For policy analysts, the transition from stable health insurance to financial uncertainty is no longer a theoretical debate. This is a daily reality for millions of Americans who live in households that constantly recalculate the math of survival.
As the intensive subsidies that have shored up the Affordable Care Act (ACA) market for years expire, the human toll is becoming visible in real time.
For many, the cost of entering the health system has doubled overnight.
Kate Bivona and her husband, who are self-employed in Arizona, have been using the ACA marketplace to purchase health insurance for the past 10 years, according to a report from MarketWatch. They pay a monthly premium of $118, with a $1,500 deductible. Then the Republican-controlled House of Representatives allowed ACA subsidies, known as the Enhanced Premium Tax Credit, to lapse late last year.
After seeing how much their premiums would increase without subsidies, they downgraded to a Bronze plan, which costs about $157 per month but has an $18,000 deductible and a $20,000 out-of-pocket maximum.
Their situation epitomizes a national trend, in which fear of high monthly premiums is driving people toward plans that offer only nominal coverage(1).
The Enhanced Premium Tax Credit, first introduced in 2021 and extended through 2025, significantly reduces the proportion of income that ACA households have to pay for health insurance by providing premium subsidies to those whose monthly payments for a standard silver plan exceed 400% of the poverty level, capping premiums at 8.5% of household income (2).
Now the situation has reversed, with many families finding they either receive significantly less aid or lose eligibility for credits altogether.
Sticker shock can be severe. Data from the Kaiser Family Foundation indicates that average annual premiums for subsidized enrollees may increase from $888 in 2025 to $1,904 in 2026, a year-over-year increase of 114% (3). And this happens because families’ budgets are already under pressure from ever-expensive groceries and utilities.
This surge, which began after subsidies expired on January 1, 2026, is already showing up in enrollment trends, with early indicators showing a decline in enrollment compared with previous years (4).
Read more: The average American net worth is a surprising $620,654. But that makes almost no sense. Here are the numbers that matter (and how to make them soar)
Faced with these rising costs, many consumers are turning to underinsurance (purchasing less insurance than is appropriate for their needs) as a primary coping mechanism.
Families like the Bivonas may choose to switch to a Bronze or high-deductible plan to lower their monthly premiums. The risks of going this route are high out-of-pocket costs and the potential need to repay medical debt if a crisis strikes. On top of that, many families think twice before seeking necessary medical care because of concerns about cost, resulting in poorer overall health and health conditions becoming serious before they are resolved.
This pattern of opting for lower premiums at the expense of actual coverage is emerging across states and at different income levels, creating financial vulnerabilities across the country.
In response, some blue states are trying to soften the blow by introducing state-funded subsidies.
For example, in Connecticut, Governor Ned Lamont announced $115 million in grants to the state’s health insurance exchange to provide assistance to certain residents if federal subsidies disappear (5), and California, Colorado, Maryland, Massachusetts, and New Mexico have also announced state-backed efforts to prevent federal subsidies from disappearing (6).
While these programs offer a vital lifeline to residents of their states, they are not guaranteed to be permanent and will not help residents of states with the most subsidies, like Florida and Texas.
For those Americans, the quest for affordability may lead them to choose private plans that offer inadequate or short-term coverage. These often come with large coverage gaps, exclusions for pre-existing conditions, and the possibility of unexpected bills.
While low premiums are attractive, they often mask a level of financial risk that could lead to bankruptcy if the policyholder does need care.
To combat this difficult situation, the most effective strategy may be to focus on reducing overall financial risk, not just monthly premiums.
Because subsidy amounts are based on household income, small changes in what you report can have a big impact on the help you receive. One of the first steps consumers should take is to make sure their income projections are up to date and accurate, especially as you approach key eligibility thresholds.
It’s also important to compare all parts of the plans: premiums, deductibles, and out-of-pocket maximums. Compare how you would fare under each plan if you experienced a catastrophic medical event. Sometimes, a plan with a slightly higher premium can provide better coverage.
For people under 30 or who qualify for a hardship exemption because of their low income, a catastrophic plan may be a viable last resort. These plans are part of the ACA, offer lower premiums and cover basic benefits after high deductibles are met, acting as a safety net against the absolute worst-case scenario (7).
Regardless of which plan they choose, consumers should confirm that their provider remains in-network and that their necessary medications are still covered to avoid additional out-of-pocket costs.
The smart approach is to seek the highest level of protection possible while still fitting into a sustainable monthly budget to ensure a medical event does not become a permanent financial disaster.
Join more than 200,000 readers and get first access to Moneywise’s best stories and exclusive interviews – curated and delivered with clear insights every week. Subscribe now.
We rely only on vetted sources and reliable third-party reports. For more information, see our Editorial Ethics and Guidelines.
Market Watch (1); Center on Budget and Policy Priorities (2); Kaiser Family Foundation (3, 4); Norwich Gazette (5); CBS News (6); Washington Post (7)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.