Subsidy cliff sends up to 5 million people off ACA plans — and their wallets start sweating

A new analysis from KFF warns that as many as 5 million people who buy insurance through the Affordable Care Act marketplaces could drop their coverage this year. Enrollment already looked weaker on paper — about 1 million fewer people signed up than the year before — but the financial sting of lost subsidies may turn that dip into a nosedive.

The main culprit is the expiration of enhanced premium tax credits at the end of last year. Congress got close to extending the extra federal help that kept monthly costs down, but the deal fell apart. “Costs went up significantly and a lot of people dropped their plans,” says Cynthia Cox, a co-author of the KFF analysis.

KFF reached that conclusion by stitching together data from CMS, state marketplaces, KFF surveys and estimates from Wakely Consulting Group. Their projection: marketplace enrollment could fall from about 22 million in 2025 to roughly 17 million in 2026 — roughly in line with internal CMS data reported recently.

Who left? Some of the 5 million might have found coverage elsewhere, but KFF expects most simply became uninsured. Those who stayed are often paying more — either through higher monthly premiums, much higher deductibles, or both — and many who experienced the steepest increases dropped their plans entirely.

Last fall KFF projected average premiums could double for some people. Instead of staying put, many consumers moved to lower-tier plans with much larger deductibles. The analysis also found deductibles jumped by about $1,000 on average last year — the biggest single-year increase on record.

That matters because being uninsured or stuck in a high-deductible plan changes behavior. People who don’t have coverage face higher bills if they see a doctor, and a serious accident or diagnosis can become a financial catastrophe. Even those paying higher premiums may still skip care because their out-of-pocket costs are larger.

There is a small silver lining: insurers appear to have anticipated much of this churn, which could mean the market only needs a one-year correction instead of repeated shocks. The next round of insurance rate filings will show whether costs calm down or if this is the new normal. For now, the ACA market looks like it’s dealing with a subsidy hangover — and millions of Americans are deciding whether to pay the tab or walk away.