Brandon Dunk, Senior Research Associate

The ACA has weathered uncertainty in the past, and 2025 is no different.

A normal year has a lot of uncertainty as brands compete to design ACA plans: Coverages, cost shares, and network all need to be coordinated to design an offering that can stand out against standardized plans and reduce membership churn. But 2025 brings an extra twist: The enhanced Inflation Reduction Act subsidies expire at the end of 2025 and no clear replacement has been proposed as of this writing. If let expire, entire segments of ACA members may be priced out of the market, no longer able to afford coverage. If renewed or enhanced, particular segments of the ACA market may see rapid growth.

So what are issuers to do about ACA subsidy uncertainty?

When faced with a range of uncertain scenarios all with a high impact, one of the key questions to decide is whether to be a first mover or a fast follower. Generally, the organization that can adapt to change first can also benefit from it. But being a first mover can also be difficult and risky. It takes a lot of work to make sure the first move is the correct one—and even when it is, all that work can go out the window if the market shifts again quickly. Leaving behind the rewards of being a first mover, organizations can also seek to be a fast follower in order to be more adaptable to change.

With uncertainty ahead, all carriers will need to identify how proactive they’d like to be. Some will act ahead of time, hoping that they’ve gotten it right. Others will wait until more clarity on policy and the future of the ACA emerges. The most successful organizations and plan managers are likely to do a little bit of both—making preparations for the negative outcomes they think could emerge, creating plan designs where success is magnified under positive outcomes, and making sure they have a strategy in place to shift quickly once uncertainty fades. The exact mix depends on the organization, when they think action may happen, and what scenarios they think are likely.

When might Congress act on ACA subsidies?

Congress faces key fiscal deadlines throughout the year. For example, a budget needs to be passed before the last funding bill runs out or the government will shut down. These real-world impacts often become key points where legislation gets passed and could potentially be areas where Congress may act on expanded ACA subsidies.

Here’s how the 2025 ACA calendar lines up with the 2025 political calendar:

Sources: Committee for a Responsible Federal Budget; CMS Bulletin: Bulletin: Timing of QHP Data Submission and Certification for the 2026 Plan Year for Issuers in the Federally-facilitated Exchanges

There’s still hope that the ACA subsidies might be addressed at the next big political deadline: the March 14 expiration of the latest continuing resolution (CR) funding the government. Top policy priorities, such as extension of the Tax Cuts and Jobs Act’s income tax, are likely on the table—extending these cuts is a top policy priority for most congressional Republicans and the Trump administration. Additionally, authorization of TANF will expire with the CR. Will enhanced ACA subsidies be addressed as well? It’s likely some action will be taken around March 14, but it’s still unclear what that policy package will include.

If no decision is made by March, the next opportunity to decide the fate of ACA subsidy expansion could come in the middle of the summer, leaving carriers little time to react.

The next potential date for action could occur around the X Date, which represents the date where the Treasury runs out of extraordinary measures that are keeping the holders of U.S. government debt paid while the debt ceiling remains reached. Depending on government spending and tax collection, the X Date will change. But when funds run out completely, the X Date is reached. This would result in a default on the debt, a potentially catastrophic event for the government and the economy.

Due to the large negative impact of reaching the X Date, it remains a driver of political action. The current X Date is likely to occur somewhere during the summer months[1]. That may mean that action could come after plan designs have already been submitted.

After that, the only deadline remaining is the actual expiration of the expanded subsidies.

What scenarios might occur with ACA subsidies?

It remains unclear whether expanded ACA subsidies will face expiration, renewal, or enhancement. While two-thirds of Americans support the ACA, only 28% of Republicans support the ACA[2].

Will it be enough for action to be taken on enhanced ACA subsidies? There are certainly other policy priorities the Republican caucus agrees on. But if a compromise is needed, there may be bipartisan support for extending ACA subsidies. If Republicans aren’t able to find the votes in their caucus to set up new funding for the government before the current continuing resolution expires in March, they may need to reach across the aisle to avoid a government shutdown, potentially agreeing to extend ACA subsidies at the same time. Similarly, raising the debt ceiling prior to the X Date may require compromise that could lead to ACA subsidies being put on the table.

The threat of higher rates of uninsurance, the reduction of which has been a policy goal for years, could raise significant support for extending ACA subsidies. While health insurers would be interested, so too might health systems and nongovernmental organizations who recognize uninsurance as a serious problem. On the other hand, The Heritage Foundation has released some viewpoints opposing extension of ACA subsidy expansion;[3] while there is no clear coalition opposing expanded ACA subsidy renewal, Republicans are generally not supportive of the ACA.

