Ten Democratic-leaning states are using their own money to help people buy Obamacare health plans, at least partially replacing the federal tax credits that expired at the end of last year.

The state assistance, some of it offered through programs that existed before the federal subsidies expired, is helping hundreds of thousands of people lower their monthly premium payments, which otherwise would have surged to double or even triple what they were before the expiration of the federal aid. The savings can total hundreds of dollars per month.

But only New Mexico is completely filling the gap left by the expiration of the federal help by offering it to people of all incomes; for most Americans buying Obamacare plans, the end of the federal aid means much higher prices. And New Mexico and the other states that are trying to cushion the blow for their residents will face increasing budget pressures as health care costs continue their inexorable rise.

In addition to the expiration of the federal subsidies, the cost of Obamacare coverage has increased because of other factors, including labor shortages and the rising cost of prescription drugs, driven in part by the growing demand for GLP-1 drugs such as Ozempic and Wegovy.

The enhanced federal subsidies were made available by the American Rescue Plan Act in 2021 and later extended through the end of 2025 by the Inflation Reduction Act. Designed as a temporary pandemic-era measure, they helped boost the number of people buying health coverage from the insurance marketplaces created under the Affordable Care Act — Obamacare’s formal name — from 11.4 million people in 2020 to 24.3 million last year.

The enhanced subsidies were available to everyone, regardless of income. Additional federal aid provided to some of the lowest-income households entirely eliminated premium payments for some people.

Congressional leaders let the subsidies expire on Dec. 31. As of the end of last month, the number of people enrolled in marketplace coverage was down by about 1.2 million compared with last year, according to federal data.

Last year, the Congressional Budget Office estimated that the expiration of the federal subsidies would increase the number of people without insurance by 4.2 million by 2034.

Under the Affordable Care Act, each state can either use the federal government’s online insurance marketplace, HealthCare.gov, or operate its own state-run exchange. Only the 21 states plus the District of Columbia with state-run marketplaces can offer state-funded tax credits or subsidies, and at least 10 of them (California, Colorado, Connecticut, Maryland, Massachusetts, New Jersey, New Mexico, New York, Vermont and Washington) are doing so.

Matt McGough, a policy analyst at health care research group KFF, said many of the people who buy Obamacare plans “have fallen between the cracks of the health care system.”

“They might not work a job or work enough hours at a job to be eligible for health benefits. They are too young for Medicare. They make too much to be eligible for Medicaid, and they really have no other option but to go to the marketplace,” McGough said.

He warned that relatively healthy people are the ones most likely to forgo marketplace coverage rather than pay more for it. That will leave the exchanges with the people who have the greatest health needs, raising costs and premiums for everyone. To avoid that scenario, he said, states “want to be able to keep as many people in the marketplace as possible.”

A big commitment in New Mexico

In New Mexico, Democratic Gov. Michelle Lujan Grisham and state lawmakers earlier this year tapped the state’s 5-year-old Health Care Affordability Fund for an additional $17.3 million so they could entirely replace the expired federal subsidies through June 30 for all enrollees, regardless of income.

The vast majority of the 82,400 New Mexicans who buy coverage from the state marketplace are eligible for state help. Perhaps as a result, New Mexico is one of only a handful of states where the number of people buying Obamacare plans has increased this year: Enrollment is up 18% in New Mexico, while there have been single-digit increases in the District of Columbia, Maryland and Texas.

“We feel really great about having come together to really focus on these affordability challenges for New Mexicans, and really proud of the gains that we’ve made in coverage while we’re seeing losses elsewhere,” said Kari Armijo, cabinet secretary for the New Mexico Health Care Authority. She noted that a handful of Republican state lawmakers have joined Democrats in supporting the aid.

The money in New Mexico’s Health Care Affordability Fund comes from a 3.75% surtax levied on insurance companies. When the fund was created, the surtax was expected to generate about $165 million in new revenue annually.

Currently, the state uses nearly half of the revenue from the surtax to fund other parts of its budget. But the New Mexico House earlier this month approved a bill that would gradually increase the portion of the surtax allocated to the Health Care Affordability Fund, from the current 55% to 100% in 2028.

Legislative financial analysts recently questioned the long-term sustainability of that approach. Armijo acknowledged that continuing to replace the expired federal subsidies “will deplete the fund over time.”

“It is a pretty substantial amount of money, and it is going to strain the programs that we can provide with that funding,” Armijo said.

Paul Gessing, president of the Rio Grande Foundation, a conservative-leaning think tank in New Mexico, said the state is “flush with oil and gas money” now, enabling it to “spend money in ways that don’t make a great deal of sense for the population as a whole and instead benefits a small sliver of relatively well-off New Mexicans.”

