Andrea Deutsch stands in her pet store in Narberth, Pa. Deutsch is one of the millions of people who receive federal aid to help them pay their health insurance premiums on an Affordable Care Act exchange. The extra help is set to expire at the end of 2025, and states say they don’t have the money to replace it. (Courtesy of Andrea Deutsch)

Andrea Deutsch, the mayor of Narberth, Pennsylvania, and the owner of a pet store in town, doesn’t get health care coverage through either of her jobs. Instead, she is enrolled in a plan she purchased on Pennie, Pennsylvania’s health insurance exchange.

Deutsch, who has been mayor since 2018, is paid $1 per year for the job. Her annual income, from Spot’s – The Place for Paws and her investments, is about $50,000. The 57-year-old, who is diabetic, pays $638.38 per month for health care coverage — about half of the $1,272.38 she’d owe without the enhanced federal subsidies Congress and the Biden administration put in place in 2021.

But that extra help is set to expire at the end of 2025. It would cost an estimated $335 billion over the next decade to extend it — a step the Republican-controlled Congress and the Trump administration are unlikely to take as they seek budget savings to offset potential tax cuts.

States say they don’t have the money to replace the federal aid. In Pennsylvania, for example, doing so would take about $500 million per year, according to Devon Trolley, the executive director of the state’s exchange.

“That is a significant amount of money, an insurmountable amount of money,” Trolley said.

The disappearance of the federal help would make coverage unaffordable for millions of Americans, including Deutsch. She said it would be a struggle to pay double what she is paying now.

“You try not to go bankrupt by the end of your life,” Deutsch told Stateline. “You need assets to take care of yourself as you get older and to have a little bit of security.”

Enhanced subsidies

The 2010 Affordable Care Act included some subsidies to help people purchase health insurance on the exchanges created under that law. Under the enhanced subsidies that started in 2021, some people with lower incomes who qualified for the original subsidies have been getting bigger ones. And those with higher incomes, who wouldn’t have been eligible for any help under the original rules, are now receiving assistance.

Thanks to the enhanced subsidies, people making up to 150% of the federal poverty level, or $22,590 for an individual, are now getting free or nearly free coverage. And households earning more than four times the federal poverty level, who didn’t qualify for subsidies before, are getting some help.

The enhanced aid also has helped push ACA marketplace enrollment to record levels, reaching more than 21 million this year. Southern states that have not expanded Medicaid as allowed under the ACA have seen the most dramatic growth in marketplace enrollment since 2020, according to KFF, a health policy research organization. The top five states with the fastest growth are Texas (212%), Mississippi (190%), Georgia (181%), Tennessee (177%) and South Carolina (167%).

If the enhanced subsidies go away, premium payments will increase by an average of more than 75%, according to KFF. Some people, like Deutsch, would see their payments double.

Given those premium hikes, millions of Americans would no longer be able to afford the coverage they’re getting on the exchanges, according to the nonpartisan Congressional Budget Office. CBO estimates that enrollment would drop from 22.8 million in 2025 to 18.9 million in 2026 to 15.4 million in 2030. Some of those people would find coverage elsewhere, but others would not.

Edmund Haislmaier, a senior research fellow at the conservative Heritage Foundation, said Republicans view the expiration of the enhanced subsidies as “an opportunity to rework and address some of the basic flaws in the ACA.”

Before the ACA, Haislmaier said, many self-employed people, such as small-business owners and freelancers, were able to find their own private insurance at competitive prices. But the health care law destroyed that market, he said, leaving such people with a selection of expensive and subpar plans.

Haislmaier said it would take time for the Trump administration to determine how it wants to change the ACA — which President-elect Donald Trump unsuccessfully tried to repeal during his first term — but that “you can do that in a way that preserves access and preserves subsidies for the lower-income people who were the primary focus of the ACA.”

States’ limitations

But Jared Ortaliza, a research associate at KFF, said letting the enhanced subsidies expire could result in higher premiums for everyone. That’s because higher prices likely would prompt many healthier people to forgo insurance, he said. Their departure would leave only chronically ill people on the exchanges, and the cost of their care is higher.

“If sicker enrollees need coverage because they need care, they’ll still choose to buy it, potentially. And if the market were sicker as a whole, that could drive premiums upward as well,” Ortaliza told Stateline.

