A new report from Wakely Consulting Group, an HMA Company, models changes to the 2026 ACA market enrollment due to the loss of federal subsidies. Findings suggest a larger drop in ACA marketplace enrollment – lower than some feared, but higher than the CBO analysis.
Written By:
Michelle Anderson, FSA, MAAA
Chia Yi Chin, ASA, MAAA
Michael Cohen, PhD
EXECUTIVE SUMMARY:
Based on unique data collection from 80% of the Affordable Care Act (ACA) individual market1, Wakely Consulting Group, a Health Management Associates, Inc., Company, estimates a material reduction in enrollment for 2026, ranging on average from 17% to 26% in total. This decrease will likely cause a deterioration in the risk pool in 2026 relative to 2025. We estimate that morbidity could be, on average, between 2.9% and 6.5% worse.
Coupled with significant changes in market composition, these impacts introduce considerable uncertainty for issuers as they develop 2027 premium rates. This report examines premium payment patterns among individual market enrollees—who paid, and who did not—in the early months of 2026 and explores potential implications for the remainder of the plan year and beyond.
The ACA individual market in 2026 experienced a significant upheaval. The expiration of enhanced premium tax credits, changes in premium tax credit eligibility as a result of recent legislation, increased costs because of high trend and inflation, rate correction from potential historical underpricing, and general uncertainty resulted in the largest net premium increase since the initial implementation of the ACA2. The general expectation is that these changes could dramatically shrink the size of the individual market. The Congressional Budget Office (CBO) projected the individual market would decline by approximately 20%, from an average enrollment of 25.4 million in 2025 to an average enrollment of 20.0 million in 20263; however, early indications from Marketplace Open Enrollment Plan (OEP) selection data are that enrollment decreased by only 5% approximately.4
So, what can we make of this discrepancy between CBO projection and OEP data? One possible explanation is that the forecasted enrollment decreases for 2026 were overstated, and the anticipated declines may not materialize. Alternatively, topline plan selection data may present an incomplete story because they include enrollees who did not—or could not—pay their 2026 premiums. If this is the case, actual attrition in the individual market in 2026 could be larger than what was reported through OEP data. The full extent of attrition in the individual market could still be forthcoming.5
Wakely conducted a unique study to evaluate the number of people who paid their first premiums across the entire individual market (both on and off Exchange) in 2026 and other corresponding market shifts. This dataset includes enrollment and premium data from participating issuers in 2025 and January 2026, representing over 30 individual markets (including two merged markets) and an estimated 80% of the total individual market.6 We analyzed January 2026 premium payment rates, shifts in market composition, and changes in member demographics. These insights enabled us to estimate potential ranges of market enrollment reductions and corresponding morbidity impacts in 2026.
Questions? Let’s ConnectKey Findings
We found that, on average, about 86% of members paid their first premium in January. This is a measurement of member premium payment compared to member enrollment, as of the end of January 2026.7 However, there was extensive variation among states. For example, among states we examined, the bottom quartile of states had an average percent of membership with paid premium of 81.9% while the top quartile had an average percent of membership with paid premium of 93.6%. States that had a higher percentage of enrollees who shopped (whether they be returning enrollees or new enrollees), and states with lower premium increases had higher percent paid ratios. In addition, on average, State-Based Exchanges (SBEs) tended to retain a higher percentage of their enrollees compared with the Federally Facilitated Exchanges (FFE) primarily driven by lower increases in member net premium, premium stabilization efforts such as state premium subsidies, Exchange operations, and more efforts on marketing and outreach.
As we consider the rest of 2026, there are factors beyond unpaid premiums that will determine the size of individual market in 2026 compared to 2025. Many enrollees exited the market at the end of December 2025. That reduction in enrollment would not be accounted for in the unpaid premium percentage. Moreover, monthly net attrition will likely look different in 2026 and could result in further enrollment losses over the course of 2026.
