The Affordable Care Act (ACA) marketplaces saw a record 21.8 million people enroll in 2025, but the expiration of enhanced tax credits has led to rising costs and declining enrollment in 2026. Law and regulatory changes have also tightened eligibility requirements, including for some lawfully present immigrants.
The ACA marketplaces, often called Obamacare, allow individuals and families without other coverage to buy insurance, often with federal tax credits based on income. The enhanced tax credits, first introduced during the COVID-19 pandemic, reduced premium payments for lower and middle-income enrollees and made some higher-income individuals eligible for assistance.
Record Enrollment Followed by Sharp Decline
The expiration of these temporary tax credits at the end of 2025 increased out-of-pocket premium costs. Insurers are seeking a median premium increase of about 15% for 2027. While remaining tax credits will protect most enrollees from the full impact, those with higher incomes who are no longer eligible for assistance will have to pay the full costs.
Effectuated enrollment fell for the first time in seven years, dropping from 21.8 million in 2025 to 19.2 million in 2026. Enrollment is expected to drop further this year, potentially as low as 17.5 million. The Congressional Budget Office projected that the reconciliation law’s ACA provisions alone would increase the number of uninsured by 2.1 million by 2034.
The ACA remains generally favorable in public opinion, with 61% holding favorable views as of March. Views diverge by political party, with nine in ten Democrats and nearly two thirds of independents (64%) viewing the law favorably, while two thirds of Republicans (67%) hold unfavorable views.
The Trump administration has implemented stricter enrollment and eligibility procedures, including additional verification of income, household information, and immigration status. These changes, along with others included in a 2026 regulation, are on hold due to pending litigation but could lead to further enrollment decline if implemented.
Political Divide Over Tax Credits
The expiration of the enhanced tax credits has been a point of contention. Republicans in Congress blocked efforts to extend them, arguing they were too generous and encouraged improper enrollment. Democrats, along with a majority of the public, supported extending the credits.
After the credits expired, what people would have to pay in premiums after accounting for tax credits increased by 114% or more than $1,000 annually to stay in the same plan in 2026. Facing higher premium payments, some dropped coverage, while some others switched to lower-premium plans with higher deductibles.
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The Trump administration announced it would send $500 checks to nearly 1 million ACA enrollees in 30 states, excluding those in states that run their own marketplaces and those receiving premium tax credits. The administration also canceled coverage for over 760,000 people it deemed improperly enrolled.
New Mexico, which offered state subsidies to replace the expired tax credits, was the only state where enrollment did not drop. The state’s approach highlights a potential strategy to mitigate the impact of federal changes on enrollment and costs.
Impact on Insurers and Market Stability
The rising costs and declining enrollment have raised concerns about the long-term stability of the ACA marketplaces. Insurers are citing a deteriorating risk pool as healthier individuals opt out of coverage to avoid higher premiums. This trend has led some insurers to plan their exit from certain ACA markets.
The 2025 reconciliation law, known as the “One Big Beautiful Bill,” introduced pre-enrollment verification requirements that could end automatic renewals starting in 2028. It also mandated full repayment of excess tax credits for enrollees who underestimated their incomes and restricted ACA tax credits for many lawfully present immigrants.
Alternatives to ACA Coverage
The Trump administration is promoting alternatives to ACA Marketplace coverage, such as short-term limited-duration health plans. These plans can deny coverage based on medical history and do not qualify for ACA premium tax credits, leaving enrollees to pay the full cost regardless of income.
Support for extending the enhanced tax credits was strong in 2025, with 67% of the public, including majorities of Democrats and independents, believing Congress erred in not extending them. Most Republicans (63%) supported Congress’s decision.
Combined with Medicaid changes and the tax credit expiration, the total increase in uninsured individuals is estimated to reach 14 million by 2034.
