Federal policy is stress-testing the nation’s private insurance marketplace, and the early evidence points to grim instability.
The implementation of the One Big Beautiful Bill Act has pushed the individual insurance market into a period of high-stakes volatility. At the center of that shift is the expiration of enhanced premium tax credits, which ended after Congress chose not to extend them at the close of 2025.
With those subsidies gone, the pricing cushion that helped stabilize enrollment has narrowed. Insurers are now absorbing increasing financial pressure as medical costs and utilization continue to rise nationwide.
Many industry experts warned this would happen if the subsidies expired. Back in September 2025, analysts at KFF, a nonpartisan health policy research, polling, and news organization, projected the expiration would double out-of-pocket premiums for many enrollees and lead to significant enrollment declines. They also noted that the effect would potentially push millions out of coverage.
The Impact of Market Insurers Leaving The Marketplace
The private insurance landscape is seeing a high volume of strategic retreats by insurers. These changes could severely reduce competition in several states, potentially driving up premiums and increasing the number of uninsured patients.
Cigna Healthcare
Cigna announced it will exit the Affordable Care Act’s individual marketplace in 2027.
During the company’s first-quarter earnings call in May, executives said they were “pleased with Cigna Healthcare’s strong first quarter results.” The company reported $62.8 billion in revenue for the quarter.
While addressing their exit from the Affordable Care Act’s individual marketplace, company officials said the move was necessary to sharpen its organizational focus and reallocate resources. They also shared Cigna is prioritizing the high-margin stability of its Evernorth pharmacy benefits and employer-sponsored plans.
“We did not make this decision lightly and appreciate the importance of ensuring patients have continuity through the transition,” said Brian Evanko, Cigna’s chief operating officer. “There are no changes to coverage or networks related to this announcement, and we will support members through their open enrollment transitions into 2027.”
The exit will affect approximately 369,000 members enrolled across 11 states. Many of these people will need to find new health coverage in a marketplace with fewer options.
Aetna
Last year, the individual insurance marketplace saw the departure of Aetna. It was an exit that affected approximately 1 million members enrolled in its Affordable Care Act plans across 17 states. Parent company CVS Health announced the decision following stronger than expected financial performance. Executives shared that Aetna’s Affordable Care Act exchange business continued to underperform financially despite record enrollment growth.
The company previously exited the Affordable Care Act marketplace in 2018 before reentering in 2021. It initially participated in the marketplaces when the exchanges launched in 2014. However, Aetna began scaling back its participation before fully exiting in 2018, citing financial loss.
The insurer later reentered the marketplace in 2022 coverage year saying the market had stabilized. This market stabilization was aided in part by the now-expired enhanced premium tax credits introduced under the American Rescue Plan.
UnitedHealthcare
UnitedHealthcare, the nation’s largest health insurer, said it expects its Affordable Care Act marketplace enrollment to shrink by roughly two-thirds in 2026, leading them to scale back their business in the marketplace.
The company is not exiting the exchanges entirely. Instead, they are downsizing by narrowing provider networks, redesigning plans, adjusting formularies and reducing service areas across 30 states. UnitedHealthcare also announced major cuts to its Medicare Advantage business for 2026. It included the closure of more than 100 plans and exits from 109 counties nationwide
Earlier this year, UnitedHealth Group chairman Stephen Hemsley testified before Congress about the Affordable Care Act exchange participation and mounting market pressures. During the hearing, Hemsley said the company would rebate profits tied to its exchange business.
“Though UnitedHealthcare is a relatively small participant in the individual ACA market, we will voluntarily eliminate and rebate our profits this year for these coverages, as Congress continues to work toward more long-term solutions,” Hemsley said.
The rebates return excess earnings from certain Affordable Care Act marketplace plans to enrollees rather than retain them as corporate profit. UnitedHealthcare did not disclose detailed segment profitability, limiting public visibility into its financial impact.
Baylor Scott & White Health Plan
Baylor Scott & White Health Plan, a top private insurer in Texas, announced they will withdraw from the state’s Affordable Care Act marketplace and Medicaid managed care program by 2027.
This departure is expected to impact more than 225,000 members across both programs. Current members in the impacted plans will remain covered through the end of their existing contracts, and the company said it would provide resources to help beneficiaries transition to new coverage.
In a statement, the regional insurer pointed to ongoing challenges in the individual and Medicaid markets. They did not cite a cause for the exit. The organization said it aims to focus on its employer-sponsored insurance business and Medicare Advantage plans.
Insurers Won’t Risk The Spiraling Cost Of A High-Risk Market
As premiums climb, the market is beginning to spiral. The stability of health insurance plans depends on a delicate balance between healthy and high-need enrollees. Healthy members pay their premiums while utilizing less care, effectively subsidizing the costs for sicker members.
When premiums rise, younger, healthier individuals are often the first to opt out, concluding that the coverage is no longer worth the price. Those with chronic illnesses or ongoing medical needs are more likely to remain enrolled as the benefits of coverage continue to outweigh the rising cost of premiums.
Insurers generally anticipate this shift. As the healthy population shrinks, the remaining pool becomes more expensive to cover. To compensate for these high-need members, insurers raise premiums further, which in turn drives away even more healthy participants in a self-reinforcing cycle.
The enhanced premium subsidies, introduced in 2021 under the American Rescue Plan Act, acted as a stabilizer for this risk pool. The subsidies incentivized broad enrollment by reducing costs to draw healthier patients into the risk pool. This mechanism helped offset the costs of higher-need enrollees.
The expiration of these credits removed a key pillar that held the Affordable Care Act risk pool together. For an industry highly sensitive to risk, this shift fundamentally changes the math.
As insurers retreat from the market, hospitals and clinicians are often left absorbing the financial burden for the newly uninsured. Practices will need to prepare for new administrative burdens tied to coverage and reimbursement verification in a market in flux.
