Executive Summary
The Affordable Care Act (ACA) transformed health coverage in the United States by expanding access to private insurance markets, introducing consumer protections, and enabling millions of individuals to obtain affordable coverage through premium tax credits and cost-sharing reductions. During the COVID-19 pandemic, Congress temporarily enhanced ACA subsidies through the American Rescue Plan Act (ARPA) and extended them under the Inflation Reduction Act (IRA). These enhancements dramatically lowered premiums, reduced out-of-pocket costs, and expanded enrollment in ACA marketplaces to record highs.
Georgia, a state that did not expand Medicaid, experienced one of the most significant enrollment surges in the nation. Marketplace sign-ups more than doubled, reaching approximately 1.5 million policyholders by 2024. Enhanced subsidies were pivotal: they reduced premiums for middle-income families, eliminated costs for many low-income households, and stabilized insurer participation in the marketplace.
However, absent Congressional action, these enhanced subsidies are scheduled to expire at the end of 2025. According to a joint forecast by the Robert Wood Johnson Foundation and the Urban Institute, Georgia’s health care sector stands to lose $3.7 billion in revenue in 2026 alone, representing one of the steepest declines nationwide. The projected losses in Georgia would be second only to Florida and Texas, both states with high ACA enrollment and similarly vulnerable markets.
The expiration would cause insurance premiums to rise dramatically, leading to an estimated 460,000 Georgians dropping coverage. Hospitals, physicians, pharmacies, and other providers would face higher uncompensated care burdens. The state’s uninsured rate, already elevated compared to national averages, would spike. Rural hospitals, many of which are financially fragile, could be forced to close, exacerbating existing disparities in access.
This report provides an in-depth analysis of the projected impact, situating Georgia’s experience within the national context, examining fiscal and political considerations, and exploring policy options.
Introduction
The Affordable Care Act (ACA), enacted in 2010, remains one of the most consequential health policy reforms in modern American history. Its central features include the expansion of Medicaid eligibility (in states that adopted it) and the creation of federally regulated health insurance marketplaces where individuals can purchase private coverage with income-based subsidies. These subsidies — in the form of advance premium tax credits (APTCs) and cost-sharing reductions (CSRs) — are essential in making coverage affordable, particularly for low- and moderate-income households.
The COVID-19 pandemic highlighted both the fragility and adaptability of the U.S. health insurance system. Millions lost employer-sponsored coverage, and the ACA marketplaces became a vital safety net. Recognizing affordability challenges, Congress enacted temporary measures through the ARPA of 2021, later extended by the IRA of 2022. These measures included:
- Enhanced subsidies: Eliminating the income “cliff” that previously cut off eligibility for subsidies at 400% of the federal poverty level (FPL).
- Greater assistance for lower-income households: Reducing or eliminating premiums for those at or near the poverty line.
- Broader middle-class affordability: Ensuring that households above 400% FPL paid no more than 8.5% of income toward premiums.
These changes spurred record enrollment. By 2024, national ACA marketplace sign-ups exceeded 21 million people, with Georgia alone accounting for 1.5 million — double its pre-pandemic level.
Yet, without further legislative action, these enhancements will expire in December 2025. Consumers would revert to pre-ARPA subsidy structures, meaning significantly higher premiums, especially for middle-income families. The Congressional Budget Office (CBO) has estimated that extending subsidies would cost approximately $335 billion over ten years, a sum that has become politically contentious in Washington.
In Georgia, the expiration of subsidies threatens both individual households and the broader health care system. The state’s relatively high uninsured rate, limited Medicaid eligibility, and fragile rural health infrastructure make it especially vulnerable.
This paper explores the anticipated consequences of subsidy expiration in Georgia, drawing from economic forecasts, health policy research, and scenario modeling. It situates Georgia’s projected $3.7 billion health sector loss within national trends, examines distributional impacts, and discusses policy pathways forward.
Literature Review & Background
ACA Subsidies and Health Insurance Affordability
Research consistently demonstrates that subsidies are a critical determinant of marketplace enrollment. Studies from the Urban Institute, Kaiser Family Foundation (KFF), and Commonwealth Fund have shown strong elasticity between premium costs and coverage take-up. For every 10% increase in net premiums, enrollment declines by approximately 2–3%.
Prior to the ARPA enhancements, subsidy structures left many middle-income families without affordable options. For example, a 60-year-old couple in Georgia with an annual income of $70,000 could face premiums exceeding $2,000 per month — effectively pricing them out of the market.
ARPA and IRA Enhancements
The ARPA temporarily transformed affordability by:
- Eliminating premiums for individuals up to 150% FPL.
- Expanding subsidies above 400% FPL.
- Capping maximum premium contributions at 8.5% of income.
