FILE – Pages from the U.S. Affordable Care Act health insurance website, healthcare.gov, are displayed on a computer screen in New York, Aug. 19, 2025. (AP Photo/Patrick Sison, File) There was a time when political leaders at least acted like they believed that financial protection was the anchor of a stable and prosperous society, and that uninsurance was something to be minimized. Those days are getting hard to remember.
Policymakers have allowed premiums in the Affordable Care Act individual market to rise dramatically. What’s more, they have thrown a copious amount of sand in the gears to make it harder for people that rely on this market to get and keep their coverage. Now, we are all living with the consequences, as enrollees and insurers exit.
Washington’s message is that these developments reflect the clever execution of a program integrity agenda. But the “fraud, waste, and abuse” narrative has been seriously overworked, and does not fit the facts.
Concerns about the potential for serious enrollment declines in the individual market turn out to have been well founded. The Centers for Medicare and Medicaid Services reported a 5 percent decline in open enrollment in March, when 1.2 million fewer people were enrolled compared to the previous year. But ominously, new enrollment was down 13 percent. And now it is becoming clear that many of the returning enrollees are disappearing.
New data released by the actuarial consulting firm Wakely shows that only 86 percent of 2026 enrollees paid their first premium. The trend was not easily visible at first, due to a 90-day grace period. This has created a slow-motion fadeout, as enrollees who do not pay are not immediately dropped from the rolls. But ultimately, they do fall off, creating lagged waves of disenrollment.
Pennsylvania’s insurance marketplace found that the leading reason cited by those dropping coverage was higher costs. Enrollment data from other state-based marketplaces similarly document a rise in buying down to plans with higher out-of-pocket costs and cancellations due to non-payment of premiums. These patterns track with new estimates of national trends, which forecast that the individual market may contract by as much as 26 percent.
Unfortunately, the market is not just smaller. It is also less healthy. Enrollment declines are never random because people who need care the most will make the greatest sacrifices to keep their coverage. New estimates suggest that morbidity in the individual market will increase by as much as 6.5 percent. Sensing trouble on the horizon, a number of insurers have already announced their exit. They include the national insurer Cigna, as well as a lengthening list of regional plans.
Rate filing data suggest commensurate premium hikes will come in 2027, with double-digit rate increases the norm. Proposed increases exceeding 20 percent were recently filed in New York and Washington. More such news is expected as the rate filing season unfolds across the country. The number of counties with only one insurer, an important barometer of market instability, increased from 72 in 2025 to 145 in 2026. Just with the exits announced already, that number will exceed 200 in 2027.
The federal government is trying to make the case that this is a sign of victory, reflecting the success of their extensive program integrity agenda. The only people leaving the market, Health and Human Services Secretary Robert F. Kennedy Jr. told Congress in April, were people that “were never entitled to coverage.” CMS acknowledged that enrollment decline could reflect a “range of factors,” but highlighted their efforts to eradicate fraud and protect taxpayers.
This is a bad-faith argument, seriously short on both evidence and logic. There has been fraud in the individual market, and some of those who perpetrated it have been criminally prosecuted. That is because rocedures were put in place, mostly during the Biden administration, making it much more difficult for brokers to enroll people in coverage without their knowledge.
By acting as if those changes never occurred, and by using inaccurate and inflationary proxies for the extent of fraudulent or improper enrollment, the administration suggests that every enrollee that left or didn’t enroll in the individual market this year was a would-be fraudster, thwarted by its tough new approach. By castigating those losing coverage as aspiring criminals, the fraud cover story frees the government of the obligation to take any responsibility.
But something is missing. The impact of sharply rising premiums on market behavior fits nowhere into this narrative. When monetary and administrative costs of something rise, demand usually falls. We further know that demand for insurance does not fall randomly. When markets are selected against, insurers become more cautious about taking risk. Some will choose not to participate, and those who remain will charge more.
What’s really happening is buyers and sellers are fleeing the individual market, making difficult but logical decisions in the face of worsening conditions. Millions of people are becoming uninsured, and millions more will increase their financial exposure by switching to plans with much higher out-of-pocket costs. Rising medical debt, more uncompensated care, poorer health and all of the other negative consequences of this large-scale disruption should be expected.
The administration would have you believe this is a good thing, and that they deserve the credit. Only half of that is true.
Katherine Hempstead is a senior policy adviser at Robert Wood Johnson Foundation.
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