Democratic U.S. Sen. Chuck Schumer of New York, accompanied by Democratic U.S. Sen. Cory Booker of New Jersey, points to a poster depicting rising medical costs if Congress allows the Affordable Care Act tax credits to expire. (Photo by Andrew Harnik/Getty Images)

States are preparing for the possibility of a rapid shift in the cost of Obamacare health plans, depending on whether Congress extends the subsidies that are at the center of the federal government shutdown.

No matter what Congress does, the amount insurers charge for coverage sold on the marketplaces created by the Affordable Care Act will increase by an average of 26% in 2026, according to KFF, a health research nonprofit. In the 30 states that use the federal Healthcare.gov, premiums will rise by an average of 30%. In the states that run their own marketplaces, the average increase will be about 17%.

But 22 million of the 24 million people who are enrolled in marketplace plans receive a tax credit. If Congress extends the credits, the amount subsidized enrollees pay each month won’t significantly change, even as insurers charge more.

If Congress doesn’t act, people with incomes below 400% of the federal poverty level will receive less financial help, while people making more than that amount will not get any help at all. As a result, according to KFF, monthly premium payments for all enrollees will increase by an average of about 114%,

For a month, Republicans and Democrats have been in a stalemate over whether to extend these subsidies, leading to a government shutdown. The situation has created ambiguity for the states that run their own marketplaces, as many of them move this weekend into the open enrollment period for people to purchase health plans.

Some states, such as Maryland, are preparing for a scenario in which they would either extend state-funded subsidies to enrollees to help them keep their plans, or rapidly apply federal subsidies if Congress extends them.

“It’s going to vary state by state based on their technological abilities and if they need to do anything with their rates,” Michele Eberle, executive director of the Maryland Health Benefit Exchange, said in a phone interview.

Eberle said Maryland created a state subsidy program to make up for some of the federal subsidies that are in limbo. She said that if Congress extends the subsidies, enacting changes for the state’s 240,000 marketplace enrollees could take around three weeks.

Maryland would have to ask health insurers to resubmit their rates. The state also might have to send notices to enrollees to give them the opportunity to change their choice of plan, according to Eberle.

“We would change [enrollees’] premiums. We would have to back out the state subsidy [that we] put in, if there’s a new rate, put the new rates in, recalculate the new premium tax credit and apply that,” Eberle said.

In California, where two million people are enrolled in Covered California, residents are already reeling from sticker shock after seeing next year’s premiums on the state’s website.

“People are very stressed about what to do and what their options are with these cost changes,” Jessica Altman, executive director of California’s marketplace, said in an interview. “At the same time, we are very much ready, and we’ll move any mountain that we can possibly move if Congress does act.”

Altman said the state will automatically recalculate what enrollees would pay for their plans if Congress extends the credits, and is prepared for people to want to change their plans if federal lawmakers act.

“We’re also very much going to want to inform our consumers and give them the opportunity to make a different choice,” she said.

Altman said notifying enrollees’ of changes should take a few weeks, but changing information in the state’s system should only take about a week.

“Even when the enhanced tax credits passed the first time, it was in the middle of the year, in the spring,” Altman said.

“All the state exchanges had to build that, and it was done in a matter of weeks, right? So, that’s who we are, and that’s how we’re thinking about this challenge.”

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

Medications are stored on shelves at a pharmacy in Los Angeles. States have gotten creative in trying to lower patients’ prescription drug copays by targeting different parts of the drug supply chain. (Photo by Eric Thayer/Getty Images)

In the absence of much federal action, states have enacted dozens of laws this year to lower prescription drug costs for their residents — and many more are considering following suit.

States cannot lower drug prices directly, but they can go after different parts of the drug supply chain to try to lower patients’ out-of-pocket costs and reduce excessive spending in state-run health plans.

Nearly two-thirds of the new state laws are aimed at pharmacy benefit managers — the drug middlemen who negotiate deals among the manufacturers that make the drugs, the insurers that allow the drugs to be prescribed, and the pharmacies that sell them.

Several states are considering drug affordability review boards. Others have passed laws to hold manufacturers and PBMs to higher transparency standards.

“So a lot of states went into looking at drug costs — trying to understand and follow the dollar,” said Maureen Hensley-Quinn, a senior program director at the National Academy for State Health Policy, a nonpartisan group that works on health policy issues. “Is it the price that manufacturers are setting? Is it the supply chain where there are different entities?”

