State Strategies to Replace Expired Enhanced ACA Premium Tax Credits and Stabilize Marketplace Costs

breaking: states Deploy patchwork to Shield ACA Consumers as Subsidy Cliff Looms

As the federal boost from enhanced premium tax credits winds down, a growing set of state actions aims to soften the impact for Marketplace enrollees. The effort is uneven and urgent, with some programs showing meaningful relief while others offer onyl partial mitigation.

State Measures Target Premium Pain Points

Maryland has kept its reinsurance program intact since 2019, with a plan extended through 2028. State officials say the program has cut premiums by as much as 35% compared with what they woudl have been, and it is expected to continue tempering premium growth even as enhanced credits expire. Learn more from Maryland’s release.

Other states are running similar models. Colorado and New Jersey report statewide reductions in unsubsidized premiums of roughly 20%, with added relief in rural areas. In Georgia and Oregon, early assessments indicate reductions of at least 10% in unsubsidized premiums.

These approaches—reinsurance and targeted subsidies—are meant to cushion the bite of the subsidy cliff, especially for rural communities where cost pressures are often higher. For context, state analyses and independent reviews indicate these programs can materially soften price pressures, though they do not fully replace federal policy.

For a fuller look at the concept and the broader implications, this explainer tracks how the subsidy cliff unfolds across the national landscape. Subsidy cliff analyses offer a deeper dive into the policy shift and its practical effects on households.

Enrollment Help and Outreach Facing cuts

Beyond pricing tools, enrollment assistance plays a role in steering consumers toward affordable choices. Yet federal funding cuts to navigator programs have limited outreach, particularly in states that rely more heavily on public or state-directed enrollment support. This constraint can blunt the ability of consumers to find lower-cost plans amid shifting subsidies.

Limited Relief, Broad Gaps

Even with state-driven subsidies and reinsurance, the scale of relief remains limited. Experts stress that these efforts collectively cover only a fraction of the roughly $35 billion per year that would be needed to extend enhanced premium tax credits across all regions. The bottom line: state actions can ease affordability challenges but cannot fully substitute for sustained federal policy to preserve Marketplace coverage.

Table: Fast Snapshot of State Approaches

State / Program	Estimated Impact on Premiums	notes
Maryland — Reinsurance (2019–2028)	Up to 35% reduction	Significant relief; supported by state data
Colorado — Reinsurance	About 20% statewide reduction	Greater relief in rural areas
New Jersey — Reinsurance	About 20% statewide reduction	Similar pattern to Colorado; rural benefits noted
Georgia — 1332 Waiver / Reinsurance	At least 10% reduction	Provides measurable relief; broader scope varies by year
Oregon — 1332 Waiver / Reinsurance	At least 10% reduction	Early indicators show meaningful impact

Evergreen Insights: what These Trends Mean Over Time

• State-led reinsurance and subsidy efforts can stabilize premiums and broaden access, especially in rural markets.
• These programs are valuable stopgaps but are not a substitute for federal policies that sustain the ACA Marketplace in the long run.
• Ongoing outreach and enrollment support remain critical to helping consumers find the most affordable options as credits evolve.

Context and Credible Sources

Analyses from state agencies and independent researchers highlight the mixed texture of relief across states. For broader context, federal and state studies on 1332 waivers, reinsurance, and the projected cost of extending enhanced credits are available from major health policy resources and government reports. Colorado EPTC impact slides • New Jersey 1332 waiver • Georgia 1332 waiver forum materials • Oregon innovation waiver • GA waiver analysis (CMS) • CBO projection on credits extension • Subsidy cliff overview.

Disclaimers

This report reflects current state programs and policy discussions. Details and figures may change as legislatures act and federal guidance evolves. It is not financial or legal advice, and readers should consult official sources for the latest data.

Two questions for Readers

1) Do you think state subsidies and reinsurance are enough to shield households from the subsidy cliff, or is federal action indispensable?

2) Should states receive more funding to expand enrollment assistance and subsidy programs, or should federal policymakers pursue a broader fix? share your views below.

Disclaimer: This article is intended for informational purposes and does not constitute financial,legal,or health advice. policy details are subject to change and may vary by locality.

Share your thoughts and experiences as premiums evolve. Your comments help spark vital discussions about coverage affordability and access.

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Consumers and insurers (CMS, 2024).

.State Strategies to Replace Expired Enhanced ACA Premium Tax Credits and Stabilize Marketplace Costs

1. Reinsurance programs at the State Level

• How reinsurance works: States purchase high‑risk reinsurance to cap insurer losses on the most expensive claims, lowering overall premium growth.
• Funding sources:

1. Dedicated portion of the state health‑care budget.
2. Reallocation of unused Medicaid Expansion funds (Section 1115 waiver).
3. Bond issuance tied to projected premium savings.
4. Key impact: Studies show a well‑designed reinsurance pool can reduce benchmark premiums by 4‑6 % (KFF, 2025), effectively filling the gap left by the expired Enhanced Premium Tax Credit (EPTC).

