This is an exclusive BHB+ story
With Medicaid redeterminations on the horizon and Affordable Care Act (ACA) marketplace subsidies set to expire at the end of this year, health care consumers could have few places to turn to for coverage.
I foresee these new developments threatening to undermine the behavioral health sector, potentially restricting access to mental health care and substance use treatment — services currently protected as essential health benefits under all ACA marketplace plans.
“What happens if Congress fails to extend the enhanced premium tax credits is clear — fewer people will be covered by insurance, which means fewer people get needed behavioral health care services,” Ellen Montz, managing director at Manatt Health Strategies, told me in an email.
And Montz speaks from a position of authority on the subject. Before joining Manatt, she served as deputy administrator and director of the Center for Consumer Information and Insurance Oversight at the U.S. Centers for Medicare & Medicaid Services (CMS).
“If not extended, Marketplace premiums consumers face beginning in 2026 will increase (an estimated 75%), putting insurance out of reach for millions,” she explained. “Populations disproportionately at risk include low-income, young adults, near-retirement adults and rural populations.”
Mannatt provides legal and consulting capabilities to a number of industries, including health, technology, financial services and retail.
What’s more is at least one major payer has already announced plans to withdraw from ACA marketplace participation next year due to costs. This announcement means that millions of Americans must find new coverage for 2026.
For more than a dozen years, Americans who do not qualify for Medicaid or do not have benefits included through their employer have relied on ACA exchange marketplaces to find insurance coverage. And exchange marketplaces may become more essential in the upcoming years as Medicaid redetermination and funding cuts could lead to more Americans without coverage.
In this exclusive BHB+ Update, I will explore:
– The implications of ACA marketplace subsidies not being renewed
– Why some payers are reevaluating ACA marketplace exchanges
– How the behavioral health industry will be impacted by potential coverage gaps
Subsidies end
In 2021, the Inflation Reduction Act put in subsidies, which are tax credits used to lower monthly premium payments for most individuals enrolled in a marketplace plan.
“Under Biden’s Inflation Reduction Act, there were subsidies for people to get into the exchange market, and that’s going to be important for us all to monitor as well, because through adverse selection for our actuaries, what we’re able to see was shifting of membership from one benefit to another when one benefit ends,” Yagnesh Vadgama, vice president of clinical care for autism at Magellan Health, said at the Autism Investor Summit. “So you think about when the ACA first went live, how many people overnight jumped into the exchange market, largely driven by this new benefit.”
Magellan Health is a Centene (NYSE: CNC) subsidiary focused on managed care services for specialized populations.
The subsidies lowered the cost of insurance substantially. According to the Kaiser Family Foundation, individuals making up to 150% of the poverty level were eligible for free or nearly free coverage. Enrollees earning four times the poverty level had their premium payments capped at 8.5% of their income.
“Maintaining mental health coverage continuity should be an urgent priority, especially considering that one in five Americans experiences mental illness annually, yet only 45% receive treatment,” Tom Cohen, EVP of healthcare solutions at Softheon, told me in an email. “Meanwhile, the Congressional Budget Office projects 3.8 million Americans could lose coverage annually from 2026-2034 if subsidies expire, with premium payments potentially rising by 75%.”
About 43% of Americans already worry about limited provider choices in their current plans, Softheon research suggests. That’s a particular concern for behavioral health patients who depend on established therapeutic relationships, Cohen pointed out.
Softheon is a platform that facilitates health insurance enrollment, administration and renewal. It specializes in working with health insurance exchanges, Medicaid and Medicare.
While ACA marketplaces will still be available next year, the potential subsidies could mean that millions of Americans will lose affordable coverage — creating a devastating ripple effect for both patients and behavioral health providers nationwide.
Vadgama noted that many people accessing benefits through the ACA marketplaces have sought out a specific service, such as applied behavior analysis (ABA) for autism care.
“I think it’s going to be terrifying because what we have seen on the exchange market is many people getting in and just accessing ABA,” Vadgama said. “So we’re seeing people getting services, and they’re only getting [health plan coverage] because they need access to [one] thing, which is good and what you’re supposed to do. But if both Medicaid and the subsidies [are cut], I think it’s going to be big trouble right away.”
And to be clear, subsidies could continue. The Republican-led Congress has the opportunity to extend these subsidies in the future. Though with many health care cuts on the table, the future of these subsidies doesn’t look particularly rosy.
Payers pull back from marketplace plans
Cuts on subsidies aren’t the only potential threat to ACA marketplaces. Payers are now reevaluating their participation.
At the beginning of this month, CVS Health (NYSE: CVS) announced that its insurance arm, Aetna, will no longer sell its health plans in the ACA marketplaces in 2026. During the company’s Q1 earnings call earlier this month, CVS Chief Strategy Officer Larry McGrath said that the company was “disappointed by the continued underperformance from our individual exchange products,” prompting it to discontinue the program.
“I think even just looking at Aetna alone, they have around 1 million exchange enrollees who would be affected by this,” Jenny Welling-Palmer, chief strategy officer at Thriveworks, told me. “Practically, that means premium increases and coverage gaps. When premiums and out-of-pocket costs increase, it not only discourages enrollment but also reduces the funds people have available for co-pays and coinsurance, making it even harder to access mental health care.”
Lynchburg, Virginia-based Thriveworks operates 340 offices and has a staff of more than 2,200 clinicians in 49 states and D.C.
Welling-Palmer noted that mental health provider groups, such as hers, need to enhance out-of-network billing processes and telehealth offerings to fill those gaps.
The move could also make it harder for providers to justify reimbursement increases. At the same time, providers may look to diversify their payer mix to offset the referral loss from exchange plans, Welling-Palmer noted.
While Aetna is the only major payer to pull out of the exchange program thus far, it could signal that other payers are beginning to reevaluate their participation in these exchange marketplaces.
“Health insurers want to operate in stable markets with stable risk profiles. When stability is threatened, insurers are less likely to enter and more likely to exit, which significantly impacts consumers,” Montz said. “While the Marketplace has experienced significant growth in insurer competition in recent years, the Marketplace proposed rule recently released by CMS and the prospect of Congress not extending the enhanced tax credits increase instability and decrease the attractiveness of the Marketplace to insurers.”
Understanding the consequences
Fewer insured patients are typically a lose-lose situation for behavioral health providers. Patients have less access to services; providers have less access to reimbursement.
Unfortunately, cuts in coverage typically impact the most vulnerable Americans – many of whom are living with a behavioral health condition.
“Quality, affordable, accessible health care at every stage and every circumstance of life is essential for a healthy and productive population,” Montz said. “Policies that reduce coverage, like not extending the ACA enhanced tax credits or limiting Medicaid eligibility, leave millions of Americans without any insurance coverage options and, consequently, with limited availability to seek the health care services they need when they need it. Even under current law many lack eligibility for health insurance and health care remains unaffordable. There are important debates to be had over policies that best reduce the growth of health care costs and increase access, but that’s not to focus of the policies under consideration.”
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