Fact check: Can states extend ACA subsidies on their own after federal expiration?

1. States Scramble — Planning, Not Legal Authority

News accounts from October 27–28, 2025 document that several state-run exchanges, notably California and Maryland, have crafted backup operational plans to contact enrollees, recalculate premiums under different subsidy scenarios, and revamp online marketplaces in case Congress does not extend the enhanced premium tax credits ^[1]. These accounts show administrative readiness rather than a declaration of independent legal power to replicate the federal subsidy levels. State exchange directors and administrators described contingency workflows and communications strategies designed to reduce confusion for consumers during open enrollment, indicating that states can manage enrollment logistics and outreach but are preparing for a federal policy outcome that determines subsidy amounts ^[1].

2. What the Coverage Calculators and Notices Reveal — Assumptions Matter

Coverage tools and state notices published ahead of the 2026 open enrollment period assume the enhanced federal credits may expire, and they are being used to show what consumers would pay under both scenarios ^{[5] [4]}. That reporting highlights a practical distinction: states can calculate costs and present alternatives to consumers, but those calculators reflect assumed federal policy, not a newly created state-funded subsidy. Some states have begun mailing estimates to policyholders “calculated under the assumption that the subsidies would expire,” which helps families plan but does not change the underlying legal funding streams that make the enhanced credits possible ^{[4] [5]}.

3. State-Funded Assistance: Limited Options, Big Budget Questions

Reporting indicates states could deploy targeted, state-funded assistance or reallocate their own resources to blunt premium increases, but such actions are constrained by state budgets and political choices ^{[1] [3]}. Maryland’s exchange director referenced backup plans that imply offering subsidies if federal discounts lapse, suggesting that a state could set up its own program to cover some costs; however, these are contingent and would require legislative or budgetary action at the state level. This underscores a tradeoff: states have administrative levers and can craft limited financial backstops, but sustaining subsidy-like payments at scale would require new state appropriations and likely face political debate and fiscal strain ^{[1] [3]}.

4. Operational Headaches and Political Shortfalls — Who Bears the Risk?

State exchange officials and experts warn that abrupt federal changes produce operational headaches—from IT updates to consumer confusion—that states can manage but not fully absorb without federal clarity ^{[6] [1]}. Covered California’s leadership noted backup plans increase administrative complexity and workload, and several state notices to enrollees emphasize that premium shock may follow if enhanced credits expire. This line of reporting frames the issue as both a governance problem and a political one: states can prepare communication and enrollment infrastructure, but the financial scale and legal authority of the enhanced credits rest with Congress and federal policy ^{[6] [1]}.

5. Bottom Line — Practical Flexibility, Legal Limits, and Political Choices

Synthesis of reporting from late October 2025 shows a clear pattern: states running their own exchanges possess operational flexibility and some fiscal options to mitigate harm, yet they lack unilateral legal authority to recreate the federal enhanced premium tax credits at the same scope without federal legislation or funding. The immediate consequence is a patchwork of contingency planning, state notices, and potential limited state assistance that can ease transitions for some enrollees but cannot fully substitute for the federal subsidy program unless states enact new, potentially costly programs ^{[1] [4]}.