Ortaliza said states might consider keeping premiums down through so-called reinsurance, or reimbursing insurers for their most expensive enrollees. Theoretically, they also could try to replace the expiring federal aid with their own money.

But few if any states have the financial flexibility to do that, said Hemi Tewarson, executive director of the nonpartisan National Academy for State Health Policy.

“There might be a couple states who don’t have current state subsidies that might add that, but that will be very nominal,” Tewarson told Stateline, adding that officials from different states have been discussing potential solutions. “They are all assuming that they would just have to absorb the loss of coverage across the population.”

Trolley, the head of the Pennsylvania exchange, said her state is working to provide its own subsidy to make the marketplace plans even more affordable. But even when fully implemented, it would spend only $50 million on that help, a tenth of what it would need to replace the federal aid.

Two-thirds of the 435,000 Pennsylvanians who purchase insurance on the marketplace joined after the enhanced federal subsidies were put in place in 2021. If they expire, Trolley said, she worries that 100,000 or more exchange participants will leave.

Jessica Altman, executive director of California’s exchange, said her state is in a similar situation. California currently receives $1.7 billion annually in enhanced subsidies from the federal government and spends an additional $165 million of its own money to keep costs down.

California estimates that if the subsidies expire, monthly premiums for the state’s enrollees would increase by an average of 63%. More than 150,000 people would no longer be eligible for federal help, and between 138,000 and 183,000 would disenroll, the state estimates.

Stateline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains editorial independence. Contact Editor Scott S. Greenberger for questions: info@stateline.org.

The extra federal extra help is set to expire at the end of 2025. It would cost an estimated $335 billion over the next decade to extend it — a step the Republican-controlled Congress and the Trump administration are unlikely…

The extra federal extra help is set to expire at the end of 2025. It would cost an estimated $335 billion over the next decade to extend it — a step the Republican-controlled Congress and the Trump administration are unlikely…

Workers sort peaches at a packing house after they were harvested from the trees of a Georgia farm in July 2023. Georgia has work requirements under its partial expansion of Medicaid, but its program has fallen far short of enrollment projections and has cost more than $26 million. (Joe Raedle/Getty Images)

Trevor Hawkins, an attorney at Legal Aid of Arkansas, remembers how busy his job got when the state for a time imposed work requirements on Medicaid recipients: His office was swamped with frantic phone calls from people who said they couldn’t comply with the new rule because they weren’t healthy enough to work or had to care for sick relatives.

“A whole heap of folks, after a month or two, started getting notices saying, ‘Hey, you’re out of compliance, and you’re going to lose your coverage,’” Hawkins told Stateline. For many people, he said, keeping their coverage was “absolutely vital to maintaining their health or getting better so they might work again.”

In June 2018, Arkansas became the first state to require some Medicaid recipients to work, volunteer, go to school or participate in job training to receive benefits. By the time a federal judge halted the policy in April 2019, 18,000 adults had lost coverage.

Arkansas was one of 13 states that received permission to impose work rules on at least some Medicaid recipients during the last Trump administration. Nine additional states requested permission to enact Medicaid work requirements during Trump’s term but had not won approval by the time it ended.

When the Biden administration came into office, it rescinded all the approvals. But now that Trump is coming back, many of those states will try again — and they’ll have a supportive U.S. Congress in their corner.

Republicans on Capitol Hill are eager to find ways to pay for extending tax cuts enacted during Trump’s first term in office, and Medicaid — funded jointly by the federal government and the states — is in their sights. Requiring states to establish Medicaid work rules, as many Republicans would like to do, would cut federal spending by an estimated $109 billion over a decade, according to the Congressional Budget Office. That’s because the cost for about 900,000 people would shift entirely to states, while another 600,000 people would become uninsured, CBO estimated. About 72.4 million people are enrolled in Medicaid.

Arkansas renewed its efforts even before Trump’s victory. Last year, Republican Gov. Sarah Huckabee Sanders requested federal approval from the Biden administration to apply work rules to able-bodied adults who are covered through the state’s expansion of Medicaid under the Affordable Care Act, and who are enrolled in health plans that Arkansas Medicaid purchases for them on the state’s health insurance exchange. That application is pending.

Georgia, after prevailing in a legal fight with the Biden administration, already has work requirements in place for people covered by its partial expansion of Medicaid. And Idaho, Mississippi, Oklahoma, South Dakota and Tennessee have pending requests to require at least some of their Medicaid recipients to work.