The IRA extended these provisions through 2025. Enrollment surged, particularly in non-expansion states such as Georgia, Florida, and Texas, where ACA marketplaces fill a gap left by limited Medicaid eligibility.
State-Specific Context: Georgia
Georgia did not expand Medicaid under the ACA, leaving an estimated 600,000 low-income adults in the “coverage gap” — too poor for marketplace subsidies yet ineligible for Medicaid under the state’s restrictive criteria. This has magnified the importance of enhanced subsidies for those slightly above the poverty threshold.
Georgia’s ACA enrollment climbed from roughly 700,000 in 2019 to over 1.5 million in 2024. Premium subsidies directly supported this growth. Without them, enrollment would collapse, reversing gains in coverage and straining health providers with uncompensated care burdens.
Methodology
This analysis draws on:
- Urban Institute & Robert Wood Johnson Foundation forecasts (2024) projecting revenue losses across states.
- KFF models estimating changes in premiums and enrollment under alternative subsidy scenarios.
- CBO cost estimates for extending subsidies.
- State-level insurance filings and rate projections from Georgia Access (state-run marketplace).
- Peer-reviewed literature on health care economics, particularly insurance elasticity and uncompensated care.
Modeling assumptions include:
- Expiration of ARPA/IRA subsidies in December 2025.
- Reversion to pre-ARPA subsidy structure.
- Static population demographics.
- No Medicaid expansion in Georgia by 2026.
Findings
Overall Financial Impact
- $3.7 billion revenue loss for Georgia’s health sector in 2026, representing a 4.8% decline in total revenue.
- This places Georgia among the three hardest-hit states, alongside Florida and Texas.
- Nationally, the expiration would cost the health sector $32 billion in lost revenue in 2026.
Consumer Impacts
- Premiums for a 60-year-old couple in Fulton County earning $58,000 would rise from $206/month to $2,202/month.
- An estimated 460,000 Georgians would drop ACA coverage.
- The uninsured rate would increase significantly, reversing a decade of progress.
Provider Impacts
- Hospitals face higher uncompensated care burdens, estimated at $1.6 billion annually.
- Rural hospitals, already at risk of closure, would face acute financial stress.
- Physicians, clinics, and pharmacies would see reduced demand for services as patients forego care.
Economic & Fiscal Impacts
- Lost federal subsidies represent a direct withdrawal of spending power from Georgia’s economy.
- Ripple effects include reduced employment in the health sector and diminished local economic activity.
- State and local governments may face higher safety-net spending pressures.
National Comparisons
- Florida: Projected $7.6 billion revenue loss.
- Texas: Projected $8.4 billion revenue loss.
- Georgia: $3.7 billion loss, third largest.
- Medicaid expansion states face smaller proportional impacts, as enhanced subsidies play a smaller role relative to expanded Medicaid eligibility.
Fiscal & Political Considerations
- Extending subsidies would cost $335 billion over 10 years.
- Federal deficit concerns have fueled opposition, particularly among Congressional Republicans.
- Political debates frame subsidies as either essential health equity measures or fiscally unsustainable entitlements.
- Georgia’s state leadership has historically opposed Medicaid expansion and ACA implementation, complicating advocacy efforts.
Policy Scenarios
- Expiration of Subsidies (Status Quo)
- Premiums rise, enrollment declines, health sector revenues fall.
- Disproportionate impact on middle-income and older consumers.
- Extension of Subsidies
- Continuation of enhanced affordability.
- Stabilized insurer participation and provider revenues.
- Targeted Adjustments
- Possible middle-ground options, such as retaining caps for low-income households while phasing out higher-income subsidies.
Case Studies
Case 1: Rural Hospital in South Georgia
A 45-bed hospital already operating at a deficit relies heavily on insured patients from ACA marketplaces. Loss of subsidies leads to coverage drops and higher uncompensated care, pushing the hospital toward closure.
Case 2: Middle-Income Family in Atlanta
A self-employed couple earning $70,000 per year currently pays $400/month for coverage. Without subsidies, their premiums rise to $2,000/month, forcing them to drop coverage.
Case 3: Young Adult in Savannah
A 28-year-old part-time worker earning $24,000 per year pays $0 under enhanced subsidies. Without them, monthly premiums exceed $120, making coverage unaffordable.
Conclusion
The expiration of enhanced ACA subsidies represents a looming crisis for Georgia’s health care system. With projected losses of $3.7 billion in 2026, the state faces higher uninsured rates, reduced provider revenues, and broader economic consequences. The policy decision facing Congress carries profound implications not only for consumers but for the financial stability of Georgia’s health infrastructure.
Extending subsidies would preserve coverage gains, protect providers, and sustain economic growth. Allowing them to expire would unravel progress, deepen inequities, and expose systemic vulnerabilities in Georgia’s health care system.
