Fewer people buy Obamacare coverage as insurance premiums spike

Nationwide, the number of people buying health plans on Obamacare insurance marketplaces is down by about 833,000 compared with a year ago, according to federal data released this week.

Many states are reporting fewer new enrollees, more people dropping their coverage, and more people choosing cheaper and less generous health insurance plans with higher deductibles.

Across most states, Thursday was the last day to enroll for plans that start in February. But nine states and Washington, D.C., have deadlines later this month, so the numbers could change.

There are 21 states with state-run health insurance marketplaces, and the rest use the federal website. The vast majority of states have seen declines in enrollment so far, compared with around this time last year.

Preliminary data released Monday by the federal Centers for Medicare & Medicaid Services shows 22.8 million enrollees, down from a record total of 24.3 million last year.

Premiums have surged as a result of the expiration of enhanced federal subsidies first made available by the American Rescue Plan Act in 2021 and later extended through the end of 2025 by the Inflation Reduction Act. The availability of the subsidies spurred a sharp increase in the number of people buying health plans on the marketplaces. In 2020, 11.4 million people were enrolled in marketplaces through Obamacare, formally known as the Affordable Care Act. More than double that amount enrolled last year.

Congress failed to reach an agreement on extending the subsidies before the end of last year and still hasn't reached one. As a result, premiums were expected to increase this year by 114% on average — from $888 last year to about $1,904, according to estimates made in September by health policy research organization KFF.

The higher costs appear to be driving many people to forgo insurance or opt for cheaper, less generous plans this year, health officials and analysts say. Several states with state-based marketplaces — including Georgia, Illinois, Minnesota, New York, Vermont, Virginia and Washington — are reporting fewer enrollments this year in comparison with enrollments through early January 2025, according to early data. Other states, such as California, are reporting fewer new enrollees.

"It's important to consider that this is preliminary data, so this represents people who have signed up and selected the plan — but they probably haven't received their first premium bill," said Elizabeth Lukanen, executive director of the health policy research organization State Health Access Data Assistance Center at the University of Minnesota. "Once that happens, I think there's concern — and it seems very possible — that people may decide to drop coverage. So, the decline could get bigger.

"On the other hand, open enrollment hasn't closed, so you have two things sort of competing. It seems pretty likely that there will be a decline," she said.

If the downward trend continues, the nation could see the first decline in enrollment since 2020, Lukanen said, adding that a full picture of income levels and demographics of people who have dropped coverage won't be clear until the summer.

In Pennsylvania, data updated through Tuesday shows more than 15,000 previously enrolled adults between the ages of 55 and 64 have dropped coverage entirely — the most of any age bracket.

Pennsylvania's state-based exchange, Pennie, has seen about 15% fewer new enrollments compared with last year. The state is also reporting 1,000 residents dropping coverage per day during open enrollment — with the most coverage losses among people with incomes 150% to 200% of the poverty level. These could include families of two adults and two children with an income between $48,225 and $64,300.

The state is seeing an "unprecedented" number of previously enrolled people dropping coverage, said Devon Trolley, executive director of the Pennsylvania Health Insurance Exchange Authority.

California is reporting 31% fewer new enrollees this year compared with last year, and more than a third of new enrollees are choosing bronze plans — the lowest, least generous coverage tier — up from less than a quarter at this time last year.

In Minnesota, data as of Dec. 3 shows more than half of active enrollees are opting to keep their coverage tier. But of those changing plans, more than a third — 37% — are going to cheaper plans. The state notes a full picture won't be available until March.

Meanwhile, some states are seeing roughly the same number of enrollees or more. Texas, for example, is reporting about 4.1 million people enrolling this year compared with 4 million last year.

Charles Miller, health and economic mobility policy director at Texas 2036, a policy research nonprofit, said it's unclear why enrollments are up, but pointed to some clues.

"Texas had a uniquely large population of uninsured individuals eligible for free and inexpensive plans that hadn't enrolled previously … [and] has more affordable bronze and gold plans than many states," he said.

He attributes that to a bipartisan state law, enacted in 2021, that had the effect of increasing subsidies for those plans, Miller said.

Nevada is seeing fewer enrollees overall. But compared with this time last year, the state is seeing 29% more people who are actively shopping the website to explore plans, said Katie Charleson, communications officer at the Nevada Health Authority Division of Consumer Health Services.

The state introduced a new public option, according to the Nevada Current, and health officials told lawmakers last week that about 1 in 5 active shoppers are opting for that plan.

In addition to the expiration of the subsidies, the cost of coverage has risen because of other factors, according to insurers. They say they've had to raise premiums because of rising prescription drug costs, inflation and workforce challenges, such as provider shortages.

But the enhanced premium tax credits were aimed at buffering those year-to-year changes for Americans with lower incomes, said Trolley, adding that the tax credit structure "helps make sure that [enrollees] don't see those really larger drops that happen from time to time, sort of from those market forces."

"When there are broader rate increases of … the total cost of the coverage, the tax credits are structured so that people who get a tax credit don't feel a lot of that increase. They're sort of sheltered from it on a year to year basis," Trolley said. "The tax credit is tied to someone's income and limits what they pay as part of their income, not necessarily tied to the cost of the coverage."

She added that she's also heard from some residents who say they are waiting to enroll in a plan to see if Congress takes action.

"People are leaving the ACA marketplace because the trade-offs have just become harder to justify," Lukanen said. "What worries me is that when the coverage becomes unaffordable, it isn't that people suddenly stop needing care. They just lose the protection that insurance offers, and those health care costs don't go away."

Lukanen added that if more people forgo coverage, health care services may end up costing the nation more overall.

"If people are going to the doctor and they don't have insurance, these costs are then just shifted. They're shifted to hospitals, ultimately to the community and the taxpayer."

Trolley echoed that, saying she's concerned about the overall burden on providers in rural counties, which are seeing the highest drops in Obamacare coverage in Pennsylvania.

"Any increase in the uninsured rate is going to further strain providers that are in rural areas, especially — further strain their financial situation," she said. "We are very concerned about that in Pennsylvania."