Millions may drop ACA coverage — and raise health costs for everyone else
Demonstrators hold signs during a rally for health care funding outside the U.S. Capitol in Washington on September 30, 2025.
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Millions of people are likely to cancel their health insurance as increased premium subsidies for consumers purchasing coverage in the Affordable Care Act marketplace expire. That could increase costs for remaining enrollees and lead some experts to warn of a potential “death spiral” in the ACA market.
Expiring enhanced premium tax credits at the end of 2025 would cause insurance premiums for the average subsidy recipient to more than double, from $888 last year to $1,904 a month in 2026, according to estimates from KFF, a nonpartisan health policy research group.
Economists say young and relatively healthy people are most likely to give up a policy if they think premiums are too high and the coverage isn’t worth the cost.
Economists said this would result in an older, sicker population of enrollees who are more likely to use their insurance and need costly care; This could lead insurers to raise premiums even further to offset higher costs in a self-reinforcing cycle.
“If these [relatively young, healthy] As individuals with lower health care costs on average move out of the risk pool, the average cost of care will increase, thereby causing premiums to increase further,” said Meredith Rosenthal, chair of the Department of Health Policy and Management at Harvard University’s TH Chan School of Public Health. he said recently in a written interview with the university.
“The concern is that this process could spiral (known as a ‘death spiral’) and lead to greater complacency and even higher premiums,” he said.
Millions of young people may drop ACA coverage
An Obamacare sign at a Miami insurance agency on November 12, 2025.
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Nearly 22 million Americans received increased premium subsidies in 2025.
Urban Institute and The Commonwealth Fund, 7.3 million people Will leave the ACA market in 2026 due to the loss of increased premium subsidies. About 5 million would remain uninsured rather than find insurance elsewhere, they wrote in a joint analysis.
Young adults will see the biggest increase in the uninsured rate, they said.
In fact, people ages 19 to 34 account for nearly half of the expected increase in the number of uninsured people, about 2.3 million, according to Jessica Banthin, a senior fellow at the Urban Institute and co-author of the analysis.
By comparison, about 500,000 of those who will be uninsured are ages 55 to 64, Banthin said.
“It all comes down to who they feel really needs health insurance,” said Emma Wager, senior Affordable Care Act policy analyst at KFF.
Experts said there is evidence that insurance companies are increasing premiums for 2026 due to a riskier population of insured consumers.
Insurers increased their gross premiums by an estimated 26% Average for 2026, according to KFF. This is the total premium, including the consumer’s share and what is covered by premium tax credits.
Wager noted in insurers’ filings with state regulators that 4 percent of that 26% was due to expectations that healthier people would drop coverage if the enhanced premium tax credit expired.
The rest of the increase is due to other factors that increase the cost of health care, such as the introduction of new specialty drugs, the cost of labor and consolidation among medical providers, Wager said.
Once the data is available over the summer, the public will be able to get a clearer picture of how many people are dropping ACA marketplace coverage and their demographics, Wager said.
Why death spiral concerns may be premature
Colorado residents fill out cards and share their stories for content to be sent to their congressional representatives on health cuts on Nov. 1, 2025, the first day of ACA open enrollment in Northglenn, Colorado.
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Some policy experts say warnings about the ACA market death spiral are premature.
First, they said, the disappearance of increased subsidies appeared to be a one-time shock to the system.
“I think the death spiral concern is understandable, but it may be a bit of an exaggeration,” Lehigh University health policy professor Michael Gusmano wrote in an email. “It’s likely that the loss of people in the pool will lead to an increase in prices, which will further erode people’s willingness to sign up.”
Additionally, the way premium tax credits are designed should prevent a death spiral, policy experts said.
The tax credit structure limits households’ out-of-pocket spending on insurance premiums as a percentage of household income. For example, strengthened federal subsidies limited spending to 8% of household income, while the lowest income earners paid 0%.
While enhanced subsidies have been eliminated, standard premium tax credits, in effect since 2014, remain.
Out-of-pocket premiums are now limited to approximately 10% of annual income for qualified consumers. The cap decreases on a sliding scale, dropping to about 2% for lower income earners.
The more money you get in subsidies, the greater the likelihood of a death spiral.
gerard anderson
professor of health policy and management at Johns Hopkins Bloomberg School of Public Health
These income limits would likely prevent a death spiral, economists said. If insurers increase premiums, those increases will be borne largely by the federal government through tax credits, not by consumers, it said.
“All these higher premium costs often translate into higher government subsidies,” John Graves, a professor of health policy and medicine at Vanderbilt University, wrote in an email.
Millions fewer people could sign up, but there would still be “stable risk pools” because of income caps, he wrote.
Consumers least likely to sign up
Patients prepare for surgery on opening day of UCI Health – Irvine on December 10, 2025 in Irvine, California.
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Besides younger consumers, those least likely to enroll or re-enroll in ACA marketplace coverage are people who no longer qualify for any premium tax credits, experts said.
These are consumers who earn more than 400% of income. federal poverty lineThis equates to $62,600 for a single-person household.
Many of these households were eligible for enhanced subsidies but are no longer eligible; This means they must pay the full unsubsidized insurance premium out of pocket.
The Urban Institute and The Commonwealth Fund estimate that the average annual premium for consumers over the subsidy cliff will jump from about $4,400 in 2025 to about $8,500 in 2026.
Approximately 3% of ACA enrollees in 2025 (approximately 725,000 people) Earned between 400% and 500% For example, the federal poverty line, according to the Bipartisan Policy Center’s analysis of federal data.
How is the likelihood of an ACA death spiral increasing?
More likely to trigger a death spiral, policy experts say: Turning the current subsidy structure into a fixed-dollar payment for consumers. Republican lawmakers and President Donald Trump have raised the issue.
In that case, the premium increase would be borne entirely by individuals rather than the federal government, Graves said.
“The more money you get from subsidies, the greater the likelihood of a death spiral,” said Gerard Anderson, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.
