Texas and the Coming Coverage Cliff

Hospital advocates are making the stakes abundantly clear: Congress now has less than a month to avert a health coverage disaster.

In four years, the enhanced premium tax credits (EPTC) for federal Health Insurance Marketplace plans have gone from a temporary post-pandemic initiative to an integral driver of health coverage gains across the vast majority of the U.S. – particularly in states like Texas that haven’t expanded Medicaid. Marketplace enrollment in the Lone Star State has more than tripled since EPTCs were first passed into law in 2021, with nearly 4 million Texans signing up in 2025.

For Texas hospitals, a mechanism proven to cover more Texans en masse can only be a good thing. And Allen Harrison, North Texas Division president of Medical City Healthcare in Dallas, says EPTCs “seem to have hit that tipping point” at which insurance shoppers feel they can afford to become insurance consumers.

“The vast majority of these people, they have jobs, they are working – they are the types of people that Texans, I think, instinctively would want to support,” said Harrison, a member of the Texas Hospital Association’s Board of Trustees. “And we think the enhanced premium tax credits are a very effective and efficient way of supporting those individuals.”

But as things stand now, when Americans change their calendars, many of them will be forced to look at changing their health coverage as well – that is, if they don’t balk at the available alternatives and decide, like too many Texans, to risk becoming uninsured.

Absent congressional action in the next 29 days, EPTCs are set to expire at the end of 2025 – a coverage cliff that remains unresolved after it became a key sticking point in the federal government shutdown that ended in mid-November.

THA, the American Hospital Association and other health care advocates are urging lawmakers to renew the enhanced credits, warning of regressive effects that will hit not just Marketplace enrollees currently using EPTCs, but the whole health care system.

THA federal lobbyist Cameron Krier Massey notes that Texas – already carrying the highest uninsured rate of any state – relies heavily on private-market coverage as it continues to eschew Medicaid expansion.

“A huge component of how we insure people in Texas is they get a subsidy and then they use that to obtain insurance on the private market,” she said. “So for that to be compromised is a real disaster for the state. It puts added stress on our providers.”

EPTCs: What they are, and how they’ve helped

Understanding EPTCs – and the implications of their elimination – begins with understanding that the word “enhanced” is the operative one. The Affordable Care Act’s original premium tax credits for the Marketplace have been central to the ACA since it first became law in 2010. Those subsidies – which provide financial assistance to enrollees with low to moderate incomes – remain permanently entrenched in the law.

But EPTCs, created as part of the American Rescue Plan Act of 2021, both expanded financial assistance for all enrollees already eligible for the original premium tax credits and opened the enhanced credits to newcomers to the Marketplace – specifically, enrollees living in households with incomes over 400% of federal poverty, with out-of-pocket premiums capped at 8.5% of that income.

Although EPTCs were originally set to run through 2022, legislation passed that year renewed them for an additional three years. Their impact on enrollment in the Marketplace has been widespread, with Kaiser Family Foundation (KFF) data showing that Texas has boosted enrollment by 255% since 2020. Nationally, enrollment in the Marketplace has more than doubled, pushing the state of coverage closer to what proponents of the Affordable Care Act envisioned when the ACA became law nearly 16 years ago. KFF notes almost all states have seen an enrollment increase since 2020, with more than 20 individual states doubling their enrollment.

Texas in trouble: Cratering coverage without EPTCs

Recent estimates on the Texas ramifications of losing EPTCs vary, but uniformly paint a portrait of a considerably negative impact. An Urban Institute report released in September estimated that 1.38 million Texans would become uninsured if the credits expire at the end of 2025, a 39% drop.

Other, less dramatic projections still represent substantial coverage disruption. A THA estimate derived from KFF data estimates around 1.1 million Texans could lose their coverage by 2034. And a September analysis by Texas A&M University estimated that up to 800,000 Texans could become uninsured.

Harrison says there’s “remarkable unanimity” in the hospital industry on the necessity of renewing the enhanced credits. He points to the familiar M.O. of patients who can’t obtain insurance: living with conditions or symptoms that would otherwise be treatable, instead of visiting a doctor’s office or another medical option, such as an urgent care clinic.

“They just stay away, and they suffer and they delay care until eventually it’s too bad, it’s too serious, it’s life-threatening and/or they can’t endure the pain any longer,” Harrison said. “And then they come to the hospital emergency room, and at that point, the hospitals are going to provide the care that those people in extremis require regardless of their ability to pay.”

That’s just the beginning of the ripple effect that reaches well beyond the operational health of the hospital, THA lobbyist Massey notes: “Our uncompensated care will go up, our bad debt goes up, there’s more cost-shifting onto those who have insurance. We see premiums going up elsewhere. … Employers that offer insurance to their employees, their premiums can go up. So everyone is impacted in some way or another when we see the uninsured increase.”

Projected national-level impacts of an EPTC expiration include the Urban Institute’s finding that 4.8 million more people will be uninsured in 2026, as well as a Congressional Budget Office analysis that projected 4.2 million Americans would lose their health insurance by 2034.

Uncertainty in D.C.

The future of EPTCs became one of the most fought-over political footballs of 2025 before and during the 43-day federal government shutdown that began on Oct. 1, with Democrats and some Republicans insisting on an extension past the credits’ Dec. 31 expiration date. Ultimately, seven Senate Democrats and one independent agreed to end the shutdown and voted to fund the government through Jan. 30, 2026, with an assurance from Senate GOP leadership that a bill to extend the EPTCs would receive a vote on the Senate floor.

But that deal hardly pushed Congress toward a clear resolution. A Senate floor vote is no guarantee of passage, and no such vote has been agreed to in the House, where Republicans hold a thin majority and don’t have to work with Democrats to avoid the possibility of a filibuster.

Massey believes political pressure will prod lawmakers to work out something to extend the credits before the end of the year, although she notes the presence of insurance premium “sticker shock” already occurring. Proposals and negotiations continue, with the White House last week circulating a proposal to extend EPTCs for two years with adjusted eligibility requirements. But no fully ironed-out deal appears imminent, as Marketplace open enrollment for 2026 continues and some consumers already are seeing premium increases.

For Harrison and like-minded hospital leaders, a clean, permanent extension of EPTCs is the beginning of the path forward.

“Let’s start there,” he said. “If there are additional proposals – alternatives that we could utilize to determine what might be an even better system – well, I’m fine with trying those also. But let’s start with: extend these credits, extend them on a permanent basis so that we’re not in this constant cycle of people having anxiety about whether or not they’re going to have coverage, whether or not they can afford coverage. … If there are better models that can be tried alongside this, by all means.

“We are in favor of more coverage that leads to higher quality of life, that leads to better outcomes. And … in the state of Texas, it tends to lead to higher levels of employability when you’ve got people who can stay healthy and who have financial support to get insurance.”