ACA Enrollment Declines by 1.2 Million After Enhanced Federal Subsidies Expire

Enrollment in Affordable Care Act (ACA) health insurance plans fell by 1.2 million people during the 2026 open enrollment period, a 5% decline that marks the largest single-year drop since the marketplaces launched in 2014. The sharp decrease, detailed in a June 8 report from the Commonwealth Fund, follows the expiration of enhanced federal tax credits at the beginning of the year, which has led to significantly higher premium costs for millions of Americans.

The expiration of these subsidies disproportionately affects individuals and families who rely on the individual market for coverage, including the self-employed, gig economy workers, early retirees, and employees of small businesses that do not offer group health plans. For these businesses, the sudden increase in healthcare costs for their workforce presents a significant new challenge in a competitive labor market. This shift creates immediate financial pressure on employees and complicates talent retention strategies for employers who depend on the ACA marketplace as a viable benefits option for their staff.

According to data from the Centers for Medicare and Medicaid Services (CMS), enrollment declined in 41 states. The drop was most severe in North Carolina, which saw its marketplace enrollment plummet by approximately 22%. A number of other states also reported double-digit percentage declines, signaling a widespread affordability crisis for consumers who had previously been shielded from the full cost of their premiums.

However, the trend was not uniform across the country. A handful of states managed to hold enrollment steady or even post gains. New Mexico reported the largest increase, with enrollment rising by 18%. Health policy experts attribute this resilience to state-level actions. According to an analysis from ACASignups.net, states that operate their own insurance marketplaces and offer their own state-funded subsidies—including California, Colorado, New Jersey, and Washington, in addition to New Mexico—were better able to mitigate the impact of the expiring federal aid.

The data reveals a stark divide between states that use the federal HealthCare.gov platform and those that run their own exchanges. The enrollment drop was more than twice as high in states relying on the federal marketplace compared to state-based marketplaces. This suggests that states with greater control over their health insurance exchanges have been more nimble in responding to the changing federal landscape and protecting their residents from sudden cost hikes.

The financial pressure is forcing consumers to make difficult choices. In Pennsylvania, the state-based exchange, Pennie, reported 15% fewer new enrollments and was losing approximately 1,000 existing members per day during the sign-up period. State officials there called the number of people dropping coverage “unprecedented.” In California, officials reported 31% fewer new enrollees and noted that more than a third of new customers were choosing lower-cost, less generous “bronze” tier plans, up from less than a quarter in the previous year. Similarly, Minnesota saw a significant number of enrollees switching to cheaper plans.

In our experience, this volatility in the individual health insurance market is a critical issue for small and mid-sized business owners. It directly impacts their ability to attract and retain talent when competing against larger corporations that can offer comprehensive, employer-sponsored health benefits. For the growing number of self-employed contractors and gig workers who are essential to modern supply chains, this premium shock represents a direct threat to their financial stability. Our work providing outsourced CFO services confirms that managing healthcare costs and employee benefits consistently ranks as a top concern for entrepreneurs. This is not just a personal finance issue for employees; it is a strategic and compliance challenge for businesses, and one that requires sophisticated financial planning. Companies trying to navigate this new benefits landscape can learn more from the advisors at C&S Finance Group LLC at csfinancegroup.com.

This recent downturn reverses a period of substantial growth. A recent analysis from KFF showed that marketplace enrollment had more than doubled in 20 states since 2020, with states like Texas, Mississippi, and Georgia seeing growth of over 220%. The expiration of the enhanced subsidies has effectively halted that momentum and, according to a KFF survey from early 2026, has already left 9% of 2025 marketplace enrollees uninsured.

The decline in coverage threatens to increase the national uninsured rate, which had fallen significantly since the ACA was implemented. According to a March 2024 report from the Department of Health and Human Services, the uninsured rate dropped from 14.5% in 2014 to 8.0% in 2022. States that have not expanded Medicaid, such as Texas, which already had the nation's highest uninsured rate at 16.6% in 2022, may be particularly vulnerable to seeing those numbers climb again.

Health policy analysts and state officials will be closely watching for the final effectuated enrollment data, which provides a more accurate count of individuals who have paid their premiums and have active coverage. That data, expected later this summer, will offer a clearer picture of the full impact of the subsidy expiration and will likely inform legislative debates at both the state and federal levels heading into the next budget cycle.