How would state-based marketplaces and Medicaid expansion affect subsidy impacts in 2026?
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Executive summary
State policy choices — notably whether a state runs its own marketplace and whether it expanded Medicaid — materially shaped 2026 premium outcomes: population-weighted gross Silver premiums rose about 20% nationally, with state-based marketplaces, Medicaid expansion and reinsurance associated with smaller increases [1]. If enhanced premium tax credits and Medicaid expansion supports are rolled back or altered, experts and state analyses predict higher premiums, coverage losses concentrated among low‑income people, and uneven effects across states [2] [3].
1. Premium spikes and the role of state market design
MoneyGeek’s 50‑state analysis found gross benchmark Silver premiums rose about 20% from 2025 to 2026, and the largest increases clustered in states that rely on the federal exchange; states combining Medicaid expansion, reinsurance and a state-run marketplace saw the most stable premiums [1]. InsuranceNewsNet echoed that dynamic, reporting statewide variation — some states up more than 30% while others held under 10% — and explicitly linking state-run marketplaces and expansion to lower, more stable rate growth [4]. Those two independent analyses point to state market design as a meaningful moderator of premium volatility in 2026 [1] [4].
2. Medicaid expansion changes the subsidy floor — and the coverage cliff
The ACA’s architecture assumes Medicaid covers people up to 138% of the federal poverty level (FPL) and marketplace premium tax credits begin at 100% FPL; where expansion is not in place, a “coverage gap” leaves people under the poverty line ineligible for Marketplace subsidies [5] [6]. KFF’s modeling warns that eliminating enhanced federal match or rolling back expansion would push millions out of coverage and shift many into more costly marketplace plans — and that marketplace coverage will become costlier for those between 100% and 138% FPL if enhanced subsidies expire at the end of 2025 [2]. In short: expansion fills the low‑income floor; without it, more people face higher net premiums or no affordable option at all [5] [2].
3. What happens to subsidies in 2026 — state variation and political risk
Several sources warn the expiration of enhanced premium tax credits (PTC) and federal policy shifts will be decisive for affordability in 2026. SHVS and Urban Institute experts framed the expiration of PTC enhancements as producing sharp, state‑specific impacts on coverage and consumer costs; State‑Based Marketplaces (SBMs) and states that emphasized enrollment and outreach highlighted their vulnerability if federal affordability supports shrink [3] [7]. The reconciliation law H.R.1 and subsequent federal proposals also reshaped subsidy eligibility and Medicaid financing, with CBO‑style estimates pointing to millions more uninsured if federal supports are curtailed [8] [9]. These federal choices interact with state design: SBMs, reinsurance programs and expansion status determine how subsidy reductions translate to premiums and enrollment locally [3] [1].
4. Who bears the brunt — the lowest‑income and non‑expansion states
Reporting and analyses converge that the pain from subsidy erosion will concentrate on low‑income people and in non‑expansion states. HealthInsurance.org and GovFacts explain the mechanics: in non‑expansion states, people below the poverty line fall into a coverage gap and cannot get marketplace premium tax credits, leaving roughly 1.4 million ineligible for affordable coverage as of late 2025 [6] [5]. KFF’s scenario work shows that eliminating expansion match rates could result in tens of millions losing coverage over a decade and that some of those displaced could only get partial benefits or face marketplace premiums that have become less generous [2]. The combined message: non‑expansion states plus subsidy cuts = concentrated coverage losses [6] [2].
5. State responses and operational pressure on SBMs
States can blunt market shocks by running SBMs, adopting reinsurance, or keeping expansion — all associated with smaller premium growth in 2026 [1] [4]. But federal proposals and proposed CMS rules also impose new requirements on SBMs that could raise enrollee costs (an estimated 4.5% higher benchmark premium under certain methodologies) and create operational burdens that might impair outreach or continuity [10]. SHVS and state officials warned some states face major immediate fiscal and enrollment impacts if federal subsidies decline, and several states quantified potential federal funding losses in the hundreds of millions [7] [9].
6. Limits of the available reporting and competing perspectives
Available sources model scenarios and report correlations between state policy and premium movement but do not offer precise causal attribution for any single state’s 2026 premium change beyond their stated methodology [1] [4]. KFF’s elimination scenario assumes a wholesale end to enhanced FMAP and projects very large coverage losses, while MoneyGeek and SHVS emphasize contemporaneous market factors (rate filings, reinsurance, SBM management) that moderated or amplified those impacts [2] [1] [3]. Sources do not mention finer‑grained behavioral responses — for example, how many newly uninsured would find alternative low‑cost care pathways — nor do they provide a single consensus estimate tying SBMs and expansion to an exact subsidy dollar impact across every state [1] [2].
Bottom line: in 2026 state choices mattered. State‑run marketplaces, Medicaid expansion and reinsurance correlated with smaller premium increases and greater resilience; by contrast, subsidy reductions and loss of expansion protections risked driving larger premium shocks and concentrated coverage losses in non‑expansion states [1] [2] [6].