who is hit hardest: middle‑income and older enrollees near the 400% FPL cliff
Multiple sources emphasize disproportionate harm to middle‑income households and older adults who benefited most from ARPA’s removal of the 400% FPL cutoff and lower caps on household contribution. If enhancements sunset, subsidies vanish for people above 400% FPL and cost shares rise for many under that threshold — examples include scenarios where a 60‑year‑old couple just above 400% FPL faces five‑figure annual premiums instead of an 8.5% income cap under ARPA rules [11] [12] [8].
5. State variation and mitigating policies matter
State circumstances matter: some states use their own reinsurance or state‑funded subsidies that partially blunt federal changes, and insurers’ local claims experience, pricing rules, and regulatory decisions produce wide variation in requested 2026 rate changes [2] [3] [13]. Analysts warn that uncertainty itself drives insurers to file higher rates in two scenarios (extension vs. expiration), complicating consumers’ ability to plan [14].
6. Fiscal tradeoffs and competing viewpoints
Policy analysts note a tradeoff: extending ARPA‑level generosity would reduce uninsurance and lower gross premiums via a healthier risk pool but comes with significant federal cost. CBO’s illustrative numbers show that a permanent extension would reduce the uninsured and lower average premiums over time but increase federal deficits substantially — the CBO and KFF place ten‑year budget costs in the hundreds of billions [15] [9] [10]. Advocates frame extension as affordability and coverage protection; budget‑conscious analysts and some lawmakers emphasize fiscal cost [15] [9].
7. What’s not in the available reporting
Available sources do not mention concrete, final nationwide 2026 enrollee counts after any possible late Congressional action or administrative fixes; they document projections, insurer filings, and state examples rather than final, realized nationwide enrollment outcomes for 2026 (not found in current reporting). They also do not provide a single authoritative state‑by‑state table of actual 2026 premium outcomes after any legislative changes; instead, reporting compiles filings and model estimates (not found in current reporting).
Bottom line: letting ARPA’s enhanced subsidies lapse is projected by CBO, KFF, Peterson‑KFF and state filings to raise gross premiums and household net payments in 2026 and to reduce marketplace enrollment by millions, with large variation across states and concentrated harms for middle‑income and older households; these projections weigh coverage gains against substantial federal budget costs [1] [6] [9] [4].