1.7 Million Texans Face Health Coverage Loss as Tax Credits Expire and ACA Rules Shift

Impact of GOP Megabill on Health Coverage in Texas

The health care landscape in Texas is facing a significant challenge due to changes in the Affordable Care Act (ACA) and the recent passage of a Republican-led tax and spending bill. Experts estimate that up to 1.7 million Texans could lose their health insurance coverage as a result of these developments, marking a potential crisis for the state’s already strained health care system.

The Role of ACA Marketplace in Texas

The ACA marketplace has been a critical source of health coverage for many Texans, especially those with lower incomes who do not qualify for Medicaid. Texas did not expand Medicaid to cover individuals earning above the federal poverty level, which means the ACA has played a more prominent role in providing health insurance than in other states. Over the past decade, the state’s uninsured rate has dropped significantly, from 23.7% in 2010 to 17.4% by 2023, largely due to increased enrollment in ACA plans.

This year alone, nearly 4 million Texans signed up for ACA health plans, setting a new record for the program. However, this surge in enrollment is now at risk due to upcoming changes that could lead to a sharp increase in the number of uninsured residents.

Key Changes in the GOP Megabill

Several provisions in the recently passed GOP megabill are expected to impact ACA coverage in Texas. These include:

• Ending automatic renewal of health insurance plans, requiring more frequent income documentation.
• Shortening the open enrollment period to just one month, limiting opportunities for people to sign up or renew their coverage.
• Eliminating year-round enrollment for individuals earning under 150% of the federal poverty level starting in 2026.
• Restricting access to ACA coverage for certain lawfully present immigrants, including DACA recipients, asylees, and refugees.

These changes are designed to reduce what Republicans describe as waste, fraud, and abuse in the ACA marketplace. However, health care experts warn that these adjustments could make it harder for people to maintain coverage, leading to higher premiums and greater financial strain on both individuals and health care providers.

The Expiration of Enhanced Premium Tax Credits

One of the most significant factors contributing to the projected loss of coverage is the expiration of enhanced premium tax credits. These credits, introduced through the American Rescue Plan Act in 2021 and extended in the 2022 Inflation Reduction Act, have made health insurance more affordable for millions of Americans, particularly those with lower incomes.

For example, individuals earning less than 150% of the federal poverty level — approximately $15,650 to $23,475 for an individual in Texas — currently pay little to no monthly premium. However, these credits are set to expire at the end of 2025, which could lead to a dramatic increase in premiums. According to projections from the Center for Budget and Policy Priorities, someone earning $22,000 a year could see their monthly premium rise from $0 to $63.

KFF estimates that over 1.1 million Texans could lose coverage if the tax credits expire. While some Republican senators have expressed openness to extending them, it remains unlikely given the current political climate in Washington.

Potential Consequences for Health Care Providers

The ripple effects of these changes could be far-reaching. As more people lose coverage, health care providers may face increased financial pressure, leading to higher premiums for those who remain insured. This could create a cycle where healthier individuals drop their coverage, further increasing the risk pool for insurers and driving up costs for everyone.

Insurance companies are already preparing for these changes. For instance, Blue Cross Blue Shield of Texas has requested a 21% rate increase for ACA-compliant individual plans next year, according to a filing shared with The Texas Tribune.

Looking Ahead

With the expiration of key subsidies and the implementation of new restrictions, the future of health coverage in Texas looks uncertain. Experts warn that without intervention, the state could see a significant spike in its uninsured population, placing additional strain on hospitals and health care systems across the state. The coming months will be crucial in determining how these changes will affect millions of Texans who rely on the ACA for their health insurance.