The Affordable Care Act (ACA) marketplace currently provides health insurance to around 24 million individuals in the United States. Among them, an estimated 22 million benefit from enhanced tax credits designed to make healthcare premiums more affordable. These enhanced subsidies were introduced in 2021 under a COVID-19 relief initiative to expand coverage and increase financial support, but they are scheduled to expire at the close of this year.
Once the subsidies revert to the lower levels in place prior to 2021, average premiums are projected to more than double in 2026 for those who currently rely on the increased assistance. The consequences of this shift are far-reaching and particularly severe in some regions of the country.
Geographical Concentration of Subsidy Recipients
More than half of the 24 million enrollees receiving ACA subsidies reside in a select group of states, many of which are located in the Southern United States. These states exhibit a higher-than-average concentration of subsidy recipients for several reasons, chief among them being the decision by most not to expand Medicaid coverage following the 2010 ACA legislation or the 2021 American Rescue Act. This is despite the availability of necessary federal funding to do so.
In these states, where Medicaid expansion was declined, the ACA marketplace has become an essential means for low-income individuals to secure health insurance. The lack of expanded Medicaid options means that more residents are dependent on marketplace subsidies.
This situation places residents in these states at a distinct disadvantage compared to neighboring states such as Kentucky, Arkansas, and Missouri, where Medicaid expansion has provided a buffer against steep premium increases. Those living in states that did not adopt Medicaid expansion face the risk of sharply increasing ACA marketplace premiums once the enhanced subsidies expire.
States Most Vulnerable to ACA Subsidy Loss
The states with the highest proportions of populations receiving ACA subsidies—and therefore anticipated to encounter significant financial challenges include:
- Alabama: approximately 456,972 enrollees
- Florida: about 4,565,216 enrollees
- Georgia: nearly 1,475,623 enrollees
- Mississippi: around 322,788 enrollees
- North Carolina: roughly 924,168 enrollees
- South Carolina: estimated 608,325 enrollees
- Tennessee: about 615,828 enrollees
- Texas: approximately 3,814,112 enrollees
- Utah: nearly 410,339 enrollees
- Wyoming: around 45,107 enrollees
Effect on Economically Vulnerable Groups
According to analysis from the Economic Policy Institute, a withdrawal of the ACA’s enhanced tax credits is likely to increase poverty levels across various demographic groups, hitting particularly hard those who have historically faced obstacles in accessing medical care. This includes working-class individuals and communities of color, who are often already economically vulnerable.
The households experiencing the greatest proportional increase in insurance premiums tend to be among the poorest eligible for these subsidies. As a result, these households may face substantial financial strain due to the premium hikes expected when subsidies lapse.
Challenges for Older Adults
Older Americans represent a notable segment of ACA enrollees, with around 24% of recipients being aged 55 or older as of 2025. This demographic often opts for early retirement before reaching Medicare eligibility at age 65, sometimes due to health issues or employment disruptions.
Insurers are permitted to charge older adults higher premiums relative to younger individuals, which exacerbates the impact of subsidy disappearance for this group. Even those who initiate Social Security benefits at age 62 may find affording health insurance increasingly difficult after the enhanced ACA subsidies end.
Impact on Small Business Owners and Employees
When the ACA was enacted in 2010, it brought optimism to small business owners and entrepreneurs who lacked access to employer-sponsored coverage, particularly since small companies are less likely to offer health insurance compared to larger firms.
Consequently, many small business owners and their employees have relied on the ACA marketplace for coverage. Approximately 48% of adults under 65 enrolled in ACA marketplace plans either own small businesses or work for companies with fewer than 25 employees.
The removal of enhanced subsidies is set to increase insurance costs for this group as well, posing additional challenges to maintain coverage.
Policy Outlook and Economic Implications
Current indications suggest that Congress may not reach an agreement to prolong the COVID-era enhancements to ACA tax subsidies. This scenario means that millions of Americans will confront higher healthcare costs starting next year, with Southern states bearing a disproportionate impact.
For those affected, especially economically vulnerable populations and residents of states without Medicaid expansion, the impending subsidy expiration represents a significant shift in healthcare affordability, the full consequences of which remain to be seen.