Advocates of these laws say it’s up to states to take the lead as the federal government lags in compelling drug companies and insurers to lower prices for patients. But critics say some state interventions could lead to local pharmacies shuttering and may stifle innovation in the pharmaceutical industry, leading to fewer new drugs.

Laws targeting PBMs are wide-ranging in scope, requiring PBMs to pass discounts on to consumers or to be more transparent in their drug purchasing activities. Some states have created drug affordability review boards to assess manufacturers’ prices. Some laws aim to place copay caps on critical medications like insulin.

So far this year, at least 31 states have enacted nearly 70 laws designed to lower drug costs, according to a state drug affordability law tracker from the National Academy for State Health Policy.

“States have no leverage, really, to put pressure on manufacturers to lower their prices, and that’s why I think most of the legislation at the state level has been on the intermediaries, the supply chain,” said Geoffrey Joyce, chair of the Department of Pharmaceutical and Health Economics at the University of Southern California.

Those interventions can go a long way in trying to reduce patients’ expenses, he said.

“The concern [is] about, well, ‘States really can’t lower drug prices, per se,’ but they can,” Joyce said. “I think there’s been evidence.”

California Democratic Gov. Gavin Newsom in October signed legislation to cap the cost of insulin for people covered by state-regulated health plans, including the state’s Affordable Care Act marketplace, private health plans and its Medicaid program. The state also plans to start offering its own generic version of insulin, costing just $11 a pen, in January.

Colorado’s drug affordability review board capped the cost of a widely used rheumatoid arthritis medication.

And Maryland Democratic Gov. Wes Moore signed a law in May to expand the authority of the state’s drug affordability review board to lower prescription drug prices for all residents, not just state employees.

Pointing fingers

The federal government has taken some steps to lower prescription drug prices. The Inflation Reduction Act under the Biden administration created annual caps on out-of-pocket drug costs and capped the cost of insulin at $35 a month for patients with Medicare, the health care program that primarily serves people over 65. The law also gave the federal government more power to negotiate drug prices for Medicare patients.

President Donald Trump has promised to slash drug prices by percentages that some experts say are mathematically impossible. He threatened tariffs on manufacturers that import their drugs if they didn’t lower their prices, which led to a deal with biopharmaceutical company Pfizer. And in May, he signed an executive order designed to ensure the U.S. government can secure drugs at prices on par with other nations.

Kush Desai, a spokesperson for the White House, said in a statement that the Trump administration’s website, TrumpRx, which hasn’t yet launched, will lower drug costs by allowing people to purchase drugs directly from the manufacturer.

But some states are going further.

In October, Colorado became the first state to cap the price of a prescription drug for all consumers. Starting in 2027, new insurers and patients will pay no more than $31,000 a year for Enbrel, a drug that treats rheumatoid arthritis and other autoimmune diseases — a sharp decrease from the average insurance payment of $53,049 in 2023. Nearly 2,600 Coloradans used Enbrel in 2022, according to state research.

Colorado Democratic state Sen. Julie Gonzales, who sponsored the bill creating the state’s drug oversight board, said states have to deal with a lot of competing interests in the drug supply chain. When it comes to establishing who is setting high drug prices, she said, “everyone is pointing the finger at everyone else.”

It took four years from the law’s passage to set up the board and approve its first payment limit because there were so many special interests involved, she said. “We had to overcome a tremendous amount of angst and fear.”

Maine, Maryland, Minnesota, Oregon and Washington also have prescription drug affordability boards. New Hampshire created a board but dissolved it in July because of budget cuts.

In California, Newsom signed a bill this year to cap the consumer copay of insulin at $35 per month for all state-regulated health plans, after vetoing similar legislation in 2023. More than two dozen other states had already opted to cap insulin for state health plans. He also signed a PBM regulation bill that, among other provisions, requires pharmacy benefit managers to pass drug discounts on to payers and patients.

California Democratic state Sen. Scott Wiener, who sponsored the PBM and insulin bills, said states have the power to lower patients’ out-of-pocket expenses, even if they can’t force manufacturers to lower drug prices.

“The federal government right now is a disaster zone when it comes to health care,” Wiener said. “That’s why it’s more important for the states to step up.”

Other states such as Illinois, Iowa and Louisiana enacted similar PBM laws this year, according to the National Academy for State Health Policy.

