100 Years of ACA Repeal

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Please, Sir, may I have my inadequate calorie ration up front?

In its initial lightly sketched form, Senator Bill Cassidy’s ACA reform plan is the least bad of several Republican proposals, in that it extends funding for the enhanced ACA premium subsidies (eAPTC) that will otherwise expire at the end of 2025, while redirecting them.

As outlined to the Washington Examiner, Cassidy’s proposal would end eAPTC but use the $26 billion estimated cost to fund Flexible Spending Accounts (FSAs) for subsidy-eligible ACA enrollees — that is, funds to spend directly on out-of-pocket costs (or other medical costs, e.g., dental). As Charles Gaba notes, it’s unclear whether each enrollee’s FSA would be funded with the amount of eAPTC she would have been eligible for, or whether the FSA would be flat-rate or allocated by some other formula. (Cassidy emphasizes that HRAs, unlike Health Savings Accounts, are use-it-or-lose it, saving the federal government money from enrollees who access little or no medical care in a year.)

The incentive for most enrollees would be strong to use their reduced premium subsidies to buy a bronze plan (average deductible about $7,400) and use the FSA to cover first-dollar expenses. That’s donut-hole coverage, as the FSA wouldn’t cover all expenses up to the deductible or annual out-of-pocket maximum (as high as $10,600). It would work for a lot of people, while leaving lots more who would otherwise have been in high-CSR silver (actuarial value 94% or 87%, in contrast to 60% for bronze) saddled with thousands more in out-of-pocket expense.

A tincture of gold mitigation in the 2026 ACA marketplace

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Trumpcare 2.0 is also gold-laden

Amidst the carnage wrought by the (still reversible) expiration of the enhanced subsidies in the ACA marketplace, one substantial mitigating factor has emerged: silver loading has reached a milestone. While net-of-subsidy premiums for benchmark silver plans will more than double for the average subsidized enrollee, the average lowest-cost gold plan will be priced below the benchmark (second-cheapest) silver plan for the first time.

That average masks a ton of variation: the average lowest-cost gold plan is priced below benchmark in only 20 states. But those states include Texas and now Florida, which together accounted for more than a third of all enrollees nationally (8.7 million). In total, average lowest-cost gold plans have premiums below benchmark in 20 states with 12.7 million enrollees, 52% of all enrollees nationwide. (In another 12 states, lowest-cost gold premiums average less than 105% of benchmark premiums.)

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CMS spin on the ACA marketplace, threaded through the Washington Post

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To have or have not..or have a lot less

My last post delved into CMS’s spin on the expiring enhanced ACA subsidies — that is, the agency’s focus on a) the comparatively modest increase in subsidized enrollees’ premiums for the lowest-cost bronze plan available in 2026 (up a mere 35%, compared to the 114% increase for benchmark silver calculated by KFF) and b) on a relative reduction in the lowest-cost bronze premium compared to 2020 (seven OEPs ago!).

I am sorry to see this distorted frame adopted in the Washington Post by a veteran ACA reporter, Paige Cunningham. The article is not factually inaccurate (though I can’t quite make some of the premium quotes work), but it downplays the impact of expiration of the enhanced subsidies on those who remain subsidized.

Here are the select facts Cunningham reports through the CMS filter:

CMS: Buy the cheapest plan, and these subsidy cuts will only hurt a little

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Heavy OOP burden 

You may have read KFF’s estimate that the average subsidized 2025 enrollee in the ACA marketplace will pay 114% more* for a benchmark silver plan in 2026, if the enhanced subsidies funded only through 2025 are allowed to expire. True!

You may also have read estimates that base (unsubsidized) premiums will rise 25% (from Charles Gaba) or 26% (from KFF). Also true!

Now, as of today, you may read CMS’s proud assurance (via https://www.axios.com/2025/10/28/trump-open-enrollment-premium-prices-health-care-government-shutdownAxios) that things are not so bad:

These claims are doubtless also true! How can that be? Are premiums for subsidized enrollees going up 114% — or 35%? (i.e. from $37 to $50/month, per CMS**).

