ACA Premiums Poised for Sharp Increase in 2026 Amid Federal Subsidy Cuts
Health insurance premiums on the Affordable Care Act (ACA) Marketplace are set to rise significantly in 2026, with proposed rate increases reaching as high as 66% in states like New York. Regulators report these as some of the steepest hikes observed in over a decade. This surge is largely driven by recent substantial cuts to health care funding at the federal level, which are expected to increase costs for millions of enrollees. Concurrently, insurers are responding by raising rates and reconsidering their participation in certain markets.
Insurers have highlighted the impact of these policy changes on market stability. For example, in Maryland, Optimum Choice anticipates that healthier individuals will exit the market due to the reduction or elimination of premium subsidies, a phenomenon expected to worsen market risk profiles. Similarly, Blue Cross Blue Shield in Vermont attributes a significant portion of its 23% rate hike proposal to the loss of premium tax credits.
Research from Wakely Consulting forecasts that 11 to 14 million Americans could lose coverage, especially in states that have not adopted Medicaid expansion. In these regions, coverage loss could reach up to 64%, resulting in a sicker insurance pool and further premium increases. The combined effect of subsidy cuts and reduced enrollment sets a challenging environment for both consumers and insurers in the ACA marketplace.
These federal policy adjustments effectively shift costs onto state budgets and individuals, primarily affecting lower-income populations, while extending tax benefits to higher-income households and corporations. The resultant premium hikes and coverage losses exemplify the complex dynamics between healthcare policy decisions and insurance market functioning.
Despite these developments, there remains potential for legislative intervention. Extending premium tax credits and opposing regulations that diminish coverage could mitigate these impacts. However, delays in Congressional action may solidify these adverse outcomes, resulting in significant financial burdens for ACA enrollees.
Insurance professionals should monitor these policy changes closely, as they have direct implications for market participation, underwriting risk, and premium setting in the upcoming enrollment periods. Understanding the intersection of federal healthcare policies and insurer responses is critical for advising clients and managing risk strategies effectively in this evolving landscape.