A complicated system

The system for developing, selling and distributing prescription drugs is complex.

Pharmaceutical companies determine the initial costs of drugs, but are often accused of setting prices too high. Pharmacy benefit managers say they exist to negotiate lower drug prices, but are often accused of pocketing discounts or engaging in predatory practices. Meanwhile, health insurers pay for the drugs and decide what copays patients may end up with, and are often accused of not reimbursing enough.

Experts note that three pharmacy benefit management companies — CVS Health, Cigna and United Health Group — dominate the PBM industry, which adds to concerns about their market power.

“There’s also some truth to the fact that this industry is very concentrated, and there’s not a lot of transparency around how much money they’re making and how they make their money, and if that’s being shared back with plans and with consumers,” said Pragya Kakani, a health economist specializing in drug policy at the Weill Cornell Medical College.

The pharmaceutical industry typically opposes drug affordability boards.

In Colorado, Amgen Inc., the manufacturer of Enbrel, sued the state in 2024 over its drug affordability review board, alleging that a price cap would cause economic harm to the company. A federal district court dismissed the challenge in March.

“Instead of fixing the root causes of patient affordability concerns, the board has rushed into a reckless experiment,” Reid Porter, senior director of state public affairs for PhRMA, a group that represents pharmaceutical companies, wrote in an email statement in regard to the board’s upper payment limit. “Colorado is risking patient access and jeopardizing the development of new medicines.”

Porter argued that PBMs and health insurers, not drugmakers, drive high costs.

But PBMs say their negotiations lower costs.

“Big Pharma sets the price — and the price is the problem when it comes to Americans facing difficulty affording their prescription drugs,” Mike Baldyga, a spokesperson for the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, wrote in an email statement. “PBMs are the only entity in the drug supply chain that lower prescription drug costs on behalf of patients, and there is no correlation between the rebates they negotiate and list prices.”

Hensley-Quinn, of the National Academy for State Health Policy, noted the challenge of making drugs affordable and accessible.

“There is no silver bullet for lowering drug costs,” Hensley-Quinn said. “You have to balance being able to innovate and making sure that drugs are affordable so that what you have just created, which is life-changing, actually gets to the people that need it.”

But this challenge is in some ways expected and more evidence that states must take action, said Priya Telang, communications manager at the nonprofit advocacy group Colorado Consumer Health Initiative.

“Manufacturers point the finger at PBMs, and PBMs point the finger at insurers. And so it’s really hard to get a sense of who the actual bad players are all at the same time,” she said.

“And so that’s why it’s critical for affordability boards to exist, because they get to see the data, they get to see behind closed doors what the root causes are and really work to bring affordability to consumers.”

Drug affordability boards

When Mary Fowler Simmons, 54, was diagnosed with an advanced cancer three years ago, she had to give up her steady job as a state government worker in Virginia to go through months of expensive and painful treatment. Fowler Simmons survived and is cancer-free today, but is still reeling financially.

Fowler Simmons told Stateline that after being saddled with a hospital bill totaling over $323,000 and depleting her savings, she and her husband continue to pay around $300 a month — after insurance — for prescription medications to maintain her health.

Fowler Simmons, who also has Type 2 diabetes, says she wants her state and federal lawmakers to recognize that some Americans are having to choose between paying for their next meal or their necessary prescription drugs.

“They need to have more compassion for people. We’re not in the position that we are making millions, that we can afford this. We’re working-class people,” Fowler Simmons said. “I need them to actually consider what they are doing to the American people and just have affordable prescription drugs available.”

Otto Wachsmann, a Republican in the Virginia House of Delegates and a pharmacist, said that he doesn’t think there’s enough evidence yet that prescription drug affordability review boards work.

He said if states set upper payment limits on drugs, that doesn’t mean a pharmaceutical company would necessarily lower the cost. Rather, he says, pharmacies may just get reimbursed even less than the cost of the drug. This year Virginia lawmakers tried to create a drug affordability review board.

“There’s nothing to prevent the board from saying we’re only going to reimburse $100 for this prescription, although those pharmacies may have to pay $120 for the drug,” Wachsmann said in an interview.

He added that if review boards target expensive and rare drugs for which to set upper payment limits, they could stifle innovation.