Gessing said the state should focus on reducing health care spending by recruiting and retaining more doctors and nurses to lessen its shortage of providers and by overhauling medical malpractice laws.

“I don’t think the state should make it a practice to use state funds to fill in the gap when federal funding is shifted or eliminated,” Gessing said.

Other states

In California, where 1.9 million people were enrolled on the state’s exchange in 2025, enrollment is already down by 32% from last year, according to state figures.

The state has opted this year to spend $190 million to fully replace the lost federal subsidies for people earning up to 150% of the federal poverty level ($23,940 for an individual), and partially replace them for people making between 150% and 165% of the federal poverty level — just above eligibility for Medicaid in the state. About 390,000 enrollees are receiving the state-based subsidies this year.

Like New Mexico, California in 2021 created a Health Care Affordability Reserve Fund, funded through general revenue and penalties some people have to pay when they file their taxes.

The state budget Democratic Gov. Gavin Newsom proposed last month envisions a “modest projected deficit” of $2.9 billion for fiscal year 2026-2027, but that could grow to $22 billion the next year. California has a total annual budget of about $350 billion.

“Any amount of money that you can put into affordability is meaningful,” said Jessica Altman, executive director of California’s marketplace. “Thinking about those trade-offs is a challenging conversation, but an important one at the state level.”

In Colorado, the state is offering financial help through a new program called the Colorado Premium Assistance program. It came together during an August 2025 special session, when Colorado lawmakers approved up to $110 million this year to partially replace the federal subsidies. Help will be available to anyone making between 133% and 400% of the federal poverty level, or between $43,890 and $132,000 for a family of four.

“It is clear that this is a value for Coloradans. And having a state based marketplace like we do in Colorado, it really allows us to develop state-specific solutions and have our policies and changes driven by the needs of the people who live here,” said Nina Schwartz, chief policy and external affairs officer for Colorado’s marketplace.

Schwartz emphasized, however, that the state help won’t entirely replace the expired federal aid, and that as a result, the number of people buying coverage on the exchange is declining. Cancellations are up 83% compared with last year.

“We’re seeing an increase in the number of cancellations, with the number of people nearly doubling who canceled their plans during open enrollment compared to last year,” she said.

Other states also are opting for limited assistance. Connecticut, for example, is offering aid to households with incomes up to 200% of the federal poverty level, and the state announced it would spend $115 million in 2026 to partially offset the expiration of the federal subsidies.

Massachusetts has set aside $250 million to enhance its existing state subsidy program, helping to keep around 270,000 enrollees with incomes below 400% of the federal poverty level enrolled with stable premiums. As of early January, around 25,000 people in Massachusetts had already canceled their marketplace plans.

Maryland has a new premium assistance program that fully replaces the federal aid for enrollees earning below 200% of the federal poverty level and partly replaces it for those earning between 200% and 400% of the federal poverty level. Since last year, New York has offered help to marketplace enrollees with incomes up to 400% of the federal poverty level. And since 2023, Washington has offered state subsidies to anyone earning below 250% of the federal poverty level.

Stateline reporter Shalina Chatlani can be reached at schatlani@stateline.org. 

A patient registers for care at a mobile dental and medical clinic in August 2025. Nationwide, the number of people buying health plans on Obamacare insurance marketplaces is down by about 833,000 compared with a year ago, according to state and federal data. (Photo by Spencer Platt/Getty Images)

Nationwide, the number of people buying health plans on Obamacare insurance marketplaces is down by about 833,000 compared with a year ago, according to federal data released this week.

Many states are reporting fewer new enrollees, more people dropping their coverage, and more people choosing cheaper and less generous health insurance plans with higher deductibles.

Across most states, Thursday was the last day to enroll for plans that start in February. But nine states and Washington, D.C., have deadlines later this month, so the numbers could change.

There are 21 states with state-run health insurance marketplaces, and the rest use the federal website. The vast majority of states have seen declines in enrollment so far, compared with around this time last year.

Preliminary data released Monday by the federal Centers for Medicare & Medicaid Services shows 22.8 million enrollees, down from a record total of 24.3 million last year.

Premiums have surged as a result of the expiration of enhanced federal subsidies first made available by the American Rescue Plan Act in 2021 and later extended through the end of 2025 by the Inflation Reduction Act. The availability of the subsidies spurred a sharp increase in the number of people buying health plans on the marketplaces. In 2020, 11.4 million people were enrolled in marketplaces through Obamacare, formally known as the Affordable Care Act. More than double that amount enrolled last year.

