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Blue states tried to staunch the bleeding from federal cuts to healthcare. It’s not working — and it could fuel a broader 2028 clash.
Dems’ problem: “They don’t have the resources.
Over 20 million Americans were receiving Affordable Care Act subsidies before their partial expiration last year. The marketplace system has long been one of the less successful aspects of the law; prior to the subsidies’ increase in 2020, when a COVID-era provision massively expanded both the credits and the pool of those eligible to receive them, plans on the marketplace were unaffordable to the vast majority of Americans who needed them. With the enhanced subsidies’ expiration on December 31st, we have largely returned to that system.
The effect has been quick and immediate. A Kaiser Family Foundation (KFF) survey in March found that 1 in 10 Americans with an ACA marketplace plan dropped insurance altogether following the expiration of the enhanced subsidies. A Wall Street Journal analysis this month found that 1 in 7 of those who remained on an ACA plan failed to even pay their premiums at the beginning of the year.
This winter, several blue states — including California, Colorado, Connecticut, Maryland, Massachusetts, and New Mexico — attempted to step into the breach, enacting short-term measures aimed at replicating the now-expired federal subsidies. Several months into 2026, a clear verdict is coming into focus: State-level stopgap measures are reaching far fewer people, providing far less help overall, and will likely be gone soon anyway. Blue states, determined to mitigate the Trump administration’s agenda wherever possible, are confronting a real limit in their own power.
“These are moderately effective, but they only impact a really small portion of the population.” Matt McGough, a Policy Analyst at KFF, told me. “It ends up being like a really small portion of enrollees nationwide which have benefited from states trying to backfill the lost enhanced premium tax credits.”
Advocates on the left are no more optimistic. “The Democratic governors are doing the best they can. But they don’t have the resources to fill the gap,” Leslie Dach, founder and chair of Protect Our Care, a liberal healthcare advocacy group, said. “The reality is, there's no way for the states to make up for what is $1.5 trillion of cuts in the healthcare system.”
The coming cliff
New Mexico is thus far the only state to fully backfill lost subsidies. But that's been made possible in part by its unique combination of a small population and ability to rely on other programs: It ranks 37th in population but number one nationwide in the percentage of residents on Medicaid and CHIP. Other states do not have such advantages.
And even in New Mexico, it seems increasingly unlikely that this will be a long-term program. The state, like most others, is facing sobering budget realities, as the economy softens and the Trump administration chokes off more federal funding streams. And while the price tag of the subsidies is, relatively speaking, small for the federal government, it carries a much bigger bite for individual states: The full cost of ACA subsidies amounts to about 5% of New Mexico’s FY2026 general fund. It appears unlikely any state will shoulder that cost in the long term.“All expectations are that this is short-term,” said McGough. “It was to bring about a soft landing and to blunt some of the impact of the expiration.”
An irony of all of this: The blue states that enacted temporary subsidies are, statistically, the least dependent on ACA subsidies. Red states like Texas and Florida, largely due to their refusal to expand Medicaid, were far more reliant on the program and provided no such cushion for those who lost coverage this year.
The 2026 question
Even as the pain is most acute in red states, there’s likely some truth to the idea that state Democrats helped soften the political blow from Republicans’ cuts somewhat. Twelve of the 32 House districts that Cook Political Report currently rates as the most competitive fall in states that provided some temporary subsidies, for example.
But with experts increasingly confident that state-level subsidies will not extend after next year, that blow is still likely to come — in time to help shape the 2028 election. Even now, healthcare has rocketed back to the top of voters’ minds. Last month, Gallup found that the issue has become Americans’ top domestic worry, a sharp change from the 2024 cycle, when it was eclipsed by issues like immigration and the economy.
The change is showing up on the campaign trail. Earlier this month, CNN’s Ron Brownstein, one of the smarter analysts out there, noted that Medicare for All, which was largely sent into exile after the 2020 cycle, has surged back as a top issue in Democratic primaries. Democratic ad-makers are adjusting as well: Earlier this week, Majority Forward, which is affiliated with Senate Democrats’ main super PAC, rolled out an ad hitting Alaska Sen. Dan Sullivan, the bulk of which focused on health costs.
The 2028 question
The difficulty of continuing ACA subsidies at the state level is part of a longer history of Democratic states struggling to enact health policy innovation. Plans to establish single payer have infamously failed, even in the deepest of blue territory. More recently, even state-run public options have run into persistent challenges: This winter, Nevada, the third state to debut a public option, landed at less than a third of its initial enrollment goals.
It’s worth noting how different this landscape is from the first Trump administration, when the president failed to gut the ACA and no state had yet enacted a public option. The combination of both factors — severe federal cuts to the healthcare system and the consistent failures of blue states to find sustainable workarounds — put Democrats in a far different position heading into the 2028 primary than 2020, when proposals like Medicare for All wilted under scrutiny, and it will likely fuel progressives' arguments.
Dach cautioned against Democrats who would “jump over this crisis,” arguing the parties’ singular focus ought to be first restoring Republicans’ 2025 cuts. Still, he conceded that the deepening crisis could add pressure for bigger reforms the next time Democrats are in power. “I think overall this will drive a need for more fundamental changes into the system.”
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