After Medicaid expansion passed in 2023, North Carolina seemed ready to enter a new era of record low levels of uninsured residents. Instead, economic headwinds and policy changes have charted the state off course, leaving insurance companies to prepare for the consequences of a smaller, and potentially sicker, risk pool.
North Carolina’s proportion of uninsured residents has been on a general decline for the better part of two decades, going from 17% in 2010, before the Affordable Care Act took effect, to 8.6% in 2024, according to data from KFF. However, two recent legislative changes may cause North Carolina’s uninsured population to increase for the first time in years.
The most immediate of these is the expiration of enhanced federal subsidies for ACA marketplace plans, a type of nongroup insurance plan favored by uninsured individuals who don’t have access to coverage through their employer or a government-sponsored program like Medicaid or Medicare.
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These enhanced subsidies were first passed by Congress in the 2021 American Rescue Plan Act, keeping marketplace plans affordable even as the true cost of insurance steadily increased. Lawmakers allowed the subsidies to lapse at the end of 2025 after a bitter partisan battle, sending the out-of-pocket costs for those plans skyrocketing.
The price hike left many healthy people with marketplace plans wondering whether it was even worth it to keep their coverage. Enrollment in marketplace plans has decreased significantly so in 2026, with North Carolina’s drop-off the steepest of any U.S. state.
The other major legislation that is set to affect the uninsured population is H.R. 1, formerly known as the One Big Beautiful Bill Act. This federal law passed by Congress last year instated stricter eligibility requirements for people covered under Medicaid expansion, which includes 725,000 North Carolinians.
A recent report from the Robert Wood Johnson Foundation estimated that by 2028, Medicaid expansion enrollment in North Carolina could decline by at least 22% and up to 48% as a result of new work requirements and more frequent eligibility checks.
Neither of these changes is particularly good news for people concerned about the increasing cost of healthcare, according to Louise Norris, a health policy analyst for healthinsurance.org.
“The more people you have in the country without health insurance, the more costs climb for everybody,” Norris told Carolina Public Press.
“When you have healthier people going without coverage and leaving sicker people in the risk pool, and you have more people needing uncompensated care in hospital emergency rooms, both of those factors will drive premiums higher for people who continue to be insured.”
Going uninsured alluring for some, but risky
Enrollments in marketplace plans fell off a cliff in North Carolina, going from 975,110 in 2025 to 761,457 this year. That 22% drop-off was the largest among all U.S. states, according to KFF.
“We aren’t sure exactly why it was so much more significant in North Carolina compared to other states with similar dynamics going on,” Norris said.
Part of the reason could be that three insurance companies — Aetna, WellCare and HAP CareSource — exited North Carolina’s marketplace altogether in 2026. Aetna had the largest share of enrollees among those three carriers with about 130,000.
Anytime a large carrier like Aetna exits, some enrollees are bound to drop their coverage through the marketplace altogether and become uninsured, Norris said.
The decrease in enrollment is only expected to get bigger as some enrollees lapse on their payments. The Wall Street Journal reported in April that around 14% of ACA marketplace enrollees nationwide failed to make their first payment this year.
The full picture of nonpayments in North Carolina won’t be apparent until CMS releases its data later this year, Norris said.
“761,000 (enrollees) is the starting point this year and it will go lower,” she added.
Rather than drop their insurance altogether and become uninsured, many of this year’s enrollees chose to downgrade their plans. In the ACA marketplace, plans are categorized into three tiers: Bronze, Silver and Gold. Bronze plans often have lower monthly premiums and higher deductibles, while Silver and Gold plans have higher upfront costs but offer more financial protection in the event of a medical emergency.
Nearly two-thirds of North Carolina enrollees chose Bronze-tier plans, compared to 45% last year.
People choosing to downgrade did so to lower their monthly premiums, but they risk paying increased out-of-pocket costs for medical care because of higher deductibles. This year’s average deductible for marketplace plans nationwide surged from $2,759 to $3,786, according to KFF.
What’s driving increased health spending?
The primary issue undergirding the rising cost of health insurance is that healthcare in general is becoming increasingly expensive. Nearly three-quarters of American adults said the affordability of healthcare is a “very big problem” in a recent poll.
There’s no one reason for the spike in healthcare costs. It’s instead driven by many different factors within the complex relationships between patients, medical providers, insurers and pharmaceutical companies.
One thing to keep in mind, UNC-Charlotte economics professor Matthew Metzger said, is that the way the insurance system is set up can naturally lead to higher spending because consumers are not directly paying service providers.
“Anytime you have that third party, you’re reducing a lot of the competitive pressures where consumers are shopping for lower prices,” Metzger said.
“You also tend to have inflation on the supply side with the cost (of healthcare), because if it’s going through a third party, you can often pass those costs along.”
Mergers between hospital systems and acquisitions of previously independent hospitals further reduce competition, leaving little incentive for hospitals to lower their prices.
That issue is well-known to many across North Carolina. Formerly nonprofit hospitals in Asheville and Wilmington have been bought out by larger corporations in recent years. Two of the state’s largest hospital systems — Atrium Health and WakeMed — recently announced their intention to merge.
Demand for medical services has also increased nationwide, spurred on by an aging population and high rates of chronic illness such as obesity and diabetes. Utilization of expensive GLP-1 drugs for weight loss has also spiked and accounts for a sizable chunk of new healthcare spending.
“You have rising cost pressures on one hand, increased demand on the other, and also this market power issue,” Metzger said.
“All that together is really what’s leading healthcare costs to increase a good bit faster than the rate of inflation.”
Some fear insurance ‘death spiral’
With higher utilization rates and increased cost of medical services, it’s not a great time for many insurance companies right now. One prime example is Blue Cross and Blue Shield of North Carolina, which recorded a net loss of nearly half a billion dollars in 2025.
The thousands of people who are set to become uninsured because of the changes to marketplace plans and Medicaid eligibility won’t help the insurers’ bottom line.
Instead, if it’s primarily healthier people losing their coverage while the most sick remain in the risk pool, it could upend the entire financial structure that insurance is based on, according to Peter Daniel, president of the North Carolina Association of Health Plans.
“You want a large risk pool with a healthy mix of people, and that keeps premiums down for everybody,” Daniel said.
When the risk pool gets smaller and sicker, premiums are bound to increase. Some fear this could cause even more healthy people to drop their insurance, causing a feedback loop of premiums rising and more people going uninsured.
“The death spiral is what we call it,” insurance broker Mike Smith told CPP.
How big of a risk is a potential “death spiral” in the insurance industry? It’s a real issue, Metzger said, but would hit a ceiling at a certain point because it simply doesn’t make sense for most people to drop their insurance regardless of the cost.
“If you’re 25 and single and you’re healthy and you skip insurance for a year, it’s kind of a minimal risk,” Metzger said.
“Once you get into that working age and family age, it’s unlikely that many many people would drop.”
Still, the prospect of losing young healthy people in the risk pool is chilling for the health insurance industry.
“You need those young invincibles,” Daniel said.
Norris said that anyone considering going without insurance should think twice. After all, it could literally be a matter of life or death.
“There’s no magic wand for making (insurance) more affordable in people’s budgets,” she said.
“But dropping your health insurance should be the absolute last last resort, because dropping your insurance puts you in such a vulnerable position. You might simply not be able to get the care you need at all.”
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