NEW ORLEANS – One of the central disputes causing the federal government shutdown is whether to extend the enhanced Affordable Care Act (ACA) premium tax credits, which help lower- and middle-income earners afford health insurance coverage.
Democrats have insisted that any funding package include an extension of those subsidies beyond 2025, while Republicans, including President Trump, have expressed opposition to renewing them.
According to a Sept. 17 analysis by the Urban Institute, 4.8 million Americans could lose coverage in 2026 if the enhanced tax credits expire, with Louisiana among the states facing the steepest declines. The report found that several southern states would see subsidized Marketplace enrollment drop by more than half, erasing much of the progress made in expanding health coverage over the past decade.
“Eight states, Georgia, Louisiana, Mississippi, Oregon, South Carolina, Tennessee, Texas, and West Virginia, would see their subsidized Marketplace enrollment fall by more than half,” the Urban Institute noted in its report called “4.8 Million People Will Lose Coverage in 2026 If Enhanced Premium Tax Credits Expire” authored by Matthew Buettgens, John Holahan, Clare Pan, and Jessica Banthin.
Why Louisiana Would Be Severely Impacted
Several factors make Louisiana especially vulnerable.
High subsidy dependence
A large share of Louisiana’s Marketplace enrollees rely on the enhanced tax credits; without them, many would find premiums unaffordable.
Limited alternative coverage options
For many residents, there are few options outside the ACA Marketplace, especially in rural or underserved areas.
Healthcare cost spillovers
The Urban Institute also forecasts that reductions in coverage will drive up uncompensated care burdens, straining hospitals and state budgets already stretched by other public health challenges. When people lose health insurance (as the Urban Institute predicts could happen if the ACA tax credits expire), more of them end up seeking treatment in emergency rooms or community hospitals without being able to pay their bills. Those unpaid medical costs become “uncompensated care.” Hospitals must either absorb the losses, shift costs to insured patients, or seek state or federal support.
Southern region dynamics
The Urban Institute’s analysis shows that Southern states, particularly those with high uninsured rates or limited Medicaid coverage, would face steeper relative impacts.
While Louisiana did expand Medicaid in 2016, it still shares many of the region’s vulnerabilities: a high reliance on subsidized coverage, lower average incomes, elevated poverty and chronic disease rates, and limited access to employer-sponsored insurance. Those economic and health factors make Louisiana’s population especially vulnerable.
Broader Impacts and Risks
The effects of losing the enhanced ACA subsidies would extend far beyond enrollment numbers. Health experts warn that without affordable insurance, many residents would delay routine care until emergencies arise, driving up hospital costs that often go unpaid.
Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, said, “The negative effects of allowing these tax credits to expire couldn’t be more stark.”
“Insurers are already preparing to send notices to households that they will see increases starting in January 2026,” said Alex Jacquez, chief of policy at the Groundwork Collaborative, an economic policy organization based in Washington, D.C. “People are more and more concerned about the cost of living, and [this is] a hit to their pocketbooks that they will start seeing in weeks.”
The financial strain could ripple through local and state budgets as safety-net programs face heavier demand. Hospitals in rural parishes, already operating on thin margins, would be particularly vulnerable to cutbacks or closures.
The Urban Institute also cautions that the lapse could deepen health inequities. Low-income families, rural residents, and minority communities would be among the first and hardest hit by higher premiums and reduced coverage options.
“If they expire, premiums will rise by thousands of dollars for many families, millions will lose coverage, and people will be forced to make impossible choices between paying for health care, rent, or groceries,” 18 Democratic governors warned in a joint letter to Congress urging lawmakers not to let the ACA tax credits lapse. “Hard-working families, older Americans not yet on Medicare, small business owners, and rural communities—where marketplace coverage is often the only option—will be hit the hardest.”
Fiscal Priorities and Spending Debates
Republicans argue that the expanded subsidies, enacted temporarily through the American Rescue Plan Act of 2021 and later extended under the Inflation Reduction Act of 2022, are too costly to make permanent. The Congressional Budget Office has estimated that keeping the enhanced credits in place for another decade would cost more than $300 billion.
GOP leaders frame the issue as one of fiscal responsibility, saying the federal government cannot afford another large, entitlement-style program without worsening the national deficit.
At the same time, the proposed fiscal year 2026 defense budget totals about $1.01 trillion, roughly $115 billion higher than previous spending levels. In their letter to Congress, Democratic governors warned that while Republican leaders invoke fiscal restraint in opposing the renewal of health care subsidies, federal defense spending continues to rise at historic levels.
