Affordable Care Act enrollment hits record in Alabama, but subsidies are in peril

A record 465,463 Alabamians enrolled in ACA health plans by January 4, a 20% increase driven by enhanced subsidies set to expire this year. (File/Getty Images)

A record 465,463 Alabamians signed up for health insurance offered through the Affordable Care Act (ACA) through January 4, according to the Centers for Medicare and Medicaid Services (CMS).

The numbers represented an increase of 80,000 people (20%) over last year which also broke the previous year’s record.

But that growth is credited to enhanced subsidies introduced in 2021 that made those plans more affordable or at no charge for those who qualify. Those subsidies are set to expire at the end of this year.

“A lot of people will see their premiums at least double if the enhanced premium tax credits go away, and that’s just unaffordable for people. That’s just ridiculous at a time when people can barely afford things,” said Debbie Smith, campaign director for Cover Alabama, a Medicaid-expansion advocacy group run by Alabama Arise, a nonprofit that works on poverty issues.

The American Rescue Plan Act (ARPA), passed in March 2021 as part of COVID-19 relief, expanded ACA health insurance subsidies to more people purchasing coverage through the marketplace. It capped health plan costs at 8.5% of income for those earning above 400% of the federal poverty level ($62,600 for an individual or $128,600 for a family of four in 2025). Before ARPA, subsidies maxed out at 400% of the poverty level. ARPA also boosted subsidies for lower-income individuals already eligible under the ACA, and the Inflation Reduction Act extended these subsidies through 2025.

Since ARPA’s passage, enrollment in ACA programs surged. Alabama’s ACA enrollment grew from 97,000 in 2014 to 195,000 in 2016 but dropped to about 160,000 by 2020 under President-elect Donald Trump’s first term. Under Biden, enrollment started ticked up again and surged because of the subsidies, bringing the number of enrolees from about 160,000 in 2021 to about 386,000 in 2024.

Additionally, the Biden administration adjusted subsidy eligibility, helping more people with unaffordable employer coverage qualify for a marketplace plan. For example, the Inflation Reduction Act fixed the “family glitch,” which prevented families from accessing Marketplace subsidies if they couldn’t afford employer-sponsored health insurance.

Matt McGough, policy analyst for the program on the ACA at KFF, a national health policy research organization, said that states with historically high uninsured rates, particularly in the South, have seen the most significant growth, including Texas, Florida, Georgia, South Carolina, and Alabama, which have not expanded Medicaid.

“Alabama specifically has seen nearly a tripling in the ACA marketplace sign-ups, which is what we would expect. States that have really driven this growth over the past four years are states that had high uninsured rates before the COVID-19 pandemic, typically red states in the South that haven’t expanded Medicaid yet,” he said.

If the subsidies expire, millions nationwide — and hundreds of thousands in Alabama — could lose coverage or face steep increases in premiums. Low-income individuals and older adults in non-Medicaid-expansion states are likely to be hit hardest, McGough said. He said that these changes could deter healthier individuals from keeping coverage, leading to further premium increases for those remaining and a possible decrease in insurers from the marketplace.

“When these enhanced subsidies expire, once you make $1 over 400% of poverty, you are no longer eligible for any federal financial assistance. We expect a lot of people who are making, for a family of four, $120,000 or more to be pushed out of the Marketplace, or see their payments drastically increase,” he said.

Smith said people who are self-employed or business owners may not have access to employer-sponsored health insurance. She said these “entrepreneurs of the world” would be some of the most affected if these subsidies expired.

“That’s who the marketplace has enrolled. It’s people who are making a living but don’t necessarily have insurance provided by an employer. It’s going to be those people who are out there on their own making a living. It would be pretty devastating to take this option away from them,” Smith said.