Health Insurance Costs in Texas Expected to Rise Significantly
For the millions of Texans who get their health insurance on the marketplace, coverage is likely to get a lot pricier next year. In 2026, marketplace enrollees will likely face a dual hit, from the expected expiration of federal subsidies and insurers’ forecasts of higher premiums. Texas already has the highest uninsured rate in the country, and higher marketplace costs could push more people to forego coverage.
“Most enrollees are going to be facing a double whammy of both higher insurance bills … but also the loss of the subsidies that lower much of that cost to them,” said Matt McGough, a policy analyst at KFF.
Marketplace plans are the health coverage options that people can purchase for themselves and their families under the Affordable Care Act. Nearly 4 million Texans enrolled in such plans for this year.
Understanding the Impact of Expiring Subsidies
The larger cost hit is likely to come from a change in federal policy. Many marketplace enrollees are currently eligible for enhanced federal subsidies to help pay for their marketplace plans. The enhanced subsidies, which give more funding to low-income enrollees and also expand eligibility to more middle-income enrollees, were originally added in 2021.
Last year, according to data from KFF, Texans received more than $1.5 billion from those enhanced subsidies. However, the enhanced subsidies expire at the end of the year, and U.S. lawmakers have not moved to renew them. If they expire, marketplace enrollees would have to pay their existing premiums plus any cost previously covered by the federal government.
For Texans receiving subsidies for marketplace plans, removing enhanced funding would lead to the average premium payment more than doubling. For those Texans, according to KFF, the average annual premium in 2024 was just shy of $400. Without enhanced subsidies, the annual premium cost would be about $850.
Expiration of Subsidies
Tom Banning, the CEO of the Texas Academy of Family Physicians, said in an email that the federal subsidies have so far protected Texans from the rising price of individual health insurance. “But with those credits set to expire at the end of 2025,” Banning wrote, “Texans who buy their own coverage … are about to get financially crushed.”
Rising Premiums: Another Factor in Increasing Costs
The anticipated expiration of the subsidies is also part of the calculation for marketplace insurers themselves. Marketplace insurers are requesting the largest premium increases since 2018. That’s according to an analysis posted last week by the Peterson Center on Healthcare and KFF, which pulled data from 19 states, including Texas, plus Washington, D.C.
Across the available data, which is preliminary and subject to change, the 2026 premiums are forecast to increase by a median 15%. Blue Cross and Blue Shield of Texas proposed a rate increase of 21%, according to McGough at KFF.
The projected increases are partly an indication of insurers’ uncertainty, McGough said, as they face federal changes they’ve never dealt with before. To explain the anticipated rate increases, individual insurers pointed to factors such as rising health care costs, including the added costs of GLP-1s, and tariffs.
Impact on Low-Income Texans and the Potential for a “Death Spiral”
But the expiration of the enhanced federal subsidies will make a significant dent, too. Insurers predict that enrollees who skew healthier may drop their plans if the subsidies expire — meaning the insurers would then raise premiums for the remaining enrollees. Banning said in an email that enough dropouts could trigger a “death spiral” for marketplace insurance, with ever-rising prices leading to ever-increasing dropouts.
Low-income Texans would be especially hard-hit by subsidies expiring and premiums increasing. If Texans do forego marketplace coverage as a result, they may join the ranks of the uninsured, who are more likely to delay medical care and more likely to die from health issues.
Conclusion
The expected expiration of federal subsidies and the forecast of higher premiums pose significant challenges for Texans who rely on marketplace health insurance. As the situation continues to unfold, it is crucial for policymakers, insurers, and individuals to be aware of the potential impacts and work towards finding solutions that ensure affordable and accessible healthcare for all Texans.
Frequently Asked Questions (FAQs)
Q: What is happening to the federal subsidies for health insurance in Texas?
A: The enhanced federal subsidies for health insurance, which were added in 2021, are set to expire at the end of 2025. This means that Texans who receive these subsidies may face significantly higher premium payments if the subsidies are not renewed.
Q: How much are premiums expected to increase in 2026?
A: According to preliminary data, premiums are forecast to increase by a median 15% in 2026, with some insurers proposing rate increases as high as 21%.
Q: Who will be most affected by the expiration of subsidies and rising premiums?
A: Low-income Texans will be especially hard-hit by the expiration of subsidies and rising premiums, as they may struggle to afford the increased costs of health insurance.
Q: What is the potential consequence of the “death spiral” in marketplace insurance?
A: If enough healthier enrollees drop their plans due to the expiration of subsidies, insurers may raise premiums for the remaining enrollees, leading to a cycle of ever-rising prices and ever-increasing dropouts, ultimately destabilizing the marketplace insurance system.