Congress failed to reach an agreement on extending the subsidies before the end of last year and still hasn’t reached one. As a result, premiums were expected to increase this year by 114% on average — from $888 last year to about $1,904, according to estimates made in September by health policy research organization KFF.

The higher costs appear to be driving many people to forgo insurance or opt for cheaper, less generous plans this year, health officials and analysts say. Several states with state-based marketplaces — including Georgia, Illinois, Minnesota, New York, Vermont, Virginia and Washington — are reporting fewer enrollments this year in comparison with enrollments through early January 2025, according to early data. Other states, such as California, are reporting fewer new enrollees.

“It’s important to consider that this is preliminary data, so this represents people who have signed up and selected the plan — but they probably haven’t received their first premium bill,” said Elizabeth Lukanen, executive director of the health policy research organization State Health Access Data Assistance Center at the University of Minnesota. “Once that happens, I think there’s concern — and it seems very possible — that people may decide to drop coverage. So, the decline could get bigger.

“On the other hand, open enrollment hasn’t closed, so you have two things sort of competing. It seems pretty likely that there will be a decline,” she said.

If the downward trend continues, the nation could see the first decline in enrollment since 2020, Lukanen said, adding that a full picture of income levels and demographics of people who have dropped coverage won’t be clear until the summer.

In Pennsylvania, data updated through Tuesday shows more than 15,000 previously enrolled adults between the ages of 55 and 64 have dropped coverage entirely — the most of any age bracket.

Pennsylvania’s state-based exchange, Pennie, has seen about 15% fewer new enrollments compared with last year. The state is also reporting 1,000 residents dropping coverage per day during open enrollment — with the most coverage losses among people with incomes 150% to 200% of the poverty level. These could include families of two adults and two children with an income between $48,225 and $64,300.

The state is seeing an “unprecedented” number of previously enrolled people dropping coverage, said Devon Trolley, executive director of the Pennsylvania Health Insurance Exchange Authority.

California is reporting 31% fewer new enrollees this year compared with last year, and more than a third of new enrollees are choosing bronze plans — the lowest, least generous coverage tier — up from less than a quarter at this time last year.

In Minnesota, data as of Dec. 3 shows more than half of active enrollees are opting to keep their coverage tier. But of those changing plans, more than a third — 37% — are going to cheaper plans. The state notes a full picture won’t be available until March.

Meanwhile, some states are seeing roughly the same number of enrollees or more. Texas, for example, is reporting about 4.1 million people enrolling this year compared with 4 million last year.

Charles Miller, health and economic mobility policy director at Texas 2036, a policy research nonprofit, said it’s unclear why enrollments are up, but pointed to some clues.

“Texas had a uniquely large population of uninsured individuals eligible for free and inexpensive plans that hadn’t enrolled previously … [and] has more affordable bronze and gold plans than many states,” he said.

He attributes that to a bipartisan state law, enacted in 2021, that had the effect of increasing subsidies for those plans, Miller said.

Nevada is seeing fewer enrollees overall. But compared with this time last year, the state is seeing 29% more people who are actively shopping the website to explore plans, said Katie Charleson, communications officer at the Nevada Health Authority Division of Consumer Health Services.

The state introduced a new public option, according to the Nevada Current, and health officials told lawmakers last week that about 1 in 5 active shoppers are opting for that plan.

In addition to the expiration of the subsidies, the cost of coverage has risen because of other factors, according to insurers. They say they’ve had to raise premiums because of rising prescription drug costs, inflation and workforce challenges, such as provider shortages.

But the enhanced premium tax credits were aimed at buffering those year-to-year changes for Americans with lower incomes, said Trolley, adding that the tax credit structure “helps make sure that [enrollees] don’t see those really larger drops that happen from time to time, sort of from those market forces.”

“When there are broader rate increases of … the total cost of the coverage, the tax credits are structured so that people who get a tax credit don’t feel a lot of that increase. They’re sort of sheltered from it on a year to year basis,” Trolley said. “The tax credit is tied to someone’s income and limits what they pay as part of their income, not necessarily tied to the cost of the coverage.”

She added that she’s also heard from some residents who say they are waiting to enroll in a plan to see if Congress takes action.

“People are leaving the ACA marketplace because the trade-offs have just become harder to justify,” Lukanen said. “What worries me is that when the coverage becomes unaffordable, it isn’t that people suddenly stop needing care. They just lose the protection that insurance offers, and those health care costs don’t go away.”

Lukanen added that if more people forgo coverage, health care services may end up costing the nation more overall.