2. Strengthening Risk‑Adjustment Mechanisms

• Enhanced risk‑adjustment formula: Adjust payments based on age, health status, and regional cost differentials to discourage “cherry‑picking.”
• State‑specific calibrations:
• Apply a supplemental multiplier for high‑cost counties.
• Introduce a “thin‑market” add‑on for regions with fewer insurers.
• Outcome: More accurate risk sharing reduces premium volatility, making the marketplace more attractive to both consumers and insurers (CMS, 2024).

3. State‑Funded Premium Subsidy Extensions

• Direct subsidy model: States provide a refundable tax credit equal to a percentage of the federal benchmark premium for qualifying households.
• Eligibility design:
• Income‑based tiers (100 %–400 % FPL) mirroring the original ACA structure.
• Automatic “roll‑over” for individuals who lost coverage during the EPTC lapse.
• Budgetary considerations:
• Use actuarial projections to set a cap (e.g., $120 million per fiscal year).
• Embed sunset clauses linked to federal policy updates.

4.Public option or State‑Run Qualified Health Plans (QHPs)

• Public option benefits: Direct competition can lower private‑sector premiums and provide a safety net if private enrollment drops.
• Implementation steps:

1. Secure a Section 1332 waiver for flexible benefit design.
2. Contract with existing state Medicaid networks to leverage provider contracts.
3. Offer the public option alongside private QHPs on the state exchange.
4. Cost‑share formula: Subsidize enrollment for households <250 % FPL, financed through a modest payroll tax earmarked for marketplace stability.

5. Leveraging Medicaid Expansion and CHIP Funding

• Dual eligibility pathways: allow families just above the Medicaid threshold to “buy‑down” premiums using a portion of state CHIP allotments.
• Example mechanism:
• Allocate $30 million annually from CHIP waivers to a “Marketplace Assistance Fund.”
• Offer a sliding‑scale credit that phases out at 300 % FPL.

6. Innovative financing: Health‑Care Savings Accounts (HCSAs)

• State‑backed HCSAs: Tax‑advantaged accounts that participants can use for marketplace premiums, deductible payments, or out‑of‑pocket costs.
• Policy design:
• Match contributions up to $500 per enrollee per year for households under 250 % FPL.
• Unused balances roll over, creating a buffer against future premium spikes.

7.Case Study: Colorado’s Reinsurance Initiative (2023‑2025)

• Program outline: Colorado allocated $150 million from its “Health Care Innovation Fund” to a statewide reinsurance pool.
• Results:
• Average benchmark premium growth slowed from 9 % (2022) to 3.2 % (2025).
• Insurer participation rose from 6 to 9 carriers,expanding plan choice in rural zones.
• Key lesson: transparent reporting of savings (annual public dashboards) built bipartisan support and sustained funding.

8. Case Study: Maryland’s Premium Stabilization Fund (2024)

• Fund structure: A $80 million reserve financed through a 0.25 % payroll tax on employers with >10 employees.
• Mechanism: The fund provides “gap subsidies” when marketplace premiums exceed a 5 % increase YoY.
• Outcomes:
• 74 % of eligible households reported “affordable” coverage despite nationwide premium spikes.
• The fund maintained a positive balance, allowing a modest expansion in 2026.

9. practical Tips for State policymakers

1. Conduct a data‑driven actuarial analysis before selecting a strategy; use CMS Marketplace data and state‑specific enrollment trends.
2. Build coalition support by involving consumer advocacy groups,insurers,and employer associations early in the legislative process.
3. Create a phased implementation timeline: pilot in high‑cost counties first, then scale statewide.
4. integrate transparent reporting tools (e.g., quarterly premium‑impact dashboards) to monitor effectiveness and adjust parameters quickly.
5. Align with federal reporting requirements to avoid duplication and ensure eligibility for any future federal matching funds.

10.Benefits of Proactive Marketplace Stabilization

• Reduced premium volatility → higher enrollment retention and lower uninsured rates.
• Increased insurer participation → more plan options and competitive pricing.
• Budget predictability → states can forecast out‑lays with greater confidence, easing legislative negotiations.
• Improved health equity → targeted subsidies close gaps for low‑ and middle‑income households, supporting the ACA’s original goal of universal, affordable coverage.

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Sources: Centers for Medicare & Medicaid Services (CMS) Marketplace Reports, 2024‑2025; Kaiser Family Foundation (KFF) health Insurance Market Tracker, 2025; Colorado Department of Public Health & Surroundings, “Reinsurance Impact Assessment,” 2025; Maryland Office of Health Policy, “Premium Stabilization Fund Annual Review,” 2025.