Why ACA Premiums Rose 58 Percent After Subsidies Expired in 2025
When pandemic-era subsidies ended in 2025, ACA Marketplace premiums jumped from $113 to $178 a month. Here's what happened to enrollment and what shoppers should expect in 2027.
When pandemic-era subsidies ended on December 31, 2025, the ACA Marketplace faced a sudden reckoning. The average monthly premium payment for individuals—after accounting for tax credits—jumped 58 percent in 2026, rising from $113 to $178, according to the Kaiser Family Foundation. This was not simply the return to normal prices. Rising prescription drug costs, particularly for obesity medications, and accelerating healthcare inflation combined to push up the underlying cost of premiums by roughly 20 percent even before accounting for the subsidy changes.
The real shock came from what the expiration meant: roughly 1.2 million people dropped coverage during 2026’s open enrollment season, many of them younger and healthier enrollees who could no longer afford the full freight of premiums. Insurers now face a sicker, smaller risk pool heading into 2027, which they are responding to with another round of double-digit rate increases.
What Drove the Premium Shock
The enhanced premium tax credits, enacted during the pandemic and extended through 2025, capped what enrollees had to pay for insurance at between 0 percent and 8.5 percent of household income, depending on earnings. When these credits expired, the standard, pre-enhancement contribution formula snapped back into place for those still eligible, requiring higher payments toward premiums. More critically, people earning above 400 percent of the federal poverty level (roughly $62,600 for a single person in 2026) lost eligibility entirely and faced full sticker-price premiums with no subsidy.
The underlying cost of coverage climbed substantially in 2026 itself. The health system tracker found median premium increases of 18 percent across 312 insurers, with one insurer citing projected claims expenses increasing approximately 10 percent annually. Medical care, hospitalizations, and physician visits all grew more expensive. Prescription drug costs spiked particularly for GLP-1 medications—Ozempic for diabetes and Wegovy for weight loss—which one insurer reported had risen approximately 25 to 30 percent per quarter, contributing significantly to overall drug spending increases.
The Subsidy Thresholds for 2026
People earning above 400 percent of the federal poverty level ($62,600 for a single person) receive no premium tax credit and must pay full premiums. Those below that threshold contribute a share of income that rises with earnings toward the benchmark silver plan, with the government covering the rest.
The Enrollment Collapse
The effect on enrollment was swift and concentrated. Overall ACA Marketplace enrollment fell 12 percent in 2026, from 21.8 million to 19.2 million people, according to KFF’s state-by-state analysis. The decline varied dramatically. States operating their own marketplaces, particularly New Mexico, which deployed state-funded subsidies to replace federal support, saw smaller drops or growth. New Mexico was the only state with enrollment growth, up 14 percent. Federal marketplace states saw 15 percent declines on average.
The people who left were not random. Of the 1.2 million who did not enroll or dropped out during 2026’s open enrollment, 542,000—46 percent—were between 18 and 34 years old. These younger, healthier enrollees made up a larger share of departures than of the total marketplace. The largest erosion came among people earning between 400 and 500 percent of the federal poverty level—those who lost all subsidies when the enhanced credits expired. This group had represented only 3 percent of prior enrollment but accounted for 27 percent of coverage losses.
What 2027 Will Bring
Insurers filing preliminary rates for 2027 expect the trend to worsen. The median proposed premium increase for 2027 is 14 percent, according to KFF, with most of the 77 insurers analyzed across 16 states and the District of Columbia requesting increases between 10 and 20 percent. 20 insurers sought increases exceeding 20 percent.
Insurers cite the sicker risk pool from 2026 as a key factor. The shift toward healthier enrollees leaving contributed roughly 4 percentage points to 2026 premiums and is expected to add another 4 percentage points in 2027. Ongoing rising healthcare costs—medical services projected to increase 10 percent for 2027—and continued growth in specialty drug spending will add more.
Insurers then must raise premiums to cover these higher costs, which prompts even more healthy people to leave.
The Risk Pool Problem
The structural challenge facing the ACA Marketplace stems from how insurance risk pools work. When premiums rise and coverage becomes unaffordable, the people most likely to exit are younger and healthier, because they face the lowest immediate medical costs and can afford to self-insure. This leaves the marketplace with a concentration of older and sicker people, whose medical care costs more.
The expiration of enhanced subsidies in 2025 created precisely these conditions across the entire marketplace in a single year. KFF found that the share of ACA Marketplace enrollees receiving premium tax credits fell from 92 percent in 2025 to 87 percent in 2026—a reversal of the insurance expansion that followed the American Rescue Plan’s subsidy enhancements. Absent a policy change to restore or modify the subsidies, this cycle will likely continue as insurers raise rates in response to the sicker pool, prompting more healthy people to leave.
Who Still Has Affordable Coverage
For the lowest-income households—those earning up to 150 percent of the federal poverty line—premium payments rose too: an enrollee at 150 percent of the poverty line now pays about 4.19 percent of income, or roughly $82 a month, to keep a low-deductible silver plan, up from a $0 premium under the enhanced subsidies. State programs have also made a difference; states that deployed their own subsidies to replace federal support saw enrollment declines far smaller than the national average.
Higher-income enrollees who kept coverage in 2026 typically did so by switching to bronze plans with higher deductibles, accepting more financial risk for lower premiums.
Photo: Superbass · CC BY-SA 4.0 · via Wikimedia Commons
