160,000 people drop Pennie health plans following price hikes

One in three Pennsylvania residents who bought an Affordable Care Act health plan last year has dropped coverage for 2026, after costs more than doubled on average when a critical financial incentive program expired.

A total of 160,000 people who bought a health plan through Pennie, the state’s ACA marketplace, last year had canceled their coverage as of the end of May. That includes just under 55,000 people in the five-county Philadelphia region, figures released Tuesday show.

Many of those 160,000 will become uninsured, marketplace leaders expect, though some may enroll in private health insurance through a new job, or transition to government coverage through Medicaid or Medicare.

Cost was the most common reason people cited for dropping their plans, said Devon Trolley, Pennie’s executive director.

“People want to have coverage, they see the value and the protection it provides,” Trolley said. “And when they can afford it, they enroll.”

Pennie leaders were bracing for dropouts on this scale after Congress failed to renew for this year a financial incentive program that ensured no one paid more than 8.5% of their salary for health coverage.

The so-called enhanced premium tax credits became a major sticking point in federal budget discussions last fall that led to a Democrat-forced government shutdown. Republicans had refused to include the tax credits without significant restrictions.

The tax credits introduced in 2021 had helped to drive Pennie enrollment to a record 497,000 enrollees last year. Just over 443,000 people were enrolled in Pennie as of June, with new enrollees partially offsetting the losses.

In New Jersey, nearly 69,000 people dropped out of their ACA plans between the end of January and April, according to the state’s Department of Banking and Insurance. The figures it released tracked drops only since the end of the state’s open enrollment Jan. 31.

Many people were able to keep health coverage by switching to a less expensive plan.

In New Jersey, thousands of people opted for less expensive plans, instead of canceling their coverage entirely.

The most popular mid-level Silver plans accounted for 68% of New Jersey marketplace enrollments, down from 83% the year before. Many switched to Bronze plans, which have cheaper monthly premiums but higher out-of-pocket expenses and deductibles.

In Pennsylvania, Trolley said that marketplace leaders have “heard from people who tried to make it work” but a few months into the new year, decided they couldn’t afford to keep their plan.

Even less-expensive plans have become unaffordable, said Antoinette Kraus, executive director of Pennsylvania Health Access Network, which helps people enroll in coverage.

“It means that people are going to go uninsured,” Kraus said. “They’ll delay getting care, get sicker, and end up in the emergency department with conditions that could have been prevented.”

In Pennsylvania, dropouts have been highest among people age 55 and older, who are nearing Medicare eligibility and who pay more for coverage than younger people.

By income level, dropouts have been greatest among people with incomes between 150-200% of the federal poverty rate. That’s an annual income of between $23,475 and $31,300 for an individual. For a family of four, the equivalent income range would be $48,225 to $64,300.

Income-based tax credits for lower-income individuals and families are still available because they were written into law under the ACA.

Marketplace leaders predicted that people would continue to drop plans through the spring, when the grace period for overdue premiums passed. People who qualify for a tax credit have 90 days to pay their premium before losing coverage; everyone else has 30 days.

Dropouts may now level off, but new challenges are looming for the ACA marketplaces. Last year’s federal spending package included new rules that would save billions of dollars through cuts to the ACA marketplaces and Medicaid, the publicly funded health program for low-income families and people with disabilities.

Beginning this fall, open enrollment will start earlier and be cut short by about two weeks, running Oct. 15 through Dec. 15. In the past, people have had until at least mid-January to sign up.

Also beginning this fall, certain groups of people who legally immigrated to the United States will not be able to enroll in marketplace plans, Medicaid, or Medicare.

In 2027, new enrollment rules will prevent marketplaces from automatically renewing plans, requiring individuals to resubmit and verify their eligibility annually.