It depends, of course, on the plan you’re buying and what percentage of your actual medical claims it will cover. The KFF estimate is for the benchmark (second cheapest) plan — the one for which all subsidy-eligible enrollees pay a fixed percentage of income, which is being sharply reduced. The actuarial value of a silver plan varies with income, but for most enrollees it’s 94% or 87% (ratcheting down to 73% or 70% at income above 200% of the Federal Poverty Level (FPL).

If the ARPA-enhanced subsidies are renewed...other factors affecting ACA enrollment in 2026

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Thanks to a court order, you can still attest to an income over 100% FPL

It’s good to see the fight over renewal or nonrenewal of the expiring enhanced ACA marketplace subsidies sitting at the center of the current political agenda.

The enhanced summaries created by the American Rescue Plan Act (ARPA) in March 2021 are plainly the main driver of a doubling of ACA marketplace enrollment from OEP 2021 to OEP 2025 (from 12 million to 24 million). The enhanced subsidies gave the ACA a credible claim to fulfilling the mission embodied in its name, offering affordable to care to all who lack access to other affordable insurance (excepting perhaps two million in the coverage gap created by red state refusal to enact the ACA Medicaid expansion).*

Renewal or nonrenewal of ARPA subsidies will determine the basic size and shape of the ACA marketplace in 2026 and who-knows-how-many years beyond. Even if the subsidies were renewed without strings today, however, other changes to the marketplace triggered by Trump’s CMS, the Republican Congress, and political uncertainty generated by their assaults on the law are likely to inhibit 2026 enrollment substantially.

To get a working sense of how some (not all) of these restrictions function, it’s important to recognize that the majority of enrollments in the ACA exchanges are executed by brokers. Brokers played an important role in the marketplace from the beginning, but their ranks swelled from 49,000 in 2019 to 83,000 in 2024 (as CMS told me by email) - spurred first by encouragement and facilitation by the first Trump administration, and then by the increasing attractiveness of offerings and ease of enrollment when the ARPA subsidy schedule kicked in. By OEP 2024, brokers accounted for almost 80% of active enrollments in the states using HealthCare.gov, which account for about three quarters of all enrollment — up from 44% in OEP 2019. Brokers execute a large share of enrollments in most state-based exchanges as well (e.g., 56% of California’s 2 million enrollments in 2025).

An extra hit to ACA marketplace premiums for the subsidy-eligible

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Rub it in, CMS

As I noted in my last post: Exacerbating the huge increase in premiums that subsidized ACA marketplace enrollees will face in 2026 if the enhanced subsidies funded through 2025 are not extended, Trump’s CMS finalized a rule change in June 2025 that increases net-of-subsidy premiums by changing the method by which health insurance premium growth is calculated. The question is by how much, and I now have an answer.

Why did KFF radically increase its estimate of rising costs for ACA marketplace enrollees?

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CMS takes a knife to premium subsidies

Update, 10/10: See the next post for an update as to the degree to which the CMS rule change discussed below will reduce premiums if the enhanced subsidies are not extended.

Yesterday KFF updated its estimate of the degree to which the average ACA marketplace enrollee’s premiums will rise in 2026 if the enhanced premium subsidies (created in 2021 and funded only through 2025) are allowed to expire. KFF’s widely-cited initial estimate, calculated in July 2024, was 75% for enrollees subsidized in 2025 (some of whom will lose subsidy eligibility). The new estimate for currently subsidized enrollees is 114%, with the average annual premium rising from $888 to $1,904. The increases are especially onerous for those who become newly subsidy-ineligible, as the old income cap on subsidies will snap back in place.

(Note: the enhanced subsidy schedule was created the by the American Rescue Plan Act (ARPA) in 2021 and extended through 2025 by the Inflation Reduction Act of 2022. Below, we’ll refer to the enhanced subsidies as the ARPA subsidies.)

