Affordable Care Act health insurance enrollment drops as costs spike

Fewer Americans are signing up for Affordable Care Act health insurance plans this year, new federal data shows, as expiring subsidies and other factors push health expenses too high for many to manage.

Nationally, around 800,000 fewer people have selected plans compared to a similar time last year, marking a 3.5% drop in total enrollment so far. That includes a decrease in both new consumers signing up for ACA plans and existing enrollees re-upping them.

The new data released Monday evening by the Centers for Medicare and Medicaid Services is only a snapshot of a continuously changing pool of enrollees. It includes sign-ups through Jan. 3 in states that use Healthcare.gov for ACA plans and through Dec. 27 for states that have their own ACA marketplaces. In most states, the period for shopping for plans continues through Jan. 15 for plans that start in February.

But even though it’s early, the data builds on fears that expiring enhanced tax credits could cause a dip in enrollment and force many Americans to make tough decisions to delay buying health insurance, look for alternatives, or forgo it entirely.

Experts warn that the number of people who have signed up for plans may still drop even further, as enrollees get their first bill in January and some choose to cancel.

Health care costs at the center of a fight in Congress

The declining enrollment comes as Congress has been locked in a partisan battle over what to do about the subsidies that expired at the start of the new year. For months, Democrats have fought for a straight extension of the tax credits, while Republicans have insisted larger reforms are a better way to root out fraud and abuse and keep costs down overall. Last week, in a remarkable rebuke of Republican leadership, the House passed legislation to extend the subsidies for three years. The bill now sits in the Senate, where pressure is building for a bipartisan compromise.

Up until this year, President Barack Obama‘s landmark health insurance program had been an increasingly popular option for Americans who don’t get health coverage through their jobs, including small business owners, gig workers, farmers, ranchers, and others.

For the 2021 plan year, about 12 million people selected an Affordable Care Act plan. Enhanced tax credits were introduced the following year, and four years later, enrollment had doubled to over 24 million.

This year’s sinking sign-ups — sitting at about 22.8 million so far — mark the first time in the past four years that enrollment has been down from the previous year at this point in the shopping window.

The loss of enhanced subsidies means annual premium costs will more than double for the average ACA enrollee who had them, according to the health care research nonprofit KFF. But extending the subsidies would also be expensive for the country. Ahead of last week’s House vote, the nonpartisan Congressional Budget Office estimated that extending the subsidies for three years would increase the nation’s deficit by about $80.6 billion over the decade.

Americans begin looking for other options

Robert Kaestner, a health economist at the University of Chicago, said some of those who abandon ACA plans may have other options, such as going on a partner’s employer health plan or changing their income to qualify for Medicaid. Others will go without insurance at least temporarily while they look for alternatives.

“My prediction is 2 million more people will lack health insurance for a while,” Kaestner said. “That’s a serious issue, but Republicans would argue we’re using government money more efficiently, we’re targeting people who really need it and we’re saving $35 billion a year.”

Several Americans interviewed by The Associated Press have said they’re dropping coverage altogether for 2026 and will pay out of pocket for needed appointments. Many said they are crossing their fingers that they aren’t affected by a costly injury or diagnosis.

“I’m pretty much going to be going without health insurance unless they do something,” said 52-year-old Felicia Persaud, a Florida entrepreneur who dropped coverage when she saw her monthly ACA costs were set to increase by about $200 per month. “It’s sort of like playing poker and hoping the chips fall and try the best that you can.”

—Ali Swenson and Nicky Forster, Associated Press