The expanded market means that insurers have to compete for customers on price. In 2018, according to data from the Texas Association of Health Plans, 98 counties only had one insurer, and just five had at least four options. Today, that trend has reversed. There are 114 counties where Texans can choose between at least four health insurance companies and only seven — all near the Oklahoma border — that have just one.

But those gains could be imperiled by the expiration of the tax credits at the end of the year and other factors insurers have cited in their proposed rate filings, including rising health care costs and increased utilization of medical services.

“This is kind of a perfect storm,” said Blake Hutson, the vice president of public affairs at the Texas Association of Health Plans. “You’ve got increasing medical costs, the expiration of the tax credits, and then you end up with a much less healthy risk pool. We’re really worried about the impact on Texans that buy coverage on their own.”

Ripple effects of federal cuts

The premium tax credits, which were expanded by Democrats in the 2021 American Rescue Plan Act and again in the 2022 Inflation Reduction Act, are claimed by 83% of Texans who get health insurance through the ACA. These tax credits operate on a sliding scale based on income to offset the cost of premiums and are paid directly to insurers. Premiums are capped at 8.5% of monthly income, and eligibility for the tax credits was expanded to people earning over 400% of the federal poverty level, many of whom are older adults or small business owners. As income goes down, the size of the tax credit goes up. With more healthy people able to afford coverage, health insurance companies are able to drive down premiums.

In Texas, 58% of ACA enrollees have a monthly premium of under $10.

But those tax credits are set to expire at the end of the year, making any Texan who earns over $62,600 a year ineligible for the subsidy and ending the additional subsidies that have allowed Texans earning less than 150% of the federal poverty level — $23,475 for individuals — to pay little to no monthly premium.

Insurers setting premium rates for 2026 are anticipating the tax credits to expire and subsequently requesting higher rates. Congress could still reach a deal to preserve the enhanced premium tax credits, which expire at the end of 2025. But premium rates are typically finalized in late summer ahead of the start of open enrollment on Nov. 1, meaning time is running out to avert rate hikes in 2026.

Texans’ monthly premium costs will likely rise even higher than the 24% average rate hike, given the looming expiration of the expanded tax credits. Health policy organization KFF projects that Texans who use ACA tax credits will see premiums rise by an average of 115% or $456 per year.

North Texas insurance broker Michelle McLaren said the ACA insurance market had stabilized in recent years, with premiums increasing at relatively acceptable rates. But the 2026 rate filings mark a distinct change and portend a rise in Texas’ uninsured rate and a potential contraction of the ACA marketplace.

“It’s going to hit those that are in rural areas, lower income and elderly,” McLaren said.

Health care analysts are worried that the marketplace will shrink if subsidies are allowed to expire. In 2016, when the pool of ACA enrollees was sicker than the average public, premiums went up and numerous insurers left the market, leaving Texans, especially in rural areas where populations are typically older and sicker and the payer mix includes less people with private insurance, with fewer choices.

With healthy Texans projected to leave the marketplace if premiums rise, the cycle could repeat.

Currently, the average monthly premium for Texans who get health care coverage through the ACA — after credits — is $57. The average benchmark — or second-lowest-cost silver plan — monthly premium cost in total is $489 in Texas.

To regulate premium hikes, insurance companies are required by federal law to spend at least 80% of premiums they collect on medical costs and quality improvement efforts for individual plans. If their loss ratio comes in below 80%, companies must pay the difference back to enrollees as rebates. Using actuarial analysis, carriers can propose changes to their premium rates, and the Texas Department of Insurance reviews filings to make sure they are compliant with the law.

The expected impact to various plans

BlueCrossBlueShield, the largest insurer in Texas and the only company to offer ACA plans in all 254 counties, has requested an average rate hike of 39% for individual plans, among the highest increases of the 17 insurers that have submitted rate requests. In its filing, the company, which insures nearly 1.1 million Texans through individual ACA plans, said rate increases will range from 9% to 65%.

“Blue Cross Blue Shield of Texas remains steadfast in its commitment to a stable health insurance market with competitive plan choices in the individual market, as we have since the inception of the ACA,” a spokesperson for the company said. “The proposed rates for 2026 coverage include both new and current individual ACA-compliant plans and reflect industry-wide changes to the market, including the anticipated expiration of enhanced premium tax credits at the end of 2025.”

Each individual’s exact premium rate increase, regardless of carrier, will be determined by the plan they select and their region.

BCBS cited projected increases in medical service and prescription drug costs as the impetus for charging higher premiums. The company had initially requested an increase of 21%, but refiled with a higher rate increase — which has the industry worried about policyholders downgrading or dropping coverage.

“It doesn’t look like Blue Cross is really going to be in the picture, which would be very difficult in Texas, as they’re still the only carrier that’s in every single county,” McLaren said. “They may have gone up too much.”

Last year, BCBS only raised rates by an average of 6.6%, and some individuals even saw their premium decrease. The company initially requested in 2024 to hold premiums steady.

United Healthcare, which insures over 580,000 Texans through the ACA, requested a 23% average increase for 2026.

UHC explicitly cited the expiration of the enhanced premium tax credits in its filing requesting a premium rate increase. Other justifications include higher reimbursement rates to providers, more frequent medical visits and providers using new expensive technology.

The company’s 2025 rate increase was 8.9%.

Younger, healthier Texans who get coverage through the ACA are expected to seek out supplemental insurance or alternative plans that have limited benefits if the enhanced tax credits are allowed to expire. In its filing, UHC explicitly priced in expected coverage loss from the expiration of the tax credits. If health insurance is prohibitively expensive, healthy people are the likeliest to drop their coverage — raising the overall risk of the remaining pool and causing insurers to raise premiums.

Some of the state’s other large insurers are requesting the largest rate hike. Celtic Insurance Company is proposing an average 41% premium increase for the over 487,000 Texans the company insurers.

Superior HealthPlan, which covers 475,000 Texans through its ACA plans, also cited the expiration of the tax credits and the resulting assumption that morbidity will rise among the remaining risk pool in its filing. Superior is requesting a 36% average rate increase. Based on regional actuarial differences, premiums will rise more sharply among Superior customers in Houston, which has an average increase of 37%, than in Austin, which is 30%.

Last year, Celtic decreased premiums by 3.2% and Superior only raised premiums by an average of 1.1%.

Beyond the expiration of the tax credits, McLaren said tariffs are also contributing to rising medical costs and therefore higher premiums.

“Medical costs are increasing because a lot of medical supplies are shipped from overseas, so tariffs are going to increase premiums,” McLaren said. “The uncertainty increases premiums.”

Disclosure: Blue Cross Blue Shield of Texas, Texas Association of Health Plans and United Healthcare have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

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