KFF cites two reasons for the increased estimate:

• Insurers’ rate requests for base premiums for this year are up an average of 18% by KFF’s calculations, which was obviously not known in July 2024. That increase directly affects unsubsidized enrollees, including the newly unsubsidized. Unsubsidized enrollees comprised just 8% of on-exchange enrollees in 2025 but will likely account for nearly 20% of (diminished) enrollment if the ARPA subsidies expire. The KFF estimate includes enrollees who are subsidized in 2025 but would not be in 2026 if the ARPA subsidies expire - i.e., many of those with income over 400% FPL ($62,600 for an individual, $84,600 for a couple).

• The “applicable percentages” of income that subsidized enrollees will pay in 2026 (varying in each income bracket) are considerably higher than the percentages KFF used in its 2024 estimate. As most enrollees are subsidized, and so not directly harmed by base premium increases (and are in fact sometimes helped by increases in base premiums, as discussed below), this underestimate of the percentages of income to be paid for benchmark silver plan in each income bracket is likely the main driver of the increase in KFF’s estimate.

As I noted back in August, KFF’s underestimate of the projected increase in subsidized enrollees’ premiums in 2026 became apparent in July when the IRS published the actual subsidy schedule for 2026 (assuming the enhanced subsidies are not renewed). As I also noted, the surprisingly large difference between the KFF estimate and the actual “applicable percentages” of income to be paid by enrollees is due to some degree to a rule change enacted by Trump’s CMS, which changed the method by which an inflation adjustment in the applicable percentages is calculated. Reverting to the method the Trump administration had put in place for OEP 2020, a change the Biden administration reversed before OEP 2022, CMS included individual market premiums in its calculation of inflation in health insurance premiums since 2013. The large marketplace premium spikes of 2017 and 2018 (average benchmark premiums rose 61% from 2016-2018) still add significantly to the premium growth calculation.

My question now: how much worse did that rule change make the increase for subsidized enrollees in 2026?

---

The “applicable percentages” that KFF used in its 2024 estimate of enrollees’ premiums for 2024 were taken from a CBO calculation of what the subsidy schedule in 2025 would have looked like if the enhanced subsides were not in place. Every year (pre-ARPA), an adjustment to the applicable percentages was derived from a calculation of inflation in health insurance premiums divided by wage growth (the Premium Growth over Income Growth Index). When the index was below 1.0, applicable percentages would drop in the year to come; below the baseline percentages established for the first ACA plan year, 2014; when it was above 1.0, the applicable percentages would rise above the 2014 baseline. As that index (let’s call it PGIGI) is also used to calculate growth in maximum allowable out-of-pocket costs in marketplace plans, as well as the Required Contribution Percentage (don’t ask, or rather see note below), it continued to be calculated and published in the ARPA era.

In its July 2024 estimate (still widely cited until yesterday), KFF used a subsidy schedule for 2026 that CBO had derived from the PGIGI for 2025, published in a June 2024 letter to Congressional leaders who had inquired about the cost of extending the ARPA subsidies. That was I believe the lowest PGIGI ever - 0.910, and it led to the lowest applicable percentages ever.

The PGIGI for 2026 published by the CMS under Biden in October 2024 was 0.962 — again, quite low. Under Trump, as noted above, CMS changed the calculation by adding individual market premium growth to the health insurance side of the equation. That boosted the PGIGI to 1.006 — 4.6% higher than under the initial calculation, and more than 10% higher than PGIGI underlying the KFF estimate (see pdf p. 97 here). The method change in the PGIGI calculation accounts for almost half of the difference between KFF’s initial calculations and actual premiums for subsidized enrollees. Update/correction, 10/10/25: the “almost half” estimate is incorrect — or rather, it’s correct for the increase in MOOP triggered by the method change (from $10,150 under the Biden administration’s initial PGIGI to $10,600 after the rule change) but incorrect as to the change in the subsidy schedule. That’s because when the IRS published the 2026 subsidy schedule in July, it accessed newly updated National Health Expenditure (NHE) spending projections, which did increase the PGIGI and applicable percentages but narrowed the gap between what the PGIGI would have been under the previous method and what was operative after the Trump administration’s rule change. The rule change boosted applicable percentages by about 17%, not 45%. Apparently the new projections increased the forecast of growth in employer-sponsored insurance more than in individual market. I will explain this in my next post.

