Which states would create their own reinsurance or subsidy programs if federal ACA subsidies end?

1. Who already has state reinsurance or subsidy machinery in place — and why that matters

States that moved early to reinsurance created a ready policy lever: approved section 1332 waivers let states use federal “pass-through” savings to finance reinsurance payments, and dozens of states have adopted or considered such programs (about 16–17 had approved reinsurance programs in recent reporting) ^{[5] [1]}. Colorado’s program, for example, is explicitly funded with state and federal waiver funds and its waiver runs through 2027 ^[6]. Maryland’s analysis warns that expiration of ARP enhanced subsidies would reduce pass-through dollars and force program redesign or new state funding ^[1]. Those pre-existing programs give states options to preserve lower premiums even if federal subsidies shrink ^{[5] [4]}.

2. Which states would likely act first — the political and fiscal signal

States that already enacted state-level subsidy or reinsurance programs — California, Colorado, New Jersey, Massachusetts, Vermont and a handful more — have demonstrated both political will and funding pathways to step in if federal help fades ^{[7] [8]}. Colorado explicitly projects large premium impacts that its reinsurance program mitigates and has extended waiver authority through 2027 ^{[3] [6]}. Maryland and Maine have publicly modeled how federal pass‑through drops would force program changes, signaling they would either shrink programs or find state revenue if needed ^{[1] [9]}. Available sources do not present a single comprehensive list of every state that would create new programs if federal subsidies end; they instead document which states already operate or are considering reinsurance and state subsidies ^{[5] [7]}.

3. How reinsurance and state subsidies work — and their limits

Reinsurance pays insurers for very large claims so insurers can lower premiums overall; under section 1332 waivers, federal “pass-through” savings from reduced premium tax credit spending can fund state reinsurance ^{[10] [2]}. Analysts have measured premium reductions of roughly 10–20% in early-adopting reinsurance states, though effects vary by plan metal level and local market ^{[11] [4]}. But reinsurance’s financing often relies heavily on federal pass-through funds; if enhanced federal tax credits expire, many states would see smaller pass-through amounts and would need new state revenue or program scaling to maintain the same impact ^{[1] [12]}.

4. State subsidies as an alternative — where they exist and how they differ

Some states already run direct state subsidies that top up federal tax credits or provide assistance for groups ineligible for federal help (California, New Jersey, Massachusetts, Vermont and others) ^{[7] [8]}. These programs can be designed to continue paying monthly and to target populations left exposed by federal rollbacks. But state subsidies are costly; the Commonwealth Fund and other analysts emphasize that state-only solutions will be insufficient to fully replace broad federal assistance and that only sustained federal commitment can prevent wide coverage losses ^[13].

5. Political constraints, fiscal tradeoffs and competing viewpoints

Budget and political realities matter: conservative-leaning states have resisted expansive state subsidy programs; Republican proposals in Congress have alternatively sought HSA-style payments rather than extended subsidies, reinforcing the prospect that some states will choose not to backfill federal cuts ^{[14] [15]}. Policy analysts caution that while reinsurance stabilizes premiums, its benefits for lower-income, subsidy-eligible enrollees are smaller and mixed; one Health Affairs analysis raised concerns about enrollment impacts among low‑ and moderate‑income people ^{[16] [11]}. States weighing action must balance premiums, state budgets, and equity tradeoffs explicitly noted in state reports ^{[1] [5]}.

6. What to watch next — practical indicators of state action

Watch for: Section 1332 waiver extension filings or approvals (CMS posts waiver key components and extension notices) — approvals and extensions already exist for some states through 2027–2029 ^[2]; state budget bills creating dedicated reinsurance or subsidy funding lines (states such as Colorado, Maryland, Maine and others have debated funding adjustments) ^{[6] [1] [9]}; and federal legislative action — if Congress extends enhanced credits, pass-through funding and many state plans’ economics change ^{[15] [14]}.

Limitations: available sources document which states already run reinsurance or state subsidy programs and model fiscal impacts, but they do not provide a definitive, state-by-state list of which states would create entirely new programs if federal subsidies end; that outcome will depend on state budgets, politics, and ongoing federal policy (not found in current reporting).