As the Trump administration transfers more Medicaid costs onto states, concerns are rising over the curtailment of subsidies provided by the Affordable Care Act.
"ACA marketplace enrollment has already declined 12% year over year, and KBRA finds that states face competing fiscal and policy pressures as they determine whether and to what extent to use state resources to address emerging coverage and affordability gaps."
The observation comes from the Kroll Bond Rating Agency in conjunction with analysis released on Tuesday on what states are doing to head off the budgetary effects of eliminating tax credits that helped health insurance premiums.
"While several states have stepped in with premium assistance, cost-sharing support, or reinsurance programs, most measures replace only a portion of the federal assistance that expired," said KBRA.
The ACA marketplace was created under the first Obama administration and required states to set up exchanges that offered health insurance.
To encourage enrollment and bolster insurance coverage during the pandemic, the federal government expanded premium tax credits to help subsidize the cost of insurance.
Original requirements for the premium credit included not earning more than 400% of the federal poverty level which is currently $63,840 for a single person.
The American Rescue Plan removed the cap, increased the credit, and limited premiums based on income.
Those provisions expired in at the end of 2025 which is knocking millions out of the marketplace.
Treating the uninsured forces hospitals to absorb the costs which in turn forces the states to provide more financial help.
"Additional support is provided by state and local governments through various supplemental programs funded by a mix of appropriations, tax revenues, intergovernmental transfers, and other state premium subsidies," said KBRA.
In February the U.S. Department of Health and Human Services estimated that about 3 million people became uninsured representing a 13% drop in enrollment.
Virginia released numbers today showing that 94,000 people have dropped their insurance this year.
The state is attempting to hedge against the impact by earmarking $150 million to create a temporary version of the expired assistance for Virginians between earning 138% and 250% of the federal poverty level.
KBRA singles out New Mexico for its aggressive push to keep residents on the insurance rolls.
"For 2026, New Mexico used its Health Care Affordability Fund to help offset the loss of the federal subsidy enhancement," said KBRA.
"The state appropriated $22.3 million for health insurance Marketplace affordability programs and, during a subsequent special session, appropriated an additional $17.3 million to reduce premiums."
Massachusetts is providing approximately $250 million to maintain affordable coverage for eligible residents with incomes up to 400% of the federal poverty level.
California committed $300 million on an ongoing basis in its 2026-27 budget to support the state premium subsidy program for enrollees with incomes up to 200% of the federal poverty level.
Colorado's program covers households with incomes between 100% and 400% of the federal poverty level and is designed to reduce the amount they pay each month for coverage.
Some states including Georgia are employing a reinsurance model to reimburse insurers for a specified portion of eligible claims.
"Reinsurance can reduce gross premiums and support individual-market stability, but it is not a direct substitute for income-based premium tax credits, and its consumer benefits are distributed differently," said KBRA.
