The Affordable Care Act (ACA) is facing a significant challenge as enrollment numbers continue to decline, with a 28% drop in April compared to the previous year in Georgia alone. This trend is causing market uncertainty for insurers and is likely to result in higher insurance rates next year. The initial data suggests that approximately 21% of people using the federal ACA marketplace failed to pay their January premiums, a concerning figure that could indicate a broader issue. The situation is further complicated by the expiration of enhanced premium tax credits, which have contributed to a 37% increase in average ACA plan deductibles, from $2,759 in 2025 to $3,786 in 2026. This rise in costs poses a political challenge for President Trump and the broader GOP, which has opposed enhanced subsidies to help people purchase Obamacare coverage.
The drop-off rate aligns with predictions made by policy experts, partly due to the lack of extended benefits that expired at the end of last year. The Wakely Consulting Group estimates that average ACA enrollment will be 17% to 26% lower this year compared to last. This trend is expected to contribute to higher cost estimates as insurers set rates for 2027. The uncertainty surrounding enrollment and the potential for higher medical claims from enrollees are factors that insurers will consider when determining next year's premiums.
The Trump administration's late posting of a key regulation that sets the rules for ACA health plans is another troubling factor. The proposed changes, which include increasing deductibles and allowing insurers to offer plans with no set networks of medical providers, were not finalized until May 15, well into the time when insurers are calculating premiums. This has created a challenging environment for actuaries, who are now tasked with predicting the impact of these changes on future premiums.
The Paragon Health Institute, a free-market think tank, has argued that record enrollment numbers in recent years were fueled by fraudulent sign-ups, possibly in the millions. However, insurers, hospitals, and policy experts have questioned the methodology used to estimate improper enrollments, suggesting that they are likely overestimated. Despite these controversies, the consensus among experts is that the biggest explanation for falling enrollment is cost. The sticker shock of rising premiums and the expiration of enhanced tax credits have contributed to a significant decline in enrollment, with a focus on the individual market.
The long-term implications of these trends are concerning. The expectation of a lower enrollment trend is likely to result in higher cost estimates as insurers set rates for 2027. The shift towards bronze-level plans, which have smaller monthly premiums but higher deductibles, raises questions about whether enrollees will pay their copays or deductibles, potentially leading to price increases for hospitals and doctors. The ongoing uncertainty and predicted decline in enrollment will play a role in setting next year's premium rates, with the possibility of double-digit increases.
