The number of people enrolling in health care plans through the state’s insurance marketplace may be at a record high, but the quality of coverage is down for thousands of Marylanders, officials told lawmakers this week.
The expiration of popular federal tax credits last year led to higher health care costs across the board, and some Marylanders just couldn’t afford their previous plans, opting for cheaper, less-comprehensive health care coverage for the 2026 plan year.
It was one of the many caveats that came with the newest enrollment data, which actually showed an overall increase in enrollments — despite expectations that rising costs would push more people away from coverage.
Michele Eberle, executive director of the Maryland Health Benefit Exchange, urged lawmakers to “dig deeper” into the data, because 5,743 people moved from a higher coverage policy called a “gold plan” to the bottom rung 0f coverage, a “bronze plan,” taking on significantly higher deductibles to maintain less-comprehensive health coverage.
“Most of our bronze plans carry $10,000 deductibles, so now that financial burden for medical has gone up tenfold for that family,” Eberle told senators during a Thursday briefing for the Finance Committee.
Gold plans tend to have a deductible of around $1,000, meaning plan holders only have to cover $1,000 of a significant medical cost before their insurance steps in to cover the rest.
“That’s really, really unfortunate that that’s happening,” said Vincent DeMarco, president of the Maryland Health Care for All coalition. “That means that people are not going to be able to get the health care that they need and are going to go to the hospital and create uncompensated care … we’ll have to pay for that hidden health care tax.”
A major factor to health care costs rising is the expiration of Enhanced Premium Tax Credits, a popular COVID-era federal benefit that helped keep monthly costs down for 190,000 Marylanders who purchased individual plans on the state’s Affordable Care Act marketplace.
“The federal government’s inaction to extend the tax credits means those who can afford coverage will be forced to pay more while getting less,” Health Secretary Meena Seshamani said in a written statement. “The ripple effect of this will lessen access to needed health care, result in job losses for health care workers, and be a blow to our state’s economy in a time when Marylanders are already experiencing rising costs in so many areas of their lives.”
New data from the exchange supports Seshamani, as data reports that thousands of Marylanders found their previous plans were no longer affordable and dropped to lower-quality plans.
The end of the federal tax credit in December had ripple effects on the whole health care economy. Last year, state insurance officials approved an average 13.4% premium rate increase for 2026 health care plans, to compensate for the expected drop in enrollment.
Despite those rising costs, Marylanders proved they wanted health care, officials said.
State subsidy softens blow to enrollment
According to early data, about 255,600 people purchased individual health care plans from the Maryland Health Connection, with 207,797 people renewing coverage this year and 47,815 newly enrolling in the exchange.That’s about 3.4% more than in last year’s open enrollment period.
The early data eases fears of what many anticipated to be a major drop in coverage due to the expiration of the federal tax credits. But officials from the marketplace note that the 2026 data is not finalized, and there may be a drop in enrollment numbers in coming weeks.
“Individuals must pay the first month’s premium to their insurance company by the end of January to start coverage,” according to a press release from the Maryland Health Benefit Exchange. “There will be some who will get the first month’s bill and not be able to pay.”
A new state-level subsidy may help some people keep their health care plans.
Maryland lawmakers last year approved funding, called the Maryland Premium Assistance, to help replace some of the lost benefit for 2026 plans.
Senate Finance Committee Chair Pamela Beidle (D-Anne Arundel) believes the new state-level subsidies likely helped stave off a massive drop in enrollment.
“I thought more people would leave their plans,” Beidle said. “I’m sure the state subsidy is helping people to stay.”
The Maryland Premium Assistance subsidy replaces the extended tax credit for those earning up to twice the federal poverty level. For those earning two to four times the federal poverty level, the state subsidy can replace 50% of the value of the federal tax credits.
Without the state-level premium assistance program, the exchange anticipated that 90,000 people would have dropped their coverage when the federal tax credits expired. Even with the state subsidy in place, the marketplace estimated that some 30,000 people dropped their coverage because they can no longer afford it.
The new state subsidy is likely a temporary solution to what could be a long-term problem if Congress does not renew the lapsed federal tax credit, which is currently under debate in Washington.
The state may not be in position financially to continue funding the program down the line.
The state’s premium subsidy is currently funded by Maryland’s reinsurance program — a special fund through which insurers are reimbursed for a portion of the costs of patients requiring the most expensive care.
The reinsurance program is funded through a 1% assessment on health insurance policies and is currently set to end in 2028 unless the federal government approves an extension on the state’s waiver for the program.
Beidle said that continuing to fund the premium subsidy past 2026 would likely require increasing the assessment or pulling from general funds. But lawmakers this year face a $1.5 billion budget shortfall in the fiscal 2027 budget.
“Our overall budget is so tight,” Beidle said. “There’s only so much you can do with a limited amount of money.”
She noted that the open enrollment data will finalize around March and the legislature would likely have some time to respond if legislative action is needed.