Why ACA Premiums Jumped and 3 Million People Dropped Coverage
Enhanced ACA subsidies expired on January 1st. Premiums spiked, three million people left, and insurers want another double-digit raise for 2027.
Why three million people dropped coverage.
About three million fewer people are paying for Affordable Care Act coverage than a year ago. Enrollment fell from roughly 22 million to 19 million by February, the first marketplace decline since 2017, and federal data released in June confirmed it across all 50 states. The government points to a crackdown on improper sign-ups. Independent analysts point to the price.
The price change wasn’t subtle. For five years, enhanced tax credits capped what people paid for a marketplace plan, and more than 90% of enrollees got them. Those credits expired on January 1st. The average monthly payment jumped 58%, and deductibles rose about a thousand dollars.
The credits were the central fight in last fall’s 43-day government shutdown, the longest in U.S. history. It ended in November, when lawmakers agreed to reopen the government in exchange for a promised vote on extending them. The credits expired at the end of December. A House vote in January passed the extension, but the Senate didn’t take it up.
Some of the enrollment drop may be due to improper sign-ups being removed. But the federal data can’t cleanly separate cleanup from cost, and the timing is hard to set aside: the coverage cliff arrived the same month the subsidy did. When a premium doubles, a lot of people are going to cancel.
What the 2027 rate requests mean for you.
For 2027, insurers are asking to raise rates again, a second year running. KFF’s analysis for The Wall Street Journal puts the typical request near 14%. In Washington state, the largest marketplace insurer wants 28%, on top of a 35% jump this year. The companies blame rising costs and a shrinking, sicker customer pool, what analysts call a “death spiral”: as healthier people leave over price, the ones who stay cost more, so rates rise, so more people leave.
There’s a second mechanism, less visible. A new verification rule can suspend a person’s tax credit when the details on their application don’t match a government database. Fixing the mismatch can take months, and during that time the enrollee owes the full premium.
The credits were written to be temporary, which means coverage for tens of millions of people was set to expire on a schedule, left to whichever party held Congress in a given year. The verification rule was added on purpose. The death spiral is the predictable output of letting the subsidy lapse.
The one state that reversed the trend.
Which is also why the fix isn’t “shop smarter.” No family re-prices a 58% hike by clipping coupons, and the polling shows they know it: two-thirds of the public, including most independents, say Congress got this wrong. The lever sits with Congress and the states. A Senate proposal from Susan Collins (R-ME) and Bernie Moreno (R-OH) would restore the credits for two years, and it’s drawn interest from both sides of the aisle. What’s blocking it is an unrelated fight over abortion-funding language.
And there’s a working proof of concept. New Mexico was the only state to fully replace the lost federal subsidies with its own money, and the only state where enrollment rose, about 14% in the federal data, while it fell in nearly every other state.
This is the part that gets lost when the story is told as a budget line. The need for a mammogram or an insulin refill or a blood-pressure check doesn’t expire with the tax credit. When people drop coverage, they don’t stop getting sick. They skip the screening, delay the visit, and show up later and sicker, which costs more and helps no one. Even among people who kept their plans, 73% told KFF they were worried about affording a hospital stay.
Open enrollment for next year starts this fall. The credits are still expired, the 2027 requests are still climbing, and the vote that would change either one hasn’t happened. Whether the number of insured Americans keeps falling is a choice, and only a few hundred people in Washington get to make it.
Really appreciate your addressing of this issue and all your evaluation which is largely on target in my opinion. But one thing I would add is that the real reason for these horrifying figures is a healthcare system that has been failing miserably the patients it's supposed to be serving, let alone supporting the providers of that healthcare. ACA was never going to be something that solved the problem entirely, nor for long. (Oh, but we needed the pre-existing protections!) The bottom line is that as long as you have so many other private "middlemen" and profiteers involved and you only try to treat one component of that healthcare service, the private industry will respond by upping premiums and deductibles, and lessening coverage. Medicaid and other gov-subsidized programs will crack down on who qualifies by increasing documentation/paperwork to qualify and for approval of services and meds. I know this as I was diagnosed with serious, progressive, disabling diseases 41 years ago when "managed medicine" and HMO's began. Patients like myself lose many months in a year filling out increasing paper work, and make endless phone calls using the billable hours from our paying jobs to even access the healthcare insurance we pay so much for (if we're fortunate enough to do that). It is demeaning and confusing and scary to fill out those endless medical forms for MassCare, Medicaid, Social Security Disability and insurance companies. And makes no sense to be required to do it regularly when you have INCURABLE DISABLING DISEASES. And in 1985 when I was diagnosed with Progressive MS and RA, my father was a medical insurance executive (who lectured against them) and my uncle was a practicing physician outside DC. They both predicted where we are, back then. And I, unfortunately, have LIVED it. What they didn't predict is that we would have a authoritarian, anti-science oligarchy for a Presidential Administration and supportive Congress. Or a Fed gov who would support Party over law, and would break healthcare laws, laws of justice, and equity and move us backwards on public health (vaccines, etc.), and go back to institutionalizing people like myself who are ill and or disabled. It's also why I have greatly appreciated listening to your strong, no-nonsense, informed commentary.
You are not some of these subsidies due to temporary legislation rising from the Covid crisis. While it’s hard to follow on the moving parts of this, I remember that the issue with Central under discussion the responsibility of extending subsidies horizon from crisis. Also, states wanted to extend this subsidy, they could but they didn’t