Expanded ACA subsidy expiration is possible. Expiration would result in millions of disenrollments. According to a report from the CBO, not extending expanded ACA subsidies would increase premiums 4.3% in 2026 and nearly 8% by 2027. Additionally, due to these costs, the uninsured population is expected to increase by 3.8 million people over the next decade, with 2.2 million disenrolling in 2026.[4] The plans that would see the most disenrollment are likely the same plans that have benefitted most from subsidies. On a dollar-for-dollar basis, consumers’ incomes above 400% FPL and those whose premium would otherwise be above the maximum contribution limit would be most affected, consisting mostly of older consumers. But the impact of moving from a $0 premium to a higher level could also impact low-income consumers who may not be able to afford their plan otherwise.

What would expiration of enhanced ACA subsidies look like? In some part, a reversal of the trends of the past several years in subsidized enrollment. In 2021, 9.7 million people enrolled on exchange and qualified for a subsidy; in 2024, this number had increased to 19.3 million people.[5] Expiration could mean that this enrollment reduces by more than a quarter. While some may still be able to afford enrollment without a subsidy, others may go uninsured or seek out employer group coverage.

Expanded ACA subsidy renewal could preserve the status quo—but it remains to be seen what impact Republicans would make on subsidies in an expansion. If expanded ACA subsidies were to be renewed without any changes, issuers could expect that the future of the ACA market would be somewhat similar to today—a growing ACA market with continued opportunity for new products and support for zero-dollar premiums through Premium Tax Credit subsidy. In a more permanent renewal of the expanded subsidies, the CBO expects ACA enrollment would rise by 6.9 million people over the next decade[6]. However, even with expanded ACA subsidies remaining similar, Republicans have an opportunity to make their mark on the subsidies through revisions. So while the plans that will see the most success from renewal could be the same plans seeing success today, carriers should also weigh that renewal could shift subsidies more favorably toward a particular group or affect how the subsidy program is administered.

Why could expanded ACA subsidies be renewed when it is so difficult to get legislation passed? More divisive policy proposals that Republican congressional leaders and the Trump administration would like to see passed may introduce the need for compromise. For Republican leadership to pass legislation that would prevent a government shutdown or suspend the debt ceiling, they may need to attract would-be dissenters by including other policies, such as extending the expanded ACA subsidies. Support for ACA subsidy expansion is fairly well organized, consisting mainly of health insurers and health systems. Supporters can exert political pressure to encourage the inclusion of ACA subsidy expansion renewal in any policy proposal.

Even richer subsidies for ACA would result in rapid market growth. There isn’t a clear path to additional subsidies on top of the already-expanded subsidies currently in place for the ACA, nor is there a clear picture for what that might look like. But it’s worth considering: In an expansion, expect an already-robust ACA market growth to get even hotter. With rapidly increasing enrollment, most successful plans would likely be those that could generate additional market share early in market segments supported by richer subsidies, as these segments would likely power ACA enrollment growth for years to come. If a compromise on the ACA leads to enhanced benefits beyond today’s ACA subsidy level for certain groups, carriers may find that additional sales, distribution, and marketing efforts are needed.

Preparing for uncertainty

We hope this information on the possible timing and scenarios of expanded ACA subsidy action provides some support as you prepare to make decisions about the upcoming plan year.

There’s still time to prepare. Deft provides several research solutions that can help keep you more informed about the market ahead or shift your plan when change occurs. Deft’s Individual and Family Plan Benefit Design Conjoint Study provides an online simulator tool where you can build a benefit package and compare it against others, revealing how consumers will react to their benefits decreasing, increasing, or remaining the same. Additionally, the Individual and Family Plan Shopping and Switching Study provides a comprehensive look at what made consumers switch during the OEP, preparing you for any disruption ahead. The IFP Benefit Design Conjoint Study is available today, and the IFP Shopping and Switching Study releases later this February, but Deft provides research on the ACA throughout the year; as news on the ACA develops, we will review its impact on the ACA market. Our final study of the year is the Individual and Family Plan Member Experience Study, which releases December 3, 2025.

Deft can help you prepare for uncertainty through market-leading research—send us an email at info@deftresearch.com.

Sources:

[1] The Bipartisan Policy Center provides projections of when the X Date may fall, although it is currently far enough away that accurate estimates are not available.

[2] KFF Health Tracking Poll: The Public’s Views on the ACA

[3] The Heritage Foundation Report, “Key Health Care Trends: Nationally and in Each of the States”

[4] CBO Letter Concerning Premium Tax Credits

[5] Enhanced Premium Tax Credit Expiration: Frequently Asked Questions

[6] Letter to Chairman Arrington and Chairman Smith Concerning Premium Tax Credits