Starting in 2027, states including California, Colorado, and New Mexico will offer financial assistance to Obamacare enrollees to help lower their monthly premiums. This move comes after the expiration of enhanced federal premium subsidies at the end of 2025, which had previously led to a significant increase in average premiums—up 58% to $178 per month in 2026.
The funding from these states aims to counteract a decline in enrollment, which fell by 13% to 19.2 million in February 2026, attributed largely to the increased costs following the subsidy lapse.
Notably, New Mexico is fully replacing the lost federal subsidies, resulting in a 14% increase in enrollment, while California has expanded its eligibility criteria and increased its funding for premium assistance to $300 million in 2027.
Experts suggest that states providing these subsidies may experience better enrollment retention compared to those that do not, although the sustainability of these programs will depend on state budgets. Overall, this initiative reflects a response to the broader affordability concerns that have emerged as a significant issue for U.S. households