Millions of Texans face health insurance price hikes as federal subsidies expire
Texas A&M experts warn of potential ‘sticker shock’ amid changes to Affordable Care Act options.
More than 4 million Texans will face higher health insurance prices next year, with up to 800,000 likely to lose their insurance for lack of an affordable option, according to a new Texas A&M University analysis.
The federal government is scheduled to cease a particularly popular set of discounts offered through the Affordable Care Act, which will raise costs for Texans who rely on plans offered through the ACA. The change is scheduled to happen Jan. 1. But with ACA open enrollment beginning Nov. 1, those planning to get their health insurance through the federal program should be aware of the looming cost increase and consider it before making a final decision, according to Laura Dague and Benjamin Ukert, a pair of Texas A&M health-policy researchers.
“When Texans go to pick their health plan for 2026, they need to be prepared for some serious sticker shock. Extra financial help that has been keeping monthly payments low for millions is set to go away,” said Dague, a health economist with The Bush School of Government and Public Service. She and Ukert, an expert on health care systems with Texas A&M’s School of Public Health, summarized their research in The Takeaway, a series of policy briefs published by the Bush School’s Mosbacher Institute for Trade, Economics, and Public Policy.
“Insurance is what can keep a huge medical bill from wiping out a family’s savings, but this price jump could price hundreds of thousands of hardworking families out of coverage,” Dague said. “This will become a pocketbook issue for lots of Texas families.”
For years, the federal government has lowered the cost of health insurance offered through the ACA Marketplace by offering subsidies: basically, the government has set aside money each year to pay part of the health care costs for many people whose coverage comes through the ACA marketplace. Congress temporarily expanded the subsidies in 2021 as part of the post-COVID-19 response. Beginning that year, no one was required to pay more than 8.5% of their income for a standard plan; anyone whose plan cost more than 8.5% of their income saw the federal government cover the difference. Many middle-income consumers were newly eligible for a discount and many low-income consumers saw the cost of their plan drop to zero. Congress subsequently extended the temporary subsidies through 2025.
Marketplace enrollment more than tripled in Texas during the five years of expanded subsidies, from 1.3 million in 2021 to almost four million now, according to The Takeaway. Texas’s total ACA enrollment is now the second-highest in the nation, after only Florida.
The enhanced subsidies have also totaled more than $1.5 billion per year in Texas. Congressional Budget Office projections show that, nationwide, a permanent extension of the subsidies would cost $335 billion over the next 10 years. The expanded subsidies are scheduled to expire Jan. 1.
“Consequently, all Marketplace enrollees will face sharp premium hikes during the Open Enrollment Period beginning Nov. 1, 2025, for the 2026 plan year, with middle-income earners again losing federal assistance entirely,” Dague and Ukert write in The Takeaway.
Ultimately, if Congress allows the subsidies to expire, and no other action is taken to fill in the health care spending, the number of uninsured Texans will probably rise to pre-subsidy levels in 2026, according to Ukert and Dague. Total ACA enrollment in Texas could drop by between 665,000 and 1.45 million.
Some people who no longer hold coverage through the ACA will probably find it in other places, such as through work or a family member’s plan, according to The Takeaway. But up to 800,000 people will probably lose their insurance altogether.
“Our analysis clearly shows that without further action by policymakers, individuals should prepare for increased Marketplace premiums,” Dague and Ukert write. “Health systems and health care providers should prepare for increased numbers of uninsured Texans coming through their doors. The expiration of these subsidies will reduce federal spending while increasing the financial burden on individuals, families, and health care providers, particularly in states like Texas that rely more heavily on the Marketplace than states that have participated in the ACA Medicaid expansions.”
Ukert and Dague write that there is “no shortage of policy ideas” to address the issue: federal lawmakers could make the subsidies permanent, Texas could enact state-level subsidies or the state could join the federal Medicaid expansion, among other possibilities. Dague and Ukert add that “public opinion in Texas indicates strong support for more state action to help low-income residents access care.”
“These decisions, however, involve significant trade-offs, as spending on subsidies means less funding for other programs or larger federal deficits. Ultimately, the most critical long-term strategy is to control the underlying growth of health care prices across inpatient, outpatient, and pharmaceutical markets.”