“If people are going to the doctor and they don’t have insurance, these costs are then just shifted. They’re shifted to hospitals, ultimately to the community and the taxpayer.”

Trolley echoed that, saying she’s concerned about the overall burden on providers in rural counties, which are seeing the highest drops in Obamacare coverage in Pennsylvania.

“Any increase in the uninsured rate is going to further strain providers that are in rural areas, especially — further strain their financial situation,” she said. “We are very concerned about that in Pennsylvania.”

Stateline reporter Nada Hassanein can be reached at nhassanein@stateline.org.

The U.S. Capitol in Washington, D.C., on Oct. 1, 2025. (Photo by Jennifer Shutt/States Newsroom)

WASHINGTON — Republican leaders in the U.S. House will face a floor vote in early 2026 on Democrats’ plan to extend enhanced Affordable Care Act tax credits for three more years, after passing their own legislation Wednesday night that has little chance of a future in the Senate and does not address the tax credits.

The House vote on that legislation will be required after a handful of moderate Republicans signed on to a discharge petition Wednesday morning. Their dissent with leadership sent a strong signal they are frustrated with the majority’s policies and the rising cost of health care for their constituents. 

Speaker Mike Johnson, R-La., said after a morning vote series on the floor, where he was seen in a heated exchange with Republican Rep. Mike Lawler, that the two “just had some intense fellowship” and “it’s all good.”

Lawler is one of the four centrist Republicans who signed the discharge petition, putting it over the threshold of 218 to force a vote on the legislation. 

“We’re working through very complex issues as we do here all the time,” Johnson said. “Everybody’s working towards ideas — we’re keeping the productive conversation going.” 

The speaker also mounted his own defense, saying he has “not lost control of the House.”

That chamber has seen chaos and intraparty divides in the aftermath of the government shutdown, when Johnson opted to send lawmakers home for nearly two months. 

“We have the smallest majority in U.S. history,” Johnson said. “These are not normal times — there are processes and procedures in the House that are less frequently used when there are larger majorities, and when you have the luxury of having 10 or 15 people who disagree on something, you don’t have to deal with it, but when you have a razor-thin margin, as we do, then all the procedures in the book people think are on the table, and that’s the difference.”

Republicans push through ‘extremely modest’ bill

House debate on Republican leaders’ health care bill later in the day was largely along party lines, with members of both parties talking nearly as much about the Affordable Care Act as they did about the policy in the new legislation. 

Energy and Commerce Committee Chairman Brett Guthrie, R-Ky., said he believes that law, enacted during President Barack Obama’s first term, “has proven to be unaffordable and unsustainable.” 

Guthrie rebuked Democrats for approving the enhanced ACA marketplace tax credits during the coronavirus pandemic and scheduling them to expire at the end of this year, leading to the current deadlock in Congress. 

“Democrats leveraged a public health emergency to shovel hundreds of billions of dollars to big health insurance plans to mask the risk of rising unaffordability of coverage,” Guthrie said.

House Minority Leader Hakeem Jeffries, D-N.Y., urged Johnson to put the three-year ACA extension bill up for a vote this week, instead of in the new year. 

“Republicans need to bring the Affordable Care Act tax credit extension bill to the floor today,” Jeffries said. “Under no circumstances should we leave this Capitol this week, before voting on an extension of the Affordable Care Act tax credit bill that we know will pass.” 

California Republican Rep. Kevin Kiley, one of the centrists looking for bipartisan solutions on the expiring tax credits, expressed dismay at how debate on health care costs has been handled during the past few months by leaders in both political parties. 

“This whole issue encapsulates what is wrong with this institution, where party leaders focus most of their time and energy on trying to blame problems on the other side rather than trying to solve those problems,” Kiley said. 

The House Republican bill, he said, is “extremely modest and it has no chance of becoming law because it was hastily thrown together without, apparently, any bipartisan input when bipartisan support is necessary to pass any measure like this.”

“What are we supposed to tell these folks? ‘Oh, don’t worry, it’s Obama’s fault.’ Or, ‘Oh no don’t worry, we did a show vote on this Lower Health Care Premiums for All Americans Act.’ Is that going to be any consolation?” Kiley said. 

New Jersey Democratic Rep. Frank Pallone called the House GOP bill a “sham” and said without a vote to extend the expiring ACA tax credits millions of Americans will have to decide if they can afford health insurance coverage. 

“They will see prices double, triple and even quadruple,” Pallone said. “It will leave millions with the difficult decision of going without coverage because they simply cannot afford rising costs.”