From my prior post, here is a) the difference between the subsidy schedule KFF used in its 2024 estimate and the actual subsidy schedule for 2026, and b) the resulting difference in net-of-subsidy benchmark premiums in 2026.

Percentage of income required to purchase a benchmark silver plan at different income levels in Plan Year 2026: Actual vs. KFF/CBO 2024 estimate

Sources: IRS, KFF, CBO.

Monthly net-of-subsidy premium for benchmark silver plan in 2026 if ARPA subsidy enhancements expire: 2024 KFF/CBO estimate vs. actual applicable percentage

Single adult, any age. FPL for 2025 (applies to PY 2026)
The “Actual” column is now reflected in the updated KFF subsidy calculator

For a sense of scale as to the impact of the PGIGI method change, it raised the highest allowable annual out-of-pocket maximum from $10,150 to $10,600, an increase of 4.4%. Net-of-subsidy premiums in each income bracket are about 15% higher in actuality than in the 2024 KFF estimates and almost half [about 17% - see correction above] of that difference is attributable to CMS’s decision to incorporate the individual market in the PGIGI calculation.

For a record of how applicable percentages changed year by year, along with a detailed account of how they’re calculated, see Louise Norris.

Mitigating factors

As briefly noted above, increases in base premiums can actually be a boon to subsidized enrollees. Since subsidized enrollees pay a fixed percentage of income for the benchmark (second cheapest) silver plan, when premiums rise, subsidies rise, as do “spreads” between the benchmark and other plans. That makes plans that cost less than than the benchmark cheaper for subsidized enrollees. Those plans include a) the cheapest silver plan (usually only marginally cheaper than the benchmark), b) most bronze plans, and c) in about 15 states where strict silver loading is mandated or practiced by insurers, gold plans. In advance of OEP 2026, three states — Illinois, Arkansas and Washington — have newly mandated strict silver loading. (Very briefly: Cost Sharing Reduction (CSR), which attaches only to silver plans and is available only for enrollees with income up to 250% FPL, raises silver plans to a roughly platinum level for most silver plan enrollees. On average, then, silver plans have a higher actuarial value than gold and so “should” cost more, but usually don’t. Before October 2017, insurers were reimbursed separately for the value of CSR, but at that point Trump cut off the payments, which led to CSR being priced into premiums. Some states have used various means to mandate that gold plans be priced below silver to varying degrees.)

Another mitigating factor is inflation in the Federal Poverty Level, which rose 3.3% from $15,060 in 2024 to $15,560 in 2025 (in the marketplace, the prior-year FPL is operative). An enrollee whose income remains static gets a small subsidy boost by having a lower FPL (or potentially a large one, if the change puts her below a CSR threshold).

Below are the calculations showing the PGIGI for 2025 (the basis for the subsidy schedule for 2026 that KFF used in its 2024 estimate), for 2026 as set by the Biden administration, and for 2026 as finalized by Trump’s CMS.

1. 2025 (underlying subsidy schedule used by KFF) (pg. 6)

   

2. 2026 - Biden admin. (p. 6)

   

3. 2026 - Trump admin. (pdf p. 97)

   

   - - - —

* The Required Contribution Percentage is the percentage of income above which an individual is exempt from the individual mandate if the cheapest ACA-compliant plan is above that threshold. Though the Republican Congress reduced the mandate penalty to $0 in December 2017, the calculation is still made each each year because the same threshold qualifies enrollees over age 30 to purchase a catastrophic plan (which CMS recently made available to anyone who doesn’t qualify for premium subsidies).

Correction: Initially I wrote as if KFF’s cost increase estimate included all enrollees, subsidized and unsubsidized. In fact it’s based on what will happen to currently subsidized enrollees only — including those who become subsidy ineligible if the ARPA subsidies expire. I’ve adjusted language in the early paragraphs accordingly.

