Policy-Driven Premium Increases and Consumer Plan Selection: Evidence from Maine’s Marketplace

• In Event: Federalism in Practice: State Policy Discretion and Coverage and Market Outcomes in the ACA

Abstract

Under the American Rescue Plan Act of 2021, premium tax credit eligibility and amounts were expanded, substantially lowering Marketplace premiums and contributing to record enrollment. These enhanced subsidies expired at the end of 2025, leading to sharp increases in net premiums. While overall Marketplace enrollment declines have been documented since the enhanced subsidies expired, there is limited research to date on how variation in premium increases from this policy shock interacted with consumers’ decisions to drop coverage or switch plans. This study uses 2025 and 2026 open enrollment data from Maine’s state-based Marketplace to assess the impact of premium increases following the expiration of the enhanced subsidies on consumer plan selection. Leveraging individual-level panel data linked with consumer survey responses, we examine both extensive- and intensive-margin outcomes. First, we estimate the impact of net premium increases on the likelihood of dropping Marketplace coverage altogether due to cost concerns. Second, conditional on continued Marketplace enrollment from 2025 to 2026, we assess the impact of net premium increases on plan-switching behavior. In addition to estimating overall effects across both outcomes, we harness rich consumer- and plan-level data to test for heterogeneity across consumer characteristics, including household income level, baseline plan selection, and demographic traits. In light of Maine’s older and more rural population, we focus on potential varying effects of higher net premiums across geographic residence and household age profiles. We supplement our analysis of the open enrollment data with information on mid-year plan selections to examine the evolution of consumer decision-making under continued higher monthly premiums into 2026. This study provides new evidence of consumer price sensitivity for health insurance coverage in the context of a large-scale policy shock. In addition, the findings from our analysis have direct implications for policymakers seeking to design targeted interventions that maintain Marketplace coverage and promote market stability following the expiration of the enhanced subsidies.

Author

• Jordan Rhodes, Maine Department of Health and Human Services
  Presenting Author