Using data on the percentage of paid enrollees and applying assumptions regarding average enrollment duration in 2026, Wakely is now estimating that average enrollment in the individual market could shrink 17% to 26% in 2026 compared to 2025 average enrollment, with significant variation by state, some falling much higher or lower than the potential estimated national range. State-specific characteristics are therefore key for understanding actual enrollment changes, for example, states that implemented their own state subsidy programs may be more sheltered from enrollment loss.
Beyond enrollment losses, we also found that the market composition and type of plans enrollees purchased varied in 2026 compared with 2025 (see Table 2).
We saw extensive buy downs, with Bronze enrollment as a percentage of total enrollment expanding by almost 11% and Silver enrollment reducing by 17%. Additionally, in states where Gold premiums are lower than Silver, many of the Silver 94% members migrated to Gold plans, increasing that metal membership by 6%. This has implications, not just for consumers who could see large increases in cost-sharing8, but also for issuers who may see differences in premium levels, plan liability, and changes to risk-adjustment transfers.
Finally, given the significant reduction in total enrollment, we anticipate increases to overall morbidity. Given limited data, there are significant uncertainties associated with estimating 2026 morbidity. However given the data we have and prior research9, we estimate morbidity could increase, on average, between 2.9% to 6.5% in 2026. However this national figure may obscure the fact that some markets will exhibit very different changes in morbidity from 2025, potentially outside of the average range noted above.
There is considerable uncertainty about these results. Not only would these estimates vary, potentially significantly by state and issuer, but actual claims cost could vary even more than we estimated. Uncertainties regarding morbidity shifts and member plan enrollment could result in unpredictable and large risk-adjustment transfers, as well as dramatic shifts in claim cost spending patterns.
Changes in plan selection and market composition will cause further uncertainty in estimating 2026 financial accruals and assumption setting in 2027 premium rates. It remains a key question whether the final 2026 average premium rate increases of 26% will be sufficient, as many of the impacts were anticipated, and how issuers will react in 2027 to the estimated significant variation in rate action and potential changes in participation. It will be important to monitor emerging experience, particularly since the 2027 plan filing season is right around the corner. The following sections describe these findings in more detail, including the methodology used in the analysis, additional key findings, their implications, and the limitations of the analysis.
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Continue the Conversation- For purposes of this paper all references to the individual market should be interpreted as referencing ACA plans or for plans for whom the market reform rules impact pricing and risk adjustment transfers shift money. ↩︎
- Cox C. ACA Insurers Are Raising Premiums by an Estimated 26%, but Most Enrollees Could See Sharper Increases in What They Pay. KFF. October 28, 2025. Available at: https://www.kff.org/quick-take/aca-insurers-are-raising-premiums. ↩︎
- Congressional Budget Office. Federal Subsidies for Health Insurance. February, 2026. Available at: https://www.cbo.gov/system/files/2026-02/51298-2026-02-healthinsurance.pdf. ↩︎
- Centers for Medicare & Medicaid Services. Health Insurance Exchanges 2026 Open Enrollment Report. Available at: https://www.cms.gov/files/document/health-insurance-exchanges-2026-open-enrollment-report.pdf. ↩︎
- Subsidized enrollees with effectuated coverage get a grace period of 90 days to pay their premiums. Consequently, after April there can be substantial revisions to early enrollment numbers. ↩︎
- Data collected includes approximately 238 million member months from 2025 experience ↩︎
- Please refer to the “Plan Selections Versus Effectuation Versus Paid Premiums” section of this paper to better understand the differences in data measurement. ↩︎
- Cohen M, Anderson M, Johnson D. Member Cost-Shifting Implications of Premium Tax Credit Expiration. Association for Community Affiliated Plans. Available at: https://www.communityplans.net/research/member-cost-shifting-implications-of-enhanced-premium-tax-credit-expiration/. ↩︎
- Prior research has tended to show individuals exiting the market due to premium increases tend to be healthier than those who remain. For example: McIntyre AL, Shepard M, Wagner M. Can Automatic Retention Improve Health Insurance Market Outcomes? April 2021. Available at: https://www.aeaweb.org/articles?id=10.1257/pandp.20211083. ↩︎