Update/correction, 10/10/25 (in case you missed it in the text above): the assertion that “almost half” of the PGIGI estimate is due to the method change is incorrect — or rather, it’s correct for the increase in MOOP triggered by the method change (from $10,150 under the Biden administration’s initial PGIGI to $10,600 after the rule change) but incorrect as to the change in the subsidy schedule. That’s because when the IRS published the 2026 subsidy schedule in July, it accessed newly updated National Health Expenditure (NHE) spending projections, which did increase the PGIGI and applicable percentages but narrowed the gap between what the PGIGI would have been under the previous method and what was operative after the Trump administration’s rule change. The rule change boosted applicable percentages by about 17%, not 45%. Apparently the new projections increased the forecast of growth in employer-sponsored insurance more than in individual market. I will explain this in my next post.

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Image credit: Michael Coghlan from Adelaide, Australia, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

Occam's razor suggests a short-term extension of ARPA-enhanced subsidies for Obamacare

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Back in July, a memo by Trump pollster Fabrizio Ward famously forecast that refusing to extend the enhanced ACA premium subsidies established by the American Rescue Plan Act, currently funded only through 2025, would cost Republicans the House of Representatives in 2026. More than 80% of the general public supported extended the enhanced subsidies, Ward claimed. Failing to extend them would increase a generic Republican’s then-current polling deficit among motivated voters in the midterms from -8% to -15%. Extending them would swing the generic ballot to +6% among motivated voters.

Underlying that calculation are the huge premium increases that will hit the 22 million current ACA marketplace enrollees (or their 2026 prospective replacements) if the ARPA enhanced subsidies expire. According to an oft-cited KFF estimate, ARPA subsidy expiration would lead to an average increase of 75%* in premiums paid by marketplace enrollees — an average that rolls together reduced subsidies for those eligible, complete loss of subsidies for enrollees with income above the pre-ARPA income cap on subsidy eligibility, and average base (unsubsidized) premium increases a bit below or a bit above 20% (the higher estimate, by Charles Gaba, is weighted according to plans’ enrollment).

Worse than forecast: Pending cost increases for ACA marketplace enrollees

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KFF data and analysis is essential to anyone seeking to understand the U.S. healthcare system. It’s copious, reliable, and clearly presented. But inevitably, it’s not always up to date.

In late 2024, KFF posted a calculator estimating how much more ACA marketplace enrollees at any income, income and family size would pay for coverage in 2026 if the subsidy enhancements created by the American Rescue Plan Act (ARPA) are allowed to expire (they are funded only through 2025). If the ARPA subsidy schedule expires, which appears near-certain at this point, the subsidy schedule will revert to the pre-ARPA formula used through OEP 2021, adjusted by an annual inflation factor.

When the calculator was created, the subsidy schedule for 2026 was unpublished, and KFF used estimates created by CBO and the JCT in June 2024 (see p. 9 here). Last month, the IRS published the subsidy schedule for 2026, and the CBO estimates turn out to have been quite low. At higher incomes, the actual percentage of income required to buy the benchmark (second cheapest silver) plan is more than a full percentage point higher than CBO estimated (e.g., 9.96% of income at an income of 300% of the Federal Poverty Level (FPL) vs. the CBO estimate of 8.65%).

Percentage of income required to purchase a benchmark silver plan at different income levels in Plan Year 2026: Actual vs. KFF/CBO 2024 estimate

Sources: IRS, KFF, CBO. See note at bottom for the ARPA enhanced subsidy schedule.

In Texas Obamacare, a gold patch on the loss of enhanced subsidies

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CMS to Texas: Who told you to put the balm on?

 As expiration of the enhanced ACA premium subsidies created by the American Rescue Plan Act (ARPA) at the start of Plan Year 2026 looms, it’s worth considering the extent to which strict silver loading may mitigate the sharp premium increases resulting from reversion to the ACA’s original subsidy schedule. Here we’ll take a look at how a market in which gold plans are priced way below silver in 2025 is likely to play out in 2026.