24 million people currently have health insurance through the Affordable Care Act (ACA) marketplace, with an estimated 22 million receiving enhanced tax credits to reduce the cost of their healthcare premiums. However, with these enhanced subsidies set to expire at the end of this month, average recipients will see their premiums more than double in 2026 as the subsidy reverts to lower pre-2021 levels.
ACA subsidies have been in place since 2014, but were enhanced in 2021 as part of the COVID-19 relief package to provide a larger tax credit and to include more Americans. If they do expire on Dec. 31, the financial fallout will be dramatic for millions, with the greatest hit felt in Southern states.
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Where most subsidy recipients live
More than half of the current 24 million enrollees receiving subsidies live in a handful of states. Southern states have a higher-than-average share of subsidy recipients because most of these states chose not to expand Medicaid coverage as part of the 2010 ACA or the 2021 American Rescue Act, despite having the federal support they needed to do so. In those states that decided not to expand Medicaid, the ACA marketplace became a crucial source of health insurance for low-income residents.
It's a double whammy for subsidy recipients who live in a state that did not take the federal government up on the opportunity to expand Medicaid. Those people need look no further than a surrounding state -- like Kentucky, Arkansas, or Missouri -- and know that if they lived there, they would be able to access Medicaid rather than worry about ballooning ACA rates once subsidies lapse.
Hardest hit states
Here are the states with the highest percentage of the population receiving ACA subsidies and expected to feel the most pain:
- Alabama: 456,972 enrollees
- Florida: 4,565,216 enrollees
- Georgia: 1,475,623 enrollees
- Mississippi: 322,788 enrollees
- North Carolina: 924,168 enrollees
- South Carolina: 608,325 enrollees
- Tennessee: 615,828 enrollees
- Texas: 3,814,112 enrollees
- Utah: 410,339 enrollees
- Wyoming: 45,107 enrollees
Poorest households
According to the Economic Policy Institute, allowing ACA enhanced tax subsidies to expire will increase poverty across all groups, with the effect most keenly experienced by those who've always had trouble accessing the medical care they need. These households are disproportionately working-class, Black, and brown -- in other words, people who are already economically vulnerable.
The poorest eligible households will see the largest percentage increase in their health insurance premiums if subsidies are allowed to expire.
Older adults
There are many reasons an older person may choose to retire before they're eligible for Medicare at age 65. They may have a serious health condition that prevents them from working, or perhaps they got laid off from work and couldn't find another job. Whatever the reason, about 24% of ACA enrollees were at least 55 years old in 2025.
Because insurance companies are allowed to charge older adults more than younger people, older Americans losing ACA subsidies are likely to find it challenging to retain health insurance, even if they begin collecting Social Security at age 62.
Small business owners
Two groups that were excited when the ACA was passed into law in 2010 were small business owners not yet eligible for Medicare, and people who dreamed of starting their own businesses but couldn't give up their 9-to-5 jobs due to the need for insurance coverage.
Small businesses are less likely than larger businesses to offer employer-sponsored health insurance. This means that new business owners and their employees are more likely to get their coverage through the ACA marketplace.
48% of adults under 65 enrolled in an ACA marketplace plan are either small business owners or employed by a company with fewer than 25 workers.
Regardless of where they live, expiring subsidies will make it more difficult for these small business owners and employees to remain insured.
As it appears unlikely that Congress will be able to cobble together an agreement to extend the COVID-era subsidy enhancements, millions of Americans will be on the hook for higher medical costs, and Southern states may feel the pinch more than others.
