GOV. MAURA HEALEY announced this month that the state would use $250 million from a state trust fund to assist some Massachusetts residents who have lost enhanced federal subsidies to pay for health care coverage. The Affordable Care Act tax credits were rolled out under the Biden administration during the pandemic through the American Rescue Plan Act, or ARPA. They made it easier for people at more moderate income levels to access subsidized care.

But those credits expired at the end of 2025, with Republican resistance to extending them central to the government shutdown last year.

They may yet return, as there is some bipartisan support for the tax credits in the House, but the Senate still seems cool to the idea. In the meantime, some states have moved to fill the funding gap. In Massachusetts, Healey said the state will cover $250 million that had come from the federal government through ARPA by tapping the Commonwealth Care Trust Fund, a state account that draws on several revenue streams.

This week on The Codcast, CommonWealth Beacon reporter Jennifer Smith unravels the health coverage moves with Audrey Morse Gasteier, executive director of the Massachusetts Health Connector, and Alex Sheff, senior director of policy and government affairs at Health Care For All. Here are some of the highlights on how we got here and what the funding change means for Massachusetts residents:

Where were we in 2025?

To start, the foundation of Massachusetts’s subsidized health care market is MassHealth, the name for the state Medicaid system – a joint state-federal program that provides health care coverage to low-income households, children, the elderly, and disabled residents. Under Gov. Mitt Romney, in 2006, so-called Romneycare was passed, building on the MassHealth structure with additional subsidies that boosted health care access for people who would not be eligible for Medicaid but are still lower income. Those subsidies, offered through the state ConnectorCare program, are run by the Health Connector and funded in part by the Commonwealth Care Trust Fund – also set up during Romney’s tenure – which brings in revenue from the cigarette tax, a state employer payroll tax, and other streams.

When the Affordable Care Act passed in 2010 under President Barack Obama, it ramped up insurance coverage and requirements, though the Bay State was already surpassing many of those standards. So before the pandemic, Massachusetts and the federal government were splitting the cost of subsidized insurance for low- and moderate-income residents.

The American Rescue Plan Act passed during the pandemic under President Joe Biden. This “really turbocharged how much the feds were kicking in both for coverage for people in the ConnectorCare program, which was at the time for people up to about three times the federal poverty level,” Gasteier said. “It also brought tax credits to even more people, even outside of what ConnectorCare had covered. So there was a really vast number of people in the Commonwealth who were helped either through the ConnectorCare program or directly through the tax credits that came along as a result of the American Rescue Plan.”

What did that mean for the trust fund and coverage?

With those ARPA credits in place, about $425 million new dollars were flowing into the state each year, Gasteier said. That offset about $250 million a year in state spending, and the rest went directly to people who were newly helped by the expanded tax credits.

This meant that the newly flush trust fund was able to expand coverage, through a pilot program, by increasing its income ceiling.

According to Sheff, about one in five people in this expanded population reported getting preventive care that they had put off for affordability reasons. About one in 10 picked up a prescription they felt like they couldn’t afford to take before. “And on top of all of that, it lowered everybody’s premiums really significantly on a monthly basis,” he said. “So kind of a win-win from our perspective. And so then the question becomes, you know, how sustainable is this?”

So what happened after the tax credits expired?

The state still has a few days left of open enrollment through the Connector — it ends on January 23. And from Gasteier’s perspective, Massachusetts saw “exactly what we worried we would see this open enrollment,” both due to “congressional inaction” on renewing the subsidies and the so-called One Big Beautiful Bill Act passed last year.

“What we are seeing is double the number of people have proactively terminated their coverage for 2026 than we saw at this time last open enrollment period,” she said. “So that’s just the first wave of people who looked at their bill for January and said, ‘I cannot do this.’”

About 25,000 people have canceled outright, she said, but the state will need to wait a bit longer to understand what she calls “quiet cancellations.” Those will be people who got a premium bill in December for their January coverage that they will not be able to afford and just didn’t pay it, she said. They will be terminated from their coverage if they don’t settle up by the end of January.

The group she and Sheff are most concerned about in terms of dropping coverage are those on the other side of an “eligibility cliff,” or just over 400 percent of the federal poverty level and making about $63,000 a year, without much extra money after handling housing, rent, and other expenses.

Health Care For All takes about 20,000 calls a year on its helpline, Sheff said, and “we heard from people that said, ‘Oh my gosh, this changes my whole budget, my whole universe.’”

But we knew the credits would expire. Did the state treat the new funding like we would always have this bigger pot going forward?

