Connecticut will provide residents with financial assistance again in 2027 to partly offset expired federal aid for Affordable Care Act health plans, Gov. Ned Lamont said after a campaign event in New Haven earlier this month. 

COVID-era federal subsidies to help offset premium costs for ACA plans lapsed at the end of last year. The support had helped roughly 143,000 Connecticut residents afford healthcare purchased through Access Health CT, the state’s health insurance exchange.

In response, Lamont allocated roughly $115 million from an emergency response fund to offset some of the federal subsidy cuts for the lowest-income Access Health CT enrollees, as well as others who were set to lose all financial assistance as a result of the federal policy change. 

Connecticut was one of just a handful of states to offset any of the lapsed federal subsidies.

Lamont said he plans to provide support again for 2027 coverage. Both he and his Democratic challenger, state Rep. Josh Elliott of Hamden, say they would, if elected, establish ongoing subsidies beyond 2027.

State Sen. Ryan Fazio of Greenwich, the Republican gubernatorial nominee, opposes using more state dollars to offset the federal tax credits until Connecticut begins to address the problem of high healthcare costs more broadly.

The budget passed by the state legislature in May directs the governor’s budget office to “design a plan” by Oct. 1 to provide ACA subsidies for the 2027 plan year.

Residents who are receiving state subsidies in 2026 can expect a similar level of support next year, said Rob Blanchard, a senior advisor for the Lamont campaign, regardless of the results of the November election.

“[Gov. Lamont’s] goal is for Connecticut to provide meaningful support again in 2027 because affordable healthcare must be something families can count on. The Governor is working through how best to fund it responsibly,” Blanchard said in an emailed statement.

In 2026, the state is covering all the expired federal funding for enrollees in CoveredCT, as well as those with ACA plans whose incomes are between 100% and 200% of the federal poverty level. The state also replaced half the amount of federal subsidies for ACA plan enrollees with incomes between 400% and 500% of the federal poverty level.

Blanchard said, as of now, Lamont plans to pay for the 2027 subsidies by tapping the emergency funds that he and the General Assembly set aside to mitigate federal cutbacks to human service programs. The fund had roughly $268 million remaining as of early June.

The precise amount the state spends on the initiative for next year will depend in part on what kind of annual rate increases the Connecticut Insurance Department approves — a decision typically made in September. Open enrollment begins on Oct. 23. 

Fazio opposes continuing the subsidies. He said when Congress declined to extend the subsidies in 2025, it was because federal lawmakers had determined most American households no longer could afford to finance relief for a subset of low-to-moderate income households that purchase insurance on state exchanges. 

For Connecticut to assume that financial burden, while ignoring rising health care costs, “is literally just taking from taxpayers and not solving problems,” he said.

A more permanent solution

Both Lamont and Elliott pledged to continue providing financial support to CT residents enrolling in qualified health plans beyond 2027.

The governor said one option for funding a permanent subsidy would be through a proposed tax on large companies whose employees rely on Medicaid for healthcare, which could rake in an estimated $100 million in revenue annually. Lamont said employers whose workers have to depend on state funding for healthcare should pay their fair share.

“Corporate welfare is not my thing,” he said at a campaign event in July.

Fazio said he opposes the proposed tax for fear it would prompt businesses to cut workers and raise prices.

“If you’re taxing these jobs, then you’re going to get fewer of them,” Fazio said.

Elliott, on the other hand, said Lamont’s plan doesn’t go far enough, and that he would replace the entirety of the federal subsidies that expired in 2025. 

The Lamont administration put up $115 million to offset the federal subsidy expiration for a subset of residents in 2026. Lamont would likely be able to continue the subsidy for that same subset of residents simply by tapping available emergency funding.

Picking up the full costs of the enhanced premium tax credits — as Elliott called for — would have cost more than $295 million in 2026, a spokesperson with Access Health CT estimated last year. That figure could vary in years to come.

Elliott said Connecticut can afford it. He said the state could tax ultra-wealthy residents to make it work.

“It’s going to look like by the numbers that that’s impossible. Until I remind people that the ultra-wealthy are paying less than 8% [in taxes] while middle class families are paying over 20%,” he said. “Tell me why the ultra wealthy can’t afford to pay more when people are being literally squeezed out of their homes.”

Leaders of the General Assembly’s Appropriations Committee said in recent interviews they’re open to the state again supplanting a portion of the canceled federal tax credits. But they were cautious about committing to assistance year after year.

If state officials do nothing for the thousands of Connecticut households that lost federal tax credits, “we’re only setting ourselves up for increased costs” as more patients who cannot pay seek care in hospital emergency departments, Sen. Cathy Osten, D-Sprague, co-chair of the Appropriations Committee, said.

Osten noted legislators also are weighing spending more state dollars to offset tightening federal eligibility rules for nutrition and Medicaid programs. She added that she would support using state dollars to offset vanishing federal subsidies this winter. After that, “I think we’re going to have to assess where we are” with the overall state budget, she said.

Rep. Tammy Nuccio of Tolland, ranking House Republican on the Appropriations Committee, said she also is open to providing another round of state assistance to households that have lost federal tax credits.

But Nuccio said that is contingent upon Connecticut getting serious about containing surging healthcare costs in general.

The state has faced significant cost overruns in its Medicaid program in each of the past three fiscal years. Lamont and his fellow Democrats in the legislature’s majority also have failed to budget the full amount Comptroller Sean Scanlon says is necessary to meet contractually mandated health insurance benefits for retired state employees.

“There’s a serious conversation that needs to be had about the cost of healthcare,” Nuccio said. If Connecticut replaces federal tax credits year after year, with no plan to pay for them, “we’re just talking about another welfare program.”