“If those manufacturers think that those are the type of drugs that are going to get hit by these boards and they realize they’ll never get their investment back, they’re not going to develop those drugs anymore,” Wachsmann said.

Virginia Republican Gov. Glenn Youngkin vetoed a bill this year that would have created a drug affordability board in the state, saying in a statement, “This approach could limit access to treatments and hinder medical innovation, especially for life-threatening or rare diseases.”

Wachsmann had voted against the board. Instead, he says it’s better to target PBMs, because he said they are engaging in predatory practices that freeze out small pharmacies and leave consumers with nowhere to go.

Neighboring Maryland created the nation’s first drug affordability board in 2019; it got a boost of resources and revved up activities in 2023.

“It will not hurt pharmacists. It will help everybody except Big Pharma,” said Vincent DeMarco, president of health care advocacy group Maryland Health Care for All, in speaking about the state’s drug affordability review board.

The original bill creating the board only authorized the board to create upper payment limits for drugs purchased by states and local governments in Maryland. But this year, Moore signed a law to expand the authority of the board to create upper payment limits for everyone, except patients on health plans regulated by the federal government.

DeMarco said he’s hoping the board will move to create limits on two popular drugs prescribed for Type 2 diabetes, Jardiance and Farxiga.

“In addition to individuals who can’t afford their drugs, all of us pay the price in higher health insurance premiums, because a big part of our health insurance premiums is high-cost drugs,” DeMarco said.

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

An Afghan refugee caresses her 9-day-old infant inside the pediatric ward of a medical treatment facility in 2021 at Joint Base McGuire-Dix-Lakehurst, N.J. Refugees are among the lawfully present noncitizens facing the loss of federally funded health care coverage. (Photo by Barbara Davidson/Pool/Getty Images)

An estimated 1.4 million immigrants who are in the country legally but are not citizens stand to lose their government-subsidized health care coverage under the sweeping tax and spending bill President Donald Trump signed into law this summer, according to estimates from the nonpartisan Congressional Budget Office.

The One Big Beautiful Bill Act cuts federal spending on Medicaid, the joint federal-state health insurance program for low-income people. It also places new eligibility restrictions on lawfully present immigrants, including refugees and asylees, who are enrolled in a variety of government-subsidized health programs: Medicaid, the Children’s Health Insurance Program (CHIP), Medicare and Affordable Care Act marketplaces.

Immigrants who are in the country illegally have long been ineligible for federally funded health coverage.

But seven states — California, Colorado, Illinois, Minnesota, New York, Oregon and Washington — plus the District of Columbia have extended state-funded coverage to some income-eligible noncitizen adults regardless of their immigration status. Fourteen states plus the district provide state-funded coverage to noncitizen children whether they are here legally or not.

The new restrictions in the One Big Beautiful Bill Act, combined with other Trump policies limiting public benefits for immigrants, put those states in a financial bind. With less federal money to provide health benefits to immigrants who are here legally, states will be hard-pressed to maintain their programs that offer coverage to all immigrants, regardless of their legal status.

“We’re taking a giant step backwards from that public health and preventive health measure by excluding more people and draining federal resources from states that need it,” said Tanya Broder, a senior counsel specializing in immigrant health policy at the National Immigration Law Center, an advocacy group.

“And the result will be that our health — individually, as families and as communities — will be in jeopardy, and the health care infrastructure that serves all of us will also be compromised,” Broder said.

Already, some states that had offered health coverage aid to all immigrants — regardless of status — have been pulling back.

To help close a $12 billion deficit, California Democratic Gov. Gavin Newsom in June signed a state budget that bars immigrants who are here illegally from enrolling in the state’s Medicaid program, known as Medi-Cal. Current enrollees between the ages of 19 and 59 will have to pay a new $30 monthly premium beginning in 2027. In July 2026, the state will eliminate dental care for noncitizens.

Illinois in July ended its state-funded health coverage program for all immigrants ages 42 to 64. The state still operates a state-funded plan for residents 65 and older regardless of immigration status, but enrollment has been paused. And Minnesota also plans to exclude adult immigrants who are here illegally from a program that used to provide coverage regardless of immigration status.

New York is in an especially tough spot, since its state constitution prohibits discrimination against lawfully present immigrants in providing public benefits.

“States have had some type of leeway to fund resources for migrant communities if they want to,” said Medha Makhlouf, a law professor and the founding director of the Medical-Legal Partnership Clinic at Penn State Dickinson Law who studies immigrants’ access to health care. “But now this [federal] law makes it difficult for them to do that.”