“It can feel now like it was a foregone conclusion that these enhanced premium tax credits weren’t gonna continue,” Sheff said. But, “certainly when we started the pilot, and even a few months ago, I wouldn’t have said that was an obvious outcome.”

The outcome of the presidential race was uncertain, he noted, as was control of Congress.

“If a different party was in control, the outcomes might look different,” he said. Over the course of the year, advocates and the state were in conversation with the state’s congressional delegation, he said, and Gasteier testified on the issue before Congress.

Sheff said there was “a real sense” that there could be bipartisan agreement to extend the credits. “I think we held out hope for quite a long time that that could still happen,” Sheff said.

They were hoping that in a different world, the pilot could continue without additional cost to the state, he said, but designing it as a pilot was a tacit acknowledgment that the funding could evaporate. It was a proof of concept, he noted, that expanding coverage could lead to better health access outcomes for those on one side of the eligibility cliff.

Why wait until January to announce the somewhat restored funding?

“Of course we’ve all been pressing, pressing, pressing all through 2025, the strongest advocacy possible all the way through this open enrollment period, even hoping after the new year something would happen,” Gasteier said. “The governor’s announcement was to acknowledge that because of that expiration, the state is going to have to spend 250 million more dollars in order to keep that program operating as intended.”

This is a step, she said, to keep the state from moving backwards from its pre-pandemic coverage commitments. It’s a “clarification and a recommitment,” she said, that the federal government stepping back does not mean Massachusetts will step back from the ConnectorCare program.

Healey took a different tone in her description of the investment, with her office dubbing it the “strongest plan in the country to protect against President Trump’s ACA cost hikes.”

Gasteier described Massachusetts as “by far the best positioned state in terms of the tools we have in place to best buffer people with the tools that we do have… if we’re seeing this pain in Massachusetts with the tools and protections we have, I shudder to think what is happening in 49 other states while we’re still waiting for the dust to settle and all the data to come in.”

The funding will protect about 40,000 people who were part of the expansion, Sheff said. But it will not solve for the group just over that eligibility cliff that saw expanded coverage through the Connector pilot — more than 27,000 people, according to Gasteier.

Sheff said the Connector and Health Care For All tried to be proactive in sounding the alarm about the looming loss of federal funding. “There’s also just an extent to which people don’t fully absorb what’s happening until it’s happening,” he said. His organization often hears from people who plan to keep their coverage, “and then the bill is due and, and they just can’t do it. I think it just is a reality that folks are focused on what’s right in front of them, particularly for this group that’s operating kind of paycheck to paycheck. So I think the state has done a good job as they can.”

But is this just a one-year fix?

The Connector makes all budgeting and policy and program design decisions “on an annual basis,” Gasteier said. “So I don’t want to sort of hold up a crystal ball with respect to where we’ll be three, four, or five years from now, but we were so heartened by the state and the governor’s leadership and continued commitment to making sure that we’re showing up for people in the ConnectorCare program in the way that we’ve been able to over the years, even as we see the feds walk away from a very proven, impactful model of enhancing affordability for people.”

In simple terms, this funding is what’s needed to “hold things kind of harmless or close to harmless” as possible, she said. But there is still a $175 million impact set to hit residents this year who now sit just outside of the ConnectorCare’s reach.

So where does that leave us in the long-term?

In an uncertain place. MassHealth and the Health Connector are in conversations about “how we can plug holes where we’re able,” Gasteier said. The program is “designed for the long haul,” she said, and the state will need to figure out a “holistic” response given the array of federal cuts it is weathering “as we’re navigating this new world order.”

The trust fund does have some room, but between the expanded pilot and money dedicated to help shore up the state’s stretched Health Safety net, the $250 million would take a hefty chunk out of the surplus.

According to Doug Howgate, president of the Massachusetts Taxpayers Foundation, at the end of 2020, before the new tax credits took effect, the Commonwealth Care Trust Fund sat at roughly $65 million. In 2024, it held about $510 million, and by the end of 2025 it sat at about $350 million because of dedicated Health Safety Net funding and the expanded coverage pilot.

For now, with some stabilized financing for the year, the Connector and Health Care For All are focusing on outreach to impacted residents. Sheff points to the complicated MassHealth redetermination process that started in 2023 as an indicator that an outreach and engagement effort can reach hundreds of thousands of residents affected by major health coverage shifts.

“It’s cold comfort to somebody who’s seeing their premium double that we’re doing everything we can to clearly communicate with you about your premium doubling,” Gasteier said. “But that is what we’re trying to do — is let these people know we see you, we’re hearing what you’re going through, we are doing everything we possibly can to connect you with coverage you can afford, and trying to be the sword and shield for these folks.”