Connecticut Allocates $70M to Offset ACA Subsidy Losses Amid Federal Gridlock

Connecticut is allocating $70 million to partially compensate for the anticipated loss of $295 million in enhanced federal tax credits that subsidize health insurance premiums under the Affordable Care Act. Governor Ned Lamont activated emergency authority granted by the General Assembly to address the lapse following the U.S. Senate's failure to extend these subsidies. This state intervention aims to stabilize premiums for individuals earning up to $56,000 and families of four earning up to $128,000. Further subsidies are being considered for those with slightly higher incomes, potentially up to $75,000 for singles and $160,000 for families of four. There is ongoing coordination between the Governor’s Office of Policy and Management (OPM) and Access Health CT, the state’s health insurance marketplace, to implement these subsidies, though details about premium adjustments for current enrollees remain unclear. Despite the uncertainty at the federal level, enrollment in Connecticut’s insurance marketplace remains stable, with nearly 125,000 participants for 2026 plans, only a minor decrease from the previous year. The General Assembly previously allocated $500 million in surplus funds for mitigating federal funding shortfalls affecting Medicaid and SNAP benefits, with the $70 million for health premiums representing the initial draw from this fund. Governor Lamont emphasized prioritizing support for the most vulnerable residents amid fiscal constraints. Legislative leaders have expressed support for the governor’s actions, with bipartisan recognition of the necessity of state-level intervention due to inaction by the federal government and Connecticut’s congressional delegation. The enhanced tax credits, originally established in 2021 to curb premium costs and increase enrollment under Obamacare, face expiration at year-end absent congressional renewal. Federal legislation to extend these subsidies failed in the Senate, with competing bills from Democrats and Republicans not meeting the necessary votes. The lapse of subsidies is expected to result in significant premium increases, averaging $2,380 annually for individuals and over $10,000 annually for families of four in Connecticut. Efforts continue in the House of Representatives to force a vote on subsidy extensions, including bipartisan discharge petitions proposing varying durations for subsidy renewal and income eligibility limits. Connecticut’s Democratic congressional delegation remains engaged but has yet to endorse these bipartisan efforts, instead advocating for a longer-term subsidy reinstatement. The uncertainty surrounding federal subsidies is anticipated to impact enrollment and premium affordability, with potential increases in uninsured rates. This situation highlights ongoing challenges in the health insurance market and underscores state-level responsibilities when federal policy stalemates occur. The Connecticut case exemplifies how states might use emergency fiscal measures to mitigate the effects of federal subsidy lapses on their insurance markets and vulnerable populations.