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GOOD NEWS! NEW MEXICO pledges to backfill 100% of lost federal ACA subsidies! [1]
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Date: 2025-09-07
New Mexico has around ~70,000 residents enrolled in ACA exchange plans, 85% of whom are currently subsidized. I estimate they also have another ~8,000 unsubsidized off-exchange enrollees.
Combined, that's 78,000 people, although assuming the national average 6.6% net enrollment attrition rate applies, current enrollment would be back down to more like 70,000 statewide.
How did we get here?
In early 2021, Congressional Democrats & President Biden passed the American Rescue Plan Act (ARPA), which dramatically expanded & enhanced the original premium subsidy formula of the Affordable Care Act, finally bringing the financial aid sliding income scale up to the level it should have been in the first place over a decade earlier. They then extended the subsidy upgrade out by another 3 years via the Inflation Reduction Act.
In addition to beefing up the subsidies along the entire 100 - 400% Federal Poverty Level (FPL) income scale, the upgrade eliminated the much-maligned "Subsidy Cliff" at 400% FPL, wherein a household earning even $1 more than that had all premium subsidies cut off immediately, requiring middle-class families to pay full price for individual market health insurance policies.
Unfortunately, the improved subsidies are currently scheduled to end effective December 31, 2025. Needless to say, with Republicans holding a trifecta, it's highly unlikely that the IRA's enhanced subsidies are going to be be extended further. They had the opportunity to do so as part of H.R. 1 (the so-called “Big Beautiful Bill”), but chose not to.
It gets worse:
In addition, the so-called “Affordability & Integrity Rule” put into place by RFK Jr., & Dr. Oz at the Centers for Medicare & Medicaid Services (CMS) is causing 2026 subsidies to be even less generous and gross premiums to increase even more.
In New Mexico specifically, all of this will result in average gross premiums hikes of 35.3%.
I decided to run the numbers myself to get an idea of just how much the combination of expiring IRA subsidies and the CMS "Affordability/Integrity Rule" will cause net premiums to increase starting in January 2026.
I'm using four household scenarios, at several different income levels for each:
a 50-yr old single adult earning between $20K - $70K/year
earning between $20K - $70K/year a 30-yr old single parent w/an 8-yr old child , earning between $20K - $90K/year
, earning between $20K - $90K/year a 40-yr old couple w/2 children age 15 & 12, earning between $40K - $130K/year
age 15 & 12, earning between $40K - $130K/year a 64-yr old couple earning between $20K - $90K/year
There's several caveats:
The average Benchmark Silver ACA premiums are based on 2026 levels.
Benchmark Silver premiums vary widely depending on where you live & other factors.
In some states, children under 19 are eligible for CHIP or Children's Medicaid at a significantly higher household income level. This can cause a sudden jump in full-price premiums as the household income moves over that eligibility threshold.
These analyses assume that the enrollees choose the benchmark Silver plan, and that the benchmark plan remains the same both years (the actual benchmark plan often changes from one year to the next).
Like some other states, New Mexico has their own "Turquoise Savings" subsidy program on top of the federal subsidies; I have no idea how this will play out next year with the expiring IRA subsidies, but it's going to mean drastic rate hikes for a lot of people regardless.
The original version of this analysis included a 4.3% increase in the unsubsidized benchmark plan premium based on a projection by the Congressional Budget Office. However, that was a national average projection which didn’t take into account other factors like increased utilization, medical inflation and so on. This updated version assumes the actual 2026 rate filings.
The original version of this analysis assumed that the Applicable Percentage Table would revert back to the pre-2021 levels. However, the Trump Administration recently modified the formula used to calculate this which means that ACA subsidies will be even less generous starting in 2026.
With all that understood, let's take a look (See below):
A single 50-yr old earning $40,000/yr would go from paying NOTHING in premiums this year to as much as $298/month... technically an infinite increase.
A single parent earning $50,000/year would go from paying NOTHING in premiums this year to as much as $344/month... again, technically an infinite increase.
A family of four earning $70,000/year would see their premiums jump from NOTHING this year to as much as $436/month.
A 64-yr old couple earning $90,000/yr would go from paying $637/mo to $3,579/mo...5.6x as much as they're paying today for the same policy.
HOWEVER, in New Mexico’s case, there’s actually some EXCELLENT NEWS:
New Mexico confirms avg. 35.7% rate hikes but promises to match lost federal subsidies for nearly all enrollees! ...While it appears that Congress will allow enhanced federal Premium Tax Credits to expire, New Mexico’s Health Care Affordability Fund (HCAF) will cover the loss of the enhanced premium tax credits for households with income under 400% of the Federal Poverty Level (or $128,600 for a family of four), providing up to $68 million in premium relief for working families who enroll in coverage through BeWell in 2026. Federal and state premium assistance will continue to reduce the impact of the rate increases.
This is HUGE.
85% of NM ACA exchange enrollees earn less than 400% FPL, which means, if I'm reading this correctly, that 85% of NM ACA enrollees will have the federal subsidy losses cancelled out. By comparison, California and New Jersey (other states with their own supplemental subsidy programs) are only able to mitigate 9% and 40% of the lost IRA subsidies respectively.
Even better: According to this NM Health Care Authority 2026 manual, the state somehow has enough funding to backfill all of the lost federal subsidies up to 400% FPL without eliminating the Turquoise Plan assistance, which is awesome.
The bottom line is that for 2026 at least, the 85% of enrollees who earn less than 400% FPL will be held completely harmless...although those over 4x the poverty level will still be screwed:
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