Speaker Mike Johnson (R-LA) has been keeping House Republicans away from Washington, and Congress may not pass funding legislation by the critical November 1 date. That delay would be dire for the marketplaces, but it should not result in Congress completely abandoning legislation to improve health coverage affordability. In the weeks ahead, it would be still possible for federal and state marketplaces to implement eligibility changes for 2026 coverage. Congress could still pass a clean extension of enhanced tax credits to deliver some financial relief for enrollees and stem the coverage losses.
Marketplaces can implement subsidy changes during open enrollment or after
States that operate their health insurance marketplaces independently of the federal government have been most outspoken about the enhanced subsidy expiration and the urgency for congressional action. While most states use the federal HealthCare.gov enrollment platform, 20 states operate their own enrollment and eligibility platforms. The state-based marketplaces released a joint statement in mid-October saying they “stand ready to act” and “will work as quickly as possible” to implement an extension. Covered California says that in the event of congressional action, it will “work quickly to share updated information with enrollees about their costs for 2026 coverage.”
Both the federal marketplace and state marketplaces have operational capability to plan for and implement changes in subsidies and eligibility changes during open enrollment. Even while the federal government is shut down, the U.S. Department of Human Services (HHS) continues operating marketplace activities because the federal marketplace is funded by user fees. Though programming changes into eligibility and enrollment platforms on the fly can be complex—particularly if implementing unanticipated scenarios—it is a feat that federal and state agencies have accomplished before.
For example, the effective date for North Carolina’s expansion of Medicaid was December 1, 2023, which meant that low-income individuals who would have otherwise been eligible for marketplace subsidies then became Medicaid-eligible. HHS updated the logic chain for eligibility determinations for the HealthCare.gov platform partway through the marketplace open enrollment period to reflect those eligibility changes.
The enhanced premium tax credits were first enacted via the American Rescue Plan Act (ARPA) of 2021 to improve health coverage affordability and smooth the tax cliff in the ACA’s original subsidy schedule. ARPA made expanded eligibility and increased generosity of the tax credits effective for all of 2021 and 2022. ARPA was signed into law by President Joe Biden on March 11, 2021, and HHS updated the HealthCare.gov platform to reflect the enhanced subsidies by April 1.
The scheduled sunset of the ARPA tax credits at the end of 2022 put the marketplaces and insurers in a situation of uncertainty similar to this year’s. Until the Inflation Reduction Act was signed, federal and state policymakers planned for the contingency of no enhanced subsidies in 2023 by having insurers file two sets of rates, one assuming that enhanced premium tax credits would expire and another assuming their extension. They also prepared marketplace eligibility platforms to toggle between original and enhanced subsidy schedules. States have made similar preparations for 2026, with insurers in some states—including California, Illinois, Maryland, Rhode Island, and Washington—filing dual rates for different scenarios.
While complicated, late implementation would still deliver savings
If Congress were to pass an extension after open enrollment, consumers who shop for coverage renewals before updates are implemented may be discouraged by the premium increases. New consumers may find that options are less affordable than they anticipated. Consumers who are young or perceive themselves as healthy are most likely to drop coverage, which means if the marketplaces lose enrollment, the risk pool will become sicker on average and premiums for everyone could rise sharply again next year.
A late extension could also lead to those who do sign up for coverage early leaving money and benefits on the table. This could particularly be an issue for low-income enrollees with family incomes 100 to 150 percent of the federal poverty level, whose comparatively large subsidies generate options with $0 net premiums. For example, an enrollee who enrolls in a lower-value bronze plan that costs $0 may think they are getting a deal. But they may not realize that, with the return of enhanced subsidies, they have an opportunity to move up to a higher-value silver plan newly available for $0. Such a plan would perhaps provide a better provider network and cost-sharing reductions that lower deductibles and other out-of-pocket costs. Convincing discouraged or already-enrolled consumers to return to the marketplaces to reconsider their options before open enrollment ends will be challenging, especially if insurance agents and brokers—who facilitate about 80 percent of HealthCare.gov enrollment—are already booked up late in the season.
Moreover, a late extension could create additional administrative hurdles for consumers who prefer advance premium tax credits—applying the subsidies toward lower monthly premiums upfront rather than taking the tax credit as a lump-sum refund at tax time. While some states may have the ability to recalculate advance tax credits and lower monthly premium costs without enrollees’ needing to take action—as California did for ARPA—it is not clear whether the federal marketplaces could do the same. In 2021, HealthCare.gov consumers had to return to update their enrollment after ARPA to receive their full advance subsidy. Enrollees with nonzero premiums who do not fully advance their tax credits can still claim the remainder of their enhanced savings as a refund on their 2026 taxes.
Even after open enrollment has begun, extending subsidies would deliver savings to millions of marketplace enrollees and lower cost barriers for those who have not yet shopped or enrolled.
Conclusion
Ideally, Congress would have extended the enhanced subsidies well in advance of open enrollment. Doing so would have avoided unnecessary compilation and disruption, giving insurers greater certainty over enrollment projections and the makeup of the risk pool; allowing state and federal agencies ample time to prepare enrollment platforms; and sparing consumers sticker shock and higher costs. However, that did not happen: Congressional Republicans in July enacted tax breaks for the wealthy and slashed Medicaid and SNAP yet passed up multiple opportunities to include a tax credit extension as part of the Big “Beautiful” Bill.
Congressional failure to act before November 1 will have damaging consequences for enrollment and, in turn, would drive up future years’ premium rates. Even if Congress does miss that critical date, tardiness is no excuse to continue denying millions of Americans more affordable health care.
The author thanks Jeffrey Grant for valuable input and Neda Ashtari for research assistance.