Why It Matters
The collapse of enhanced federal health insurance subsidies at year-end 2025 has triggered a sharp decline in marketplace enrollment across the nation, leaving nearly 3 million people without Affordable Care Act coverage. The shift threatens to widen the ranks of the uninsured and raises questions about the long-term viability of the individual insurance market without sustained federal support.
What Happened
Marketplace enrollment dropped from 21.8 million in 2025 to approximately 19.2 million in 2026, a contraction spanning 49 states. The decline followed the expiration of enhanced federal subsidies that had been authorized through the American Rescue Plan Act in 2021 and extended through the end of 2025 by the Inflation Reduction Act.
New Mexico stands alone as the only state to use its own funds to fully replace the expired federal assistance. The state’s enrollment actually grew by 14 percent, bucking the national trend. States operating their own health insurance exchanges experienced an average decline of 6 percent, while states relying on the federal HealthCare.gov platform saw steeper drops of roughly 15 percent on average.
The Trump administration attributed part of the enrollment decline to the removal of improper, phantom, and fraudulent enrollees from the system, estimating that fraudulent enrollment had peaked at 5.6 million the prior year. However, coverage retention rates—the percentage of people who maintained their plans past January—fell significantly in many states, suggesting that legitimate enrollees also left the marketplace as costs rose.
Geographic Disparities in Coverage Loss
The impact varied widely by state. Ohio and Oklahoma experienced the steepest drops, with enrollment declining 32 percent in each. Arizona fell 30 percent, South Carolina 29 percent, Indiana 28 percent, and Michigan and Minnesota each saw 27 percent declines. Louisiana and Mississippi each dropped 26 percent.
Coverage retention rates—a measure of how many enrolled members maintained plans after January—reflected the financial strain. Mississippi had the lowest retention, at 61 percent. South Carolina, Louisiana, Indiana, and Oklahoma all fell below 70 percent retention. By contrast, five states with their own exchanges—New Mexico, California, Nevada, Vermont, and Idaho—maintained retention rates of at least 95 percent, suggesting that state-level subsidy support or other interventions helped stabilize enrollment.
States with minimal declines or essentially flat enrollment included Connecticut, the District of Columbia, Idaho, Illinois, Massachusetts, Pennsylvania, and Texas, where coverage loss remained below 5 percent.
By the Numbers
21.8 million — Affordable Care Act enrollment in 2025
19.2 million — ACA enrollment in 2026
2.6 million — approximate number of people who left marketplace coverage
5.6 million — fraudulent enrollees removed from the system, according to the Trump administration
15% — average enrollment decline in states using the federal HealthCare.gov platform
6% — average enrollment decline in states operating their own insurance exchanges
32% — enrollment decline in Ohio and Oklahoma
61% — coverage retention rate in Mississippi, the lowest nationally
14% — median proposed premium increase for 2027 plans
Zoom Out
The enrollment slide reflects a broader national pattern: enhanced subsidies enacted during the pandemic emergency created a temporary expansion of coverage that proved difficult to sustain once federal support wound down. States with dedicated funding mechanisms or their own regulatory frameworks have fared better at holding coverage steady, while those dependent entirely on federal programs have experienced sharper losses.
The proposed 14 percent median premium increase for 2027 signals further pressure on affordability. Without renewed subsidies or state intervention, enrollment may continue to contract, potentially destabilizing insurers in smaller markets and leaving fewer affordable options for lower-income consumers.
What’s Next
Congress will face mounting pressure to address marketplace stability ahead of the 2027 enrollment season. Some states may pursue their own subsidy programs similar to New Mexico’s approach, while others could seek federal relief. Insurers will submit final rate proposals for 2027, offering a clearer picture of how premium increases will affect enrollment decisions in the coming year.