The House voted 216-211 to approve the Republican health care bill, sending it to the Senate, where it’s highly unlikely it would get the bipartisan support needed to advance without significant revision. 

Senate approach

Senate Majority Leader John Thune, R-S.D., said earlier in the day he hadn’t yet decided whether to put the House Democrats’ bill on the floor if it is passed and arrives. 

“Well, we’ll see. I mean, we obviously will cross that bridge when we come to it,” Thune said. “Even if they have a sufficient number of signatures, I doubt they vote on it this week.”

Thune said the discharge petition on the three-year ACA tax credits extension is far different from the discharge petition that forced a House floor vote on a bill to require the release of the Epstein files. Files related to Jeffrey Epstein, who died in jail in 2019 awaiting federal trial on sex trafficking charges, have become a target of Congress and victims in recent months.

“That came over here pretty much unanimously, 427 to 1,” Thune said. 
“And my assumption is this discharge petition is going to be a very, probably, partisan vote.”

The Senate voted earlier this month on Democrats’ three-year ACA tax credits legislation, a move that Thune agreed to in order to get enough Democratic votes to end the government shutdown. That bill, which is identical to the House version, was unable to get the 60 votes needed to advance on a 51-48 vote. 

Both chambers are set to leave Capitol Hill later this week for their two-week winter break and won’t return to work until the week of Jan. 5. 

‘We have to do something’ 

Sen. Jeanne Shaheen said she sees the House discharge petition reaching the 218-signature threshold as “constructive.” 

The New Hampshire Democrat said “bipartisan, bicameral talks continue that are also constructive, so hopefully we can see some movement.” 

Though she is “hopeful” for a deal in January, Shaheen said “obviously, there’s a lot that needs to happen in order to get something done, but people need relief,” adding that “people in both houses and on both sides of the aisle are hearing from constituents that they want to see something done.” 

Missouri Sen. Josh Hawley — one of four Republicans who voted with Democrats to advance the three-year extension plan — reiterated his calls for lawmakers to take action to address the looming premium spikes. 

“I just think we have to do something on the cost of premiums, and I’m not locked into any one thing,” he said, acknowledging that he voted for both Democrats’ proposal and his GOP colleagues’ alternative bill. That effort also failed, at 51-48, to garner the 60 votes needed to move forward.  

“I mean, advance any solution — that’s my view, but what I think we should not do is just sit back and say, ‘Well, you know, good luck. We wish you all the best.’” 

Frustration breaks through

The House Republican bill, which Johnson released Friday evening, doesn’t extend the enhanced ACA marketplace tax credits.

It would require Pharmacy Benefit Managers “to provide employers with detailed data on prescription drug spending, rebates, spread pricing, and formulary decisions—empowering plans and workers with the transparency they deserve,” according to a summary in Johnson’s release. 

Starting in 2027, the legislation would appropriate funding for cost sharing reduction payments that the summary said would reduce health insurance premiums and stabilize the individual market. 

Johnson decided Tuesday not to allow the House to debate any amendments to the bill, blocking moderate Republicans from having their bipartisan proposal to extend the ACA marketplace tax credits with modifications taken up. 

That led to considerable frustration, and Wednesday morning, Pennsylvania Republican Reps. Brian Fitzpatrick, Rob Bresnahan and Ryan Mackenzie, along with New York’s Lawler, signed the Democrats’ discharge petition, putting it at the 218 signatures needed to force a floor vote in that chamber. 

“We’ve worked for months with both parties, in both chambers, and with the White House, all in good faith, to balance all equities and offer a responsible bridge that successfully threaded the needle,” Fitzpatrick wrote in a statement.   

“Our only request was a Floor vote on this compromise, so that the American People’s voice could be heard on this issue,” Fitzpatrick added. “That request was rejected. Then, at the request of House leadership I, along with my colleagues, filed multiple amendments, and testified at length to those amendments. House leadership then decided to reject every single one of these amendments. As I’ve stated many times before, the only policy that is worse than a clean three-year extension without any reforms, is a policy of complete expiration without any bridge. Unfortunately, it is House leadership themselves that have forced this outcome.”

Jeffries introduced petition

The discharge petition, introduced last month by House Democratic Leader  Jeffries, sat just below the signatures needed for weeks as centrist Republicans tried to broker a deal that could become law. 

When that logjam broke with the moderates’ signatures, it set up a House floor vote, but any legislation must move through the Senate as well and gain President Donald Trump’s signature. 

Without a law to extend the enhanced ACA marketplace subsidies, roughly 22 million Americans will see their health insurance premiums spike by thousands of dollars next year, if they can fit the rise in costs into their budgets.