Pennie anticipates 150,000 people could lose coverage next year if Congress lets enhanced tax credits expire

Pennie, Pennsylvania’s Obamacare marketplace, expects as many as 150,000 people could lose health coverage next year if Congress does not act soon to extend tax credits that make health insurance affordable for hundreds of thousands of residents.

State-based marketplaces were created under the 2010 Affordable Care Act as a way to extend insurance coverage to working Americans who do not have access to insurance through an employer and earn too much to qualify for Medicaid.

Pennie reached record enrollment of nearly 500,000 people this year, largely due to enhanced premium tax credits that ensure no one spends more than 8.5% of their income on a health insurance premium.

Those enhanced tax credits are now in jeopardy. For the subsidies to continue next year, Congress must renew them before open enrollment begins this fall.

If the tax credits are discontinued, premium prices are expected to spike an average of 82% in 2026. Many people may pay four times more to keep their current plan.

“This works when you make it affordable. It gets people access to care they need at a price they can afford,” said Devon Trolley, executive director of Pennie, noting this year’s record enrollment. “It’s a striking contrast to see these cuts immediately coming on the heels of that success.”

Losing the enhanced tax credits would be an immediate financial hit as the marketplace braces for more cuts under the sweeping tax and policy package that President Donald Trump signed into law July 4.

Under Trump’s so-called “big, beautiful bill” people will need to reapply for their Obamacare health plan annually and will be required to pay full price for their health plan until their income is verified.

Another 100,000 Pennsylvania residents enrolled in Pennie are expected to lose coverage as a result of those provisions, coupled with new federal rules shortening the annual open enrollment period.

Combined, the changes could slash Pennie enrollment in half, leaving an estimated 250,000 people who have historically had few other options for coverage uninsured.

The numbers of people losing coverage are expected to keep climbing as more provisions in the federal bill go into effect.

Another 300,000 Pennsylvanians with Medicaid, the publicly funded health program for low-income individuals, children, and people with disabilities, are expected to lose coverage under work requirements and twice-yearly plan renewals in the federal budget reconciliation bill.

» READ MORE: The ‘big, beautiful bill’ is poised to cut Medicaid. Here’s what’s at stake for five Philly-area families.

The 2010 Affordable Care Act created private insurance marketplaces for people who do not have access to health insurance through an employer and who earn too much to qualify for Medicaid.

Under the law, people who earn less than 400% of the federal poverty level — about $60,000 — are eligible for tax credits based on their income. People with low incomes get bigger tax credits to help offset the monthly cost of an insurance premium.

In 2021, Congress expanded the tax credits, increasing financial assistance so that no one buying coverage through an Obamacare marketplace pays more than 8.5% of their income.

As a result, people who already received a credit got larger subsidies, and people who previously missed the income cutoff were able to get a small amount of financial assistance.

People who earn less than $60,000 will still qualify for an income-based tax credit, even if the enhanced subsidies expire.

But the size of their tax credit will drop and premium prices will go up if Congress does not act. Pennie expects that many people will decide the plans are unaffordable, Trolley said.

A budget bill expected in Congress this September may be the last chance to get the enhanced tax credits renewed. It’s unclear whether a Republican-controlled Congress will approve subsidies that support Obamacare, which they have fought hard to dismantle.

Other changes to the Obamacare marketplaces that will hinder enrollment are on the horizon.

New rules from the Centers for Medicare and Medicaid Services will shorten the annual open enrollment period by 15 days beginning 2026, requiring states to end enrollment no later than Dec. 31.

And beginning in 2027, marketplaces will no longer be able to automatically renew plans.

» READ MORE: Federal Medicaid and ACA cuts could leave half a million Pa. residents uninsured

Automatic plan renewals are an industry standard in private insurance, as a way to reduce the risk of coverage gaps and minimize administrative burden.

The new rules will require people to reapply for marketplace coverage every year, and they will be dropped from their plan if they do not take action.

Tax credits won’t apply until the marketplace has verified income, meaning people will pay full price for their plan until they are able to submit needed paperwork.

“It’s barriers like that that will make it that much harder for people to enroll in coverage,” Trolley said. “And for people to keep coverage, they will have to take extra steps.”

Trolley said Pennie plans to develop outreach initiatives to make people aware of the changes closer to when they take effect.