Texas ACA Subsidy Expiration to Cause Sharp Premium Increases in 2026
More than 4 million Texans are expected to face increased health insurance premiums in 2026 due to the scheduled expiration of expanded Affordable Care Act (ACA) subsidies that were temporarily extended through 2025. These enhanced subsidies, introduced in 2021 as a response to the COVID-19 pandemic, capped insurance premiums at 8.5% of income and significantly expanded federal assistance for middle- and low-income consumers. Consequently, Texas's ACA Marketplace enrollment more than tripled from 1.3 million in 2021 to nearly 4 million today, making it the second-largest state market in the nation after Florida.
The removal of these subsidies is projected to lead up to 800,000 Texans losing insurance coverage due to affordability issues, with total ACA enrollment potentially declining by 665,000 to 1.45 million. While some affected individuals may find alternative coverage through employers or family plans, the overall uninsured rate in Texas is expected to regress to pre-subsidy levels. This shift poses financial challenges for families and could increase demand on healthcare providers facing more uninsured patients.
Texas relies heavily on the ACA Marketplace due to its non-participation in the Medicaid expansion program, intensifying the impact of subsidy expiration compared to states with expanded Medicaid coverage. The federal government’s rollback of subsidies also reduces federal health care spending but shifts costs onto individuals, families, and providers. Policymakers at both the federal and state levels face key decisions, including potentially making subsidies permanent, introducing state-level assistance programs, or expanding Medicaid in Texas.
Texas A&M health-policy researchers emphasize that while numerous policy solutions exist, each entails trade-offs such as increased government expenditures or impacts on the federal deficit. They underscore the importance of controlling health care cost growth across hospitals, outpatient services, and pharmaceuticals as a critical long-term strategy to improve affordability beyond subsidy measures. Enrollment decisions for the 2026 plan year beginning November 1, 2025, should consider these impending premium increases.
This analysis provides a critical market forecast for insurers, health care providers, and policymakers in Texas, highlighting financial pressures and coverage volatility linked to federal subsidy policy shifts. Stakeholders are advised to prepare for substantial insurance premium hikes and coverage losses that could influence market dynamics, regulatory considerations, and health system demand in the near term.