Texas won't be spared: Big changes coming to Medicaid, Marketplace health insurance in 2026

The signing of the Big Beautiful Bill, aka the federal budget, on July 4 will affect health care cost and access for many Texans. The scope of many of the changes are still unknown and there are opportunities for some changes to be rolled back or offset by other means, including state funding.

The Texas Health and Human Services Commission, which manages the state's Medicaid and Affordable Care Act's Health Insurance Marketplace programs, said it is "assessing the impacts" of the the federal budget.

"HHSC will work with our federal partners regarding any possible changes to benefits," wrote James Rivera of the department's office of communications in an email.

Rivera would not go into specifics such as whether the state would make up for funding changes to Medicaid and the Affordable Care Act that the KFF nonprofit health research group said could cause an estimated 1.9 million more Texans to be uninsured.

"The scale of the changes to the health care system is staggering," said Larry Levitt, the executive vice president for health policy at KFF. Some of the changes could present "nasty surprises" to people who have Medicaid or Marketplace insurance.

The state also would not give its estimate of how many more people will become uninsured by the federal budget changes.

Here's what we do know:

Affordable Care Act plan costs will rise

If you get your health care through the Affordable Care Act's Marketplace at healthcare.gov, the increased subsidies that were available from 2021's American Rescue Plan Act and 2022's Inflation Reduction Act will be going away in January. If you make more than 400% of the federal poverty level (which would be less than $62,600 for one person and $128,600 for a family of four), you will not be eligible for any subsidies.

One change that could help: more plans will qualify for health saving accounts, which are pre-taxed dollars set aside to be used for health care costs. If you are able to enroll and save money in an HSA, you could lower your taxable income and increase your ability to qualify for subsidies.

With the enhanced subsidies going away, KFF expects Marketplace monthly premiums to rise by 75% on average in January.

For Austin-based Sendero Health Plans, which has plans on the Marketplace, the changes to the ACA has created a guessing game of how much to raise premiums to remain competitive but not low enough to be unsustainable. "These new regulations are so complicated," said Sharon Alvis, the CEO at Sendero. "Every plan is getting a look."

KFF estimates that more than 770,000 Texans are expected to choose no insurance rather than pay the increased premium rates.

People most likely to drop out of the Marketplace will be younger, healthier people who decide to take a chance on not having insurance rather than pay increased premiums.

Norris reminds that while hospitals have to provide care for an emergency situation regardless of your insurance status, they only have to stabilize you. They do not have to provide surgery or treatments to solve the problem that caused you to come to the hospital.

Consumers can expect the cost for insurance, including premiums and out-of-pocket expenses, to continue to increase in subsequent years without those healthy people on the plan to lower the cost-per-person rates for insurance companies.

"Insurance is spreading the risk," Alvis said. "If all the healthy people say 'I can't afford it,' then we'll try to manage on fewer people with fewer dollars."

As a nonprofit, Sendero's mission is providing health care to people who could not otherwise afford it, Alvis said. It is likely to stay in the ACA Marketplace, but some for-profit companies might not without the subsidies to bring healthy people to their plans.

If companies drop out, consumers will have less choice in their plans.

Enrolling in the Marketplace will get harder

Affordable Care Act plans also will no longer be available for people who are not U.S. citizens but are here legally, and will not be available for people who came to the country illegally as children. Those so-called Dreamers are expected to be disenrolled in government plans in August.

Even if you do qualify, the Marketplace will no longer automatically re-enroll people for coverage next year. If you want to enroll, you will have to make a selection and verify your income each year.

For the regular enrollment period, which begins Oct. 15 through Jan. 15, participants will be expected to have more documentation of their income and be more on the hook to estimate next year's income correctly.

"Over the last few years, they made it easier to enroll with less documentation needed," said Louise Norris, a health insurance expert at the nonprofit consumer group HealthInsurance.org. "They are putting that red tape back in place."

The Marketplace will use the IRS system to verify income, but if that income doesn't match the IRS, you will have to attest that the income you are projecting for next year is accurate and provide documentation. If your estimate is not correct, you will have to pay back subsidies on your taxes in a lump sum. It will be important to report any changes to income level immediately to not get hit with that lump sum repayment.

Because so many changes will be coming to the Marketplace plans, you will need to re-evaluate your plan and others to make sure you are choosing the best one for what you need, as well as the out-of-pocket costs.

Beginning Aug. 25, everyone who wants to enroll in a Marketplace plan can only do so during the regular enrollment period. The provision that allowed people making less than 150% of federal poverty level to enroll throughout the year will end.

People also will have less help enrolling. The federal government cut the funding for Marketplace navigators by 90%, which means you will be expected to either enroll on your own or book an appointment with a navigator early. You also could use a broker, but that broker is paid for by the insurance companies.

"Start paying attention early," Alvis said. "Don't wait until Dec. 13 to start looking."

Once the 2026 Marketplace is open on Oct. 15, look at the whole plan, not just the monthly premiums, or even the gold, silver or bronze levels, said Rudy Ybarra, the development director of Sendero.

Consumers get frustrated when they buy a plan that is the least expensive and later discover it doesn't pay for much, Ybarra said. They might have saved money by spending more in monthly premiums that cover more care rather than having unmanageable out-of-pocket expenses.

Changes to Medicaid

Texas' Medicaid population tends to be children, pregnant people or people who have had a baby less than 12 months ago, seniors in nursing homes or people with disabilities who are unable to work. Many of the changes, including work requirements, will not affect people in states like Texas that did not expand Medicaid coverage for people making more than 133% of federal poverty level.

Eligibility verification for all Medicaid recipients will be done every six months and is expected to be more stringent, much like the Medicaid unwinding in 2023 and 2024 that caused about 1.8 million people in Texas to lose coverage.

Funding cuts to Medicaid include special incentive programs that pay providers like hospitals a subsidy for providing quality care. Without those subsidies, the cost to provide care goes up on a per-person basis and the reimbursements go down.

"If you start losing that revenue, the (cost of) uncompensated care gets shifted into the private payer," Norris said.

Meaning that if you come into the hospital with employer-plan insurance, your appendectomy could cost substantially more next year.

Hospitals, especially those that rely on Medicaid as a larger percentage of income such as rural and children's facilities, also could cut some of the services they provide because of the subsidies being gone.

What happens if you lose insurance?

In Travis County, if you make less than 200% of the federal poverty level you can qualify for the Medical Access Program or the Medial Access Program Basic through the Central Health hospital district. MAP is free and MAP Basic has some consumer-paid expenses, and which one you qualify for is based on your income levels.

Central Health is expecting to see an increase in MAP enrollees next year because of the changes to Medicaid and the Marketplace.

You also can seek care through federally qualified health care clinics, which offer sliding scale payments and can help you navigate government programs. These include CommUnityCare, People's Community Clinic and Lone Star Circle of Care.

Those federally qualified clinics also are facing funding uncertainty and are expecting to see an increase in patients because of the Medicaid and Marketplace changes.