If enhanced APTCs expire at the end of 2025, the ACA moves into its first post-subsidy marketplace in over a decade—and risk adjustment becomes one of the biggest pressure points for issuers.
In this episode of Regulatory Joe, ClearFile President Joe Boyle explains how subsidy changes can reshape the single risk pool, disrupt risk adjustment payments, and redefine health plan strategy heading into Plan Year 2027.
Risk Pool Shifts in a Post-Subsidy ACA Marketplace
The expiration of enhanced APTCs alters more than enrollment. It reshapes ACA risk adjustment dynamics by changing who stays insured and how they seek care.
Key impacts include:
- Loss of subsidies may push lower-income, higher-risk members out of coverage
- Remaining members could delay care longer, increasing acuity and cost
- Risk scores may rise even if total membership does not
- Metal tier distribution may shift, influencing plan-level transfer payments
The net effect: risk adjustment payments may swing more sharply in a post-subsidy market, even for plans with relatively stable enrollment.
Why ACA Risk Adjustment Impact Peaks for Health Plans in 2027
Because ACA risk adjustment operates on a lag, the financial effects of subsidy changes don’t surface immediately. Even if enhanced APTCs expire at the end of 2025, issuers won’t fully see those shifts reflected in payments, transfers, and reconciliation until they’re developing and filing rates for Plan Year 2027.
That’s the point at which new subsidy assumptions shape rate development and product strategy, multiple years of risk adjustment reconciliation intersect with a very different risk pool, and new entrants must make early decisions about paying the default charge versus standing up EDGE infrastructure. Renewal issuers, meanwhile, can no longer rely on historical morbidity and utilization trends to project the future with any confidence.
In short, 2027 becomes the first year where risk adjustment outcomes fully reflect a post-subsidy marketplace.
MLR, Capital and Regulatory Impacts for Health Plans in a Post-Subsidy ACA Market
The shift to a post-subsidy ACA marketplace introduces new operational and financial risks that extend beyond actuarial modeling.
There are several areas where regulators may intensify scrutiny:
- ACA MLR stability: Premium changes and delayed care can cause significant volatility.
- Capital and reserve adequacy: Regulators may ask for more ACA-specific financial detail.
- URRT justifications: Projections must clearly account for risk pool changes.
- RADV readiness: CMS continues to expand documentation expectations.
As subsidy structures change, premium dollars and claim behavior may move out of sync, creating short-term financial instability if plans are not prepared.
Recommendations for Health Plans Preparing for Post-Subsidy Risk Adjustment
- Build multi-scenario ACA risk adjustment models: Model membership, risk profile, and transfer payments with and without subsidies.
- Stress-test MLR and capital plans: Assess volatility across 2026-2028 under different care-seeking and premium patterns.
- Strengthen risk adjustment operations and RADV processes: Work to improve coding accuracy, documentation quality and EDGE data completeness now.
- Engage regulators early: Signal stability, share preliminary assumptions and stay aligned on expectations.
- Don’t wait to begin strategy work: Don’t wait for the already-delayed NBPP to be released—establish a flexible plan that can be refined once rules drop.