Meeting requirements

Supporters say requiring Medicaid recipients to work, study or train for a career gives them a boost toward self-sufficiency and financial stability. Kristi Putnam, the secretary of the Arkansas Department of Human Services, said in a statement announcing her state’s latest request that it would challenge people to “embrace economic opportunities that can lead to true job advancement.”

“Meaningful work connects people to purpose — and through the pandemic we have seen negative mental health impacts from people feeling disconnected,” Putnam said.

Critics, however, say such rules end up hurting far more people than they help. In a 2020 study examining how the Arkansas work requirements played out, researchers from the Harvard T.H. Chan School of Public Health “found no evidence that the policy succeeded in its stated goal of promoting work and instead found substantial evidence of harm to health care coverage and access.”

More than 95% of the Arkansas beneficiaries the researchers surveyed already met the work requirement or should have qualified for an exemption. The main reason people lost coverage, the researchers found, was because they had trouble verifying that they were complying with the rules. Many of those who lost their coverage stopped taking their medications, delayed care and fell into medical debt.

“Our results should provide a strong note of caution for federal and state policy makers considering work requirement policies in the future,” the researchers concluded.

Under the rules Arkansas put in place during the first Trump administration, Medicaid participants under age 50 had to report that they spent at least 80 hours each month working, attending school, in job training or volunteering. The rule only applied to people who became eligible after Arkansas expanded Medicaid under the ACA to cover adults making up to 138% of the federal poverty level. And people were exempt if they were pregnant, had a child under 18 at home, were disabled, had to care for a person unable to care for him or herself, were in alcohol or drug treatment, or were in school or job training full time.

About 70,000 of the roughly 270,000 Arkansans on Medicaid were subject to the new rules, and about 1 in 4 of those lost coverage.

Unlike Arkansas, Georgia has not expanded Medicaid under the Affordable Care Act. But its Pathways to Coverage program, launched in July 2023, allows people with household incomes up to 100% of the federal poverty level who aren’t already eligible for Medicaid to enroll in the program if they fulfill work requirements. Georgia’s qualifying activities and exemptions are similar to the ones Arkansas had.

Fiona Roberts, a spokesperson for the Georgia Department of Community Health, told Stateline that as of Nov. 15, there were 5,548 people enrolled in the program and that a total of 7,518 people had been enrolled at some point — evidence, she said, that the program is helping people move from Medicaid to private insurance.

But in its first year, Pathways to Coverage only enrolled about 4,200 people — many fewer than the 25,000 the state had predicted. The cost of the program as of the end of 2023 was $26.6 million, and more than 90% of that went toward administrative and consulting costs, according to KFF, a nonprofit health research group. If Georgia had opted for a full expansion under the ACA, the federal government would have picked up 90% of the tab and the state would have covered about 359,000 people.

Leah Chan, director of health justice at the Georgia Budget and Policy Institute, said work requirements are particularly challenging for people living in rural areas.

“If you don’t have broadband internet at your house, you’re not going to be able to upload the documentation and your pay stubs,” Chan told Stateline. “Even eligible people can’t keep up with it, particularly in rural areas where there are additional barriers to participation.”

‘Learning from mistakes’

Benjamin Sommers, a professor of health care economics at the Harvard T.H. Chan School of Public Health and one of the authors of the Arkansas study, said the experience with work requirements there and in Georgia should give other states pause.

“All that ended up happening was people lost coverage due to red tape, became uninsured, and in some cases, we saw that they had worse access to health care,” Sommers said.

But Arkansas Republican state Rep. Aaron Pilkington, who serves on the health committee in his chamber, said Medicaid work rules are “100% on the table and something we’ll look to ask for from the Trump administration.”

“They can find work and get better health insurance through their employer,” said Pilkington. He said the volunteering and education options make the rules even more attractive.

Meanwhile, in some of the 10 states that have not expanded Medicaid under the ACA, the inclusion of work requirements might be the only way politically to get expansion over the finish line.

“Most of the Democrats I’ve spoken to did not want the work requirements, but to get it passed through the Mississippi legislature it’s most likely going to have one,” Mississippi Republican state Rep. Sam Creekmore told Stateline.

“We’ve looked at Georgia’s plan. We recognize the pitfalls and are hopefully learning from mistakes.”

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Stateline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains editorial independence. Contact Editor Scott S. Greenberger for questions: info@stateline.org. Follow Stateline on Facebook and X.