Making it less attractive to stay

Jessica Vaughan, director of policy studies at the Center for Immigration Studies, a nonprofit group that backs stricter immigration policies, said these efforts are part of both Trump’s larger anti-immigration stance and “Congress’ interest in getting rid of any incentive or benefit for people who are in the country illegally.”

“It’s a way of making it less attractive for people to stay here illegally, right?” Vaughan said. “They’re trying to give people reasons to leave rather than reasons to stay.”

As noncitizens who are here legally lose access to federally funded benefits, the demand for state-funded coverage is “likely to increase,” Drishti Pillai, director of immigrant health policy at KFF, a health policy research group, told Stateline.

“However, at the same time, states are facing increasing budget pressures, especially with the Medicaid cuts,” Pillai said. “So it’s almost a double whammy, where there will likely be increased demand for state-funded coverage programs, but also states will have fewer resources to cover people.”

Makhlouf said the Trump administration’s policy changes reflect a broader strategy of stripping public benefits from marginalized and poor communities.

“Everyone who cares about access to health care needs to pay attention to what’s happening to immigrants,” she said. “When it becomes normalized to be able to sacrifice certain people’s humanity or their vulnerability, or to minimize their contributions to society, and say, ‘You don’t deserve access to health care,’ then that can be turned on to any group.”

Under Trump’s domestic policy law, California expects to lose at least $28.4 billion in federal Medicaid funding, according to Newsom’s office.

On the California Senate floor June 27, Democratic state Sen. María Elena Durazo expressed her sorrow at the state’s decision to deny coverage to immigrants.

“I can’t express how much joy I felt when we expanded basic health care,” Durazo said. “Today, that joy that I was so happy about, that joy has turned into pain, that joy has turned into shame.”

Democratic Senate Pro Tem Mike McGuire, however, said the state had little choice.

“We are a state of immigrants, 10.6 million strong. And we will never turn our backs on those who are part of the heart of the largest economy in the United States of America,” McGuire said during the debate. “So we’ve had to make some tough decisions. I know we’re not going to please everyone.”

Obligated in New York

One state, New York, is particularly in a bind, because its constitution requires it to provide coverage to lawfully present noncitizens.

Roxana, 27, has been living in the U.S. under the Deferred Action for Childhood Arrivals program, known as DACA, since she was 8 years old and is using her first name only out of fear she will be targeted. At the end of 2019, she experienced a range of debilitating symptoms, including pelvic pain and chronic fatigue, and discovered a noncancerous lump on her breast.

“Chronic illness has impacted my career trajectory with a lot of fatigue and chronic pain,” said Roxana, who lives in the Bronx, New York.

Roxana cannot get federally funded Medicaid. But she qualified for state-funded public health coverage in New York. A 2001 court case, Aliessa v. Novello, requires the state to offer publicly funded health coverage to all lawfully present residents under the state constitution. So, she could afford to go to the doctor, where she learned that she had a hormonal condition called polycystic ovary syndrome, or PCOS, and she was able to get the lump removed.

New York mostly picked up the tab for immigrants and other lawfully residing immigrants until 2016, when it launched coverage it called the Essential Plan under the 2010 Affordable Care Act, also known as Obamacare. Under the ACA, the plan has no deductibles or monthly premiums for patients, and the federal government has picked up almost the entire cost — 90% — of the plan, a huge economic relief for the state.

Now, New York faces an annual loss of $13.5 billion in federal Medicaid and Affordable Care Act funds. Additionally, the phasing out of premium tax credits for noncitizens under Trump’s law would lead to a loss of $7.5 billion in annual funding to the state’s Essential Plan, which covers 1.7 million New Yorkers.

“These are billions of dollars that are being taken away and out of New York’s delivery system,” Amir Bassiri, director of Medicaid at the New York State Department of Health, said at a United Hospital Fund conference on July 30.

It’s unclear whether and how the state will afford to cover people like Roxana, even though it’s required under the state’s constitution. Like other immigrants, she is terrified that in the face of cuts and shrinking safety net access for noncitizens, she will lose continuous health care coverage and that her condition will get worse.

“My PCOS symptoms have just been getting worse over the years. I really want to try my best with the health access that I have to get it under control.”

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