As open enrollment draws near, Marketplace health plans are bracing for what could be the most turbulent season in a decade. With the looming expiration of Affordable Care Act (ACA) subsidies and increasing financial pressures, payers face a challenging road ahead. Experts estimate that more than four million Americans could lose coverage if subsidies are not renewed, triggering an 18% rise in premiums and a 75% spike in out-of-pocket costs for enrollees.
In this uncertain climate, health plans must act now to stabilize membership, manage costs, and prepare for a dramatically altered landscape in 2026.
Paul Schuhmacher, managing director at consulting firm AArete, works closely with payers across the country. He shared what health plans should prioritize to remain competitive, retain members, and ensure long-term sustainability in the face of subsidy uncertainty and rising volatility.
The Most Urgent Challenge: Affordability Uncertainty
According to Schuhmacher, the number one challenge right now is affordability volatility. “Plans are having to make critical pricing and benefit design decisions while facing potential shifts in subsidies, medical cost trends, and consumer behavior,” he says. “That combination of volatility makes it difficult to project enrollment levels and maintain a stable risk pool.”
Health plans are essentially navigating blind. They’re setting premiums and building benefit structures without knowing whether key subsidies will continue. And for many consumers, that uncertainty will impact their decision to stay enrolled or leave the marketplace entirely.
The Impact of Expiring Subsidies: A Smaller, Riskier Pool
If ACA subsidies are allowed to expire, the fallout could be swift and severe. “A drop of that scale would have a double impact,” Schuhmacher explains. “First, it would reduce membership, which directly pressures revenue and administrative cost ratios. Second, those most likely to drop coverage are often healthier members, which would leave plans with a higher-risk population and drive up per-member medical costs.”
This adverse selection effect, where healthier members leave and sicker ones stay, could destabilize premium pricing and threaten long-term sustainability. Plans must prepare now for the possibility that coverage will shrink, costs will rise, and risk will concentrate among the remaining insured population.
Preparing for Backlash: Communication and Retention
So how should health plans respond?
Schuhmacher stresses proactive communication and transparency as essential tools. “Plans need to be proactive in member communication—making it clear why costs are shifting and what options exist for consumers to maximize value.”
At the same time, plans must strengthen retention tactics. That includes offering flexible payment options, simplifying the process of comparing and selecting plans, and expanding education around subsidies and cost-sharing reduction (CSR) programs. “Preparing for backlash isn’t just about messaging—it’s about building trust while giving members tools to navigate affordability,” he adds.
What Smart Plans Are Doing Right Now
Schuhmacher notes that the smartest plans are already taking action. He points to three strategies that are proving especially effective:
- Data-Driven Segmentation: By analyzing member behavior and financial risk profiles, plans can identify individuals most likely to churn. “Leading plans are tailoring outreach to members’ specific financial and care needs,” Schuhmacher says.
- Simplified Enrollment: Many plans are streamlining their digital platforms to make enrollment and re-enrollment easier. “They’re also extending call center capacity during peak periods and partnering with community organizations to help members navigate subsidies.”
- High-Touch When Needed, Digital When Possible: This hybrid model is becoming a gold standard. It allows for scale while still providing personal attention where necessary—especially for members facing complex coverage decisions.
Predictive Modeling: A Game-Changer for Retention
One of the most powerful tools in the payer toolbox is predictive modeling. Schuhmacher explains how it works: “Predictive models pull from payment behavior, utilization patterns, and demographic variables to flag members most at risk of dropping coverage.”
Plans then use this data to build tiered retention strategies, such as reaching out to members who missed premium payments or targeting younger, healthier individuals who are more price-sensitive.
“When done well,” Schuhmacher says, “predictive modeling allows plans to deploy resources where they will have the greatest ROI.”
Cutting Medical Costs Without Cutting Care
As medical costs continue to rise, controlling spending while maintaining quality is crucial. Schuhmacher highlights several proven approaches:
- Value-Based Provider Partnerships: Aligning incentives between payers and providers can reduce unnecessary care while improving outcomes.
- Site-of-Care Optimization: Steering members from high-cost hospital outpatient settings to more affordable ambulatory care can yield significant savings.
- Smarter Utilization Management: “Tools like payment integrity and prior authorization, when used thoughtfully, help ensure care is appropriate without creating friction.”
Plans are also expanding telehealth, chronic condition management, and behavioral health integration, all of which support quality care while lowering long-term costs.
Balancing Short-Term Gains With Long-Term Stability
It can be tempting for plans to chase short-term enrollment numbers, especially during open enrollment periods. But Schuhmacher warns against that mindset.
“Plans that focus only on short-term volume risk deteriorate their margins and destabilize their markets,” he says. Instead, they should focus on sustainable enrollment growth, retaining healthier members, and managing risk adjustment carefully.
One promising approach: strategic product design. Offering both entry-level bronze plans and more comprehensive options gives consumers choices, while also supporting risk pool balance.
The Message for 2026: Prepare for Volatility
Looking ahead to 2026, Schuhmacher’s message to health plan leaders is clear: “Plan for volatility as the baseline.”
Whether ACA subsidies are renewed, modified, or sunset entirely, the only certainty is uncertainty. “The leaders who succeed in 2026 will be those who pair operational agility with member-centric innovation,” he says.
That means leveraging data, embracing flexible operations, and putting consumer trust at the center of everything. “Navigating uncertainty without losing sight of affordability and trust will be the hallmark of successful plans,” Schuhmacher adds.
Competing on Value, Not Just Premium
Finally, Schuhmacher emphasizes that success in the Marketplace is no longer about who can offer the lowest premium. “Marketplace participation is no longer just about competing on price. Plans must compete on value.”
That means coupling affordability with a clear, positive member experience, something that builds loyalty even during difficult financial times.
“The next two years will reward payers who treat open enrollment not just as a sales cycle,” Schuhmacher concludes, “but as an opportunity to strengthen long-term relationships with their members.”
What Comes Next
Marketplace health plans are standing at a critical inflection point. With subsidy expiration on the horizon and affordability pressures mounting, payers must make strategic decisions today to survive and thrive tomorrow.
By investing in predictive analytics, strengthening retention, optimizing medical costs, and building member trust, plans can weather the storm and emerge stronger in 2026.
As Schuhmacher puts it, “Volatility is the new normal—but that doesn’t mean it has to be disruptive. The plans that lean into innovation and agility will be the ones that shape the future of the Marketplace.”
For more information, visit aarete.com.
Daniel Casciato is a seasoned healthcare writer, publisher, and product reviewer with two decades of experience. He founded Healthcare Business Today to deliver timely insights on healthcare trends, technology, and innovation. His bylines have appeared in outlets such as Cleveland Clinic’s Health Essentials, MedEsthetics Magazine, EMS World, Pittsburgh Business Times, Post-Gazette, Providence Journal, Western PA Healthcare News, and he has written for clients like the American Heart Association, Google Earth, and Southwest Airlines. Through Healthcare Business Today, Daniel continues to inform and inspire professionals across the healthcare landscape.
