Rising Premiums and Uncertain Future for Texas ACA Market
Health insurance companies in Texas have submitted proposals for an average 24% increase in premiums for Affordable Care Act (ACA) plans in 2026. This significant rise could destabilize the marketplace, potentially leading to more individuals opting for less or no coverage. The proposed hikes are far steeper than the 3.8% average increase seen last year, marking a major shift in the health insurance landscape.
The data from KFF indicates that this could be the largest rate hike since 2018, when premiums increased by 35%. That year, insurers considered Congress' attempts to repeal the ACA and President Donald Trump's executive order ending subsidies for low-income individuals. Since then, premium increases have remained relatively modest, with no more than a 4% rise in any given year.
Growth of the ACA Marketplace in Texas
Despite these challenges, the ACA has seen substantial growth in Texas. Nearly 4 million Texans enrolled in ACA plans for 2025, a record high in a state with the nation’s highest uninsured rate. Enrollment has tripled since 2020, largely due to expanded tax credits that helped lower monthly premiums for many users.
This expansion has had a measurable impact on health care trends in Texas. Enrollment grew from 1.3 million in 2021 to nearly 4 million in 2025. The average post-subsidy monthly premium paid by Texans dropped from $136 in 2018 to $50 in 2024. While the uninsured rate remains the highest in the country, it has decreased from 23% in 2012 to 16.3% in 2023.
The ACA marketplace in Texas now offers more options than ever. The number of insurers operating in the individual marketplace has increased from eight in 2020 to 15 today. This competition has led to more choices for consumers, with 114 counties now offering at least four insurance options. Only seven counties, all near the Oklahoma border, still have just one insurer.
Challenges Ahead: Expiring Tax Credits and Rising Costs
However, these gains may be at risk due to the expiration of key tax credits at the end of the year. Insurers have cited rising medical costs and increased use of health services as reasons for their proposed rate hikes. Blake Hutson, vice president of public affairs at the Texas Association of Health Plans, described the situation as a "perfect storm" involving increasing medical costs, the loss of tax credits, and a less healthy risk pool.
The premium tax credits, expanded through the American Rescue Plan Act and the Inflation Reduction Act, currently benefit 83% of Texans who purchase coverage through the ACA. These credits are based on income and help reduce monthly premiums. However, they will expire at the end of 2025, making those earning over $62,600 ineligible for subsidies. This change could significantly impact those earning under 150% of the federal poverty level, who currently pay little or nothing for coverage.
KFF projects that premiums for those using ACA tax credits could rise by an average of 115% or $456 per year. Insurance brokers like Michelle McLaren warn that this could lead to higher uninsured rates and a contraction of the ACA marketplace, particularly affecting rural areas, lower-income individuals, and the elderly.
Impact on Major Insurers
Several major insurers have already submitted rate requests for 2026. BlueCrossBlueShield, the largest insurer in Texas, is asking for an average 39% increase in individual plan premiums. United Healthcare is requesting a 23% average increase, while Celtic Insurance Company and Superior HealthPlan are proposing 41% and 36% increases, respectively.
These hikes are driven by factors such as rising medical costs, increased use of services, and the expiration of tax credits. For example, United Healthcare explicitly cited the loss of enhanced tax credits in its filing. The company also noted higher provider reimbursement rates and the use of expensive new technologies.
The Risk of a Shrinking Marketplace
Analysts worry that if subsidies expire, healthier individuals may drop their coverage, leaving a sicker and more expensive risk pool. This could lead to further premium increases and potentially force some insurers to exit the market, as happened in 2016 when premiums rose sharply and several insurers left Texas.
The average monthly premium for Texans with ACA coverage after subsidies is $57, while the benchmark silver plan costs around $489. Federal law requires insurers to spend at least 80% of premiums on medical costs and quality improvement efforts. If this ratio falls below 80%, rebates must be issued to enrollees.
Looking Ahead
With open enrollment approaching, time is running out to address these concerns. While Congress could extend the tax credits, the window for action is narrowing. As the ACA marketplace faces these challenges, the future of affordable health care in Texas remains uncertain.