Introduction

The Affordable Care Act (ACA) marketplace has reached a critical inflection point, following a period of unprecedented growth. With 23.6 million members, the Health Insurance Marketplace enrollment has surged due to enhanced pandemic-era subsidies and the impact of Medicaid redeterminations. However, the impending expiration of these subsidies in late 2025, coupled with evolving Trump administration healthcare policies, raises significant uncertainty about the future of the ACA market.

The ACA’s individual market has long been influenced by federal subsidies, regulatory frameworks and macroeconomic conditions. As we move forward, health plans, providers, policymakers and consumers must prepare for potential shifts in coverage affordability, enrollment trends and market sustainability.

This paper explores key policy changes, market dynamics, stakeholder implications and strategic actions for navigating the evolving landscape.

Trump Administration Actions and the Future of the ACA Market

In 2024, 92 percent of ACA market enrollment was subsidized, with the average subsidy amounting to $6,400 against a total annual premium of $7,320.[1] Additionally, non-subsidized enrollment has remained flat since 2019, indicating that ACA growth has been heavily reliant on subsidies.[2] Enrollment expansion has been disproportionately concentrated among individuals below 250 percent of the Federal Poverty Level (FPL), making this segment especially vulnerable to policy shifts.[3] Recent signals from the Trump administration indicate a policy direction that may reduce ACA support, encourage private alternatives and reshape Medicaid expansion. Key proposed or enacted changes include:

• Expiration of Enhanced ACA Subsidies: Pandemic-era subsidies, which significantly lowered consumer costs, are set to expire, leading to higher premiums for millions and potential enrollment declines.[4]
• Expansion of Short-Term, Limited Duration Insurance: Likely reintroduction of short-term health plans with longer renewal periods, offering cheaper but less comprehensive alternatives to ACA plans.
• State Flexibility and Market-Based Reforms: Potential block grants and Section 1332 waivers to allow states to customize ACA rules, alter benefit designs and adjust subsidies.[5]
• Medicaid Expansion Rollbacks: Changes to Medicaid eligibility criteria, work requirements and funding structures could drive more people into the ACA market, shifting the risk pool.

Implications for Key Stakeholders

Economic and Employment Impact of ACA Premium Tax Credit Expiration

The potential expiration of enhanced ACA premium tax credits at the end of 2025 could have widespread consequences beyond individual coverage losses. A March 2025 Commonwealth Fund brief[6] estimates that 4 million individuals will lose health insurance coverage, triggering a ripple effect across the healthcare industry and broader economy.

• 130,000 healthcare jobs are expected to be lost across hospitals, physician offices, ambulatory care centers and pharmacies.
• The total national employment decline is projected to reach 286,000 jobs by 2026.
• Texas would experience the highest healthcare job losses (30,800), followed by Florida (22,100) and Georgia (12,800).
• States that have seen the greatest ACA enrollment growth — such as North Carolina, Tennessee and Arizona — will also face workforce and economic contractions.

The Commonwealth Fund estimates that these figures are conservative, as they do not factor in productivity declines from individuals losing healthcare access and suffering worsened health outcomes.

This anticipated downturn underscores the far-reaching economic implications of ACA disruption, reinforcing the urgency for health plans, providers and policymakers to prepare strategic responses.

Health Plans

• Enrollment Volatility: The expiration of subsidies will likely lead to membership churn, with lower-income individuals at greatest risk of disenrollment.
• Risk Pool Deterioration: Healthier individuals may opt out due to affordability concerns, leaving a sicker, higher-cost population in ACA plans.
• Financial Pressures: Premium increases and reduced federal payments will challenge payer profitability, requiring pricing adjustments and product strategy shifts.
• ICHRA Growth Potential: As some employers look for alternative coverage options, Individual Coverage Health Reimbursement Arrangements (ICHRA) may gain traction but will be geographically and segment-dependent.

Providers

• Reimbursement Uncertainty: Lower enrollment could reduce demand for ACA-covered services, impacting hospital and physician revenues.
• Network Adequacy Challenges: ACA plans already have narrower networks than commercial counterparts, which could further limit provider participation.
• Emergency Room Utilization Risks: If affordability issues drive people out of ACA plans, uncompensated ER visits may rise, straining hospital finances.

Members and Consumers

• Higher Out-of-Pocket Costs: Premium increases could lead to costlier coverage, disproportionately affecting middle-income individuals who don’t qualify for Medicaid.
• Shift Toward Bronze Plans: To offset rising costs, more consumers may downgrade from Silver to Bronze plans, accepting higher deductibles in exchange for lower premiums.
• Migration to Non-Qualified Health Plans: Short-term plans, health-sharing ministries and indemnity products may see increased adoption, despite offering limited coverage and higher financial risk.

State Governments and Regulators

• Section 1332 Waivers: Some states may pursue waivers to stabilize the ACA market, while others may move toward private alternatives.
• State-Based Reinsurance Programs: To mitigate rate hikes, states could implement reinsurance mechanisms, subsidizing high-cost claims.
• Regulatory Uncertainty: States must navigate federal policy shifts, balancing consumer protection with insurer sustainability.

Linking ACA Market Disruptions to Medicaid Cuts

The looming $880 billion Medicaid funding reduction under the Trump Administration has direct consequences for the ACA market:

• Increased ACA Enrollment Due to Medicaid Disenrollments: As eligibility restrictions tighten, many previously Medicaid-eligible individuals will transition into ACA plans.
• Adverse Selection Risks: With more low-income, high-cost enrollees entering ACA plans from Medicaid, insurers will need to adjust pricing and risk models.
• State Budget Pressures: States may redirect funds from ACA premium stabilization to Medicaid shortfalls, further straining ACA affordability.
• Provider Reimbursement Reductions: With cuts to both Medicaid and ACA plan reimbursements, hospitals and safety-net providers face financial instability.

Strategic Recommendations for Stakeholders

Health Plans

• Refine Risk Pool Management: Develop predictive analytics and member engagement strategies to retain healthier enrollees.
• Optimize ACA Plan Pricing: Adjust pricing to mitigate risk pool deterioration, while maintaining market competitiveness.
• Enhance ICHRA Readiness: Expand partnerships with employers and brokers to capture growth in employer-funded ACA participation.
• Strengthen Member Retention Programs: Use targeted communication, financial incentives and product design to improve renewal rates among lower-risk members.

Providers

• Diversify Payer Mix: Expand participation in alternative payment models to reduce reliance on ACA reimbursement.
• Enhance Revenue Cycle Management: Strengthen billing and coding processes to minimize revenue leakage.
• Improve Patient Navigation and Education: Help patients understand ACA plan options, particularly as subsidies decline.

Members and Consumers

• Evaluate Coverage Options: Consumers should compare ACA, employer-sponsored and alternative plans to select the most financially sustainable option.
• Seek State and Federal Assistance Programs: Engage in premium assistance, Medicaid eligibility reviews and reinsurance programs where available.
• Understand Plan Differences: Consumers must recognize the risks of short-term and alternative plans, particularly regarding coverage gaps.

State Governments and Regulators

• Expand State-Based Reinsurance Programs: Implement mechanisms to offset insurer risk and stabilize ACA premium growth.
• Leverage Section 1332 Waivers: Seek federal flexibility to sustain ACA plan viability and affordability.
• Enhance Medicaid-ACA Coordination: Improve transitions for disenrolled Medicaid members to minimize coverage gaps and ensure continuity of care.

Conclusion

The ACA market faces an uncertain future as enhanced subsidies expire and new federal policies reshape the landscape. While potential Medicaid cuts will increase ACA enrollment, they will also introduce adverse selection risks, cost pressures and provider reimbursement challenges. Stakeholders across the healthcare ecosystem — health plans, providers, consumers and state regulators — must prepare now to mitigate disruptions and sustain market stability. By taking proactive, strategic actions, organizations can navigate this evolving environment while maintaining financial and operational resilience.