Not Again

Running wild

Republicans are attempting to offset tax cuts by significantly reducing ACA subsidies and making massive funding cuts and changes to how Medicaid is financed.

These changes will have far reaching implications, beyond the ACA Medicaid expansion.

The marketplace will become a smaller, less healthy and more expensive place.

An estimated 4 million will lose coverage through the ACA Marketplace.

The Congressional Budget Office (CBO) projects that proposed changes to Medicaid could lead to 7.8 million people becoming uninsured due to Medicaid cuts.

New Proposals

Some of the Trump administration’s new proposals call for adjusting the federal formula to allow insurers to cover a smaller share of medical costs.

• There is also discussion about revising Essential Health Benefits (EHB) to eliminate some and require consumers to pay more for others.

Separating people into insurance pools has resurfaced again. A group for healthy people and another for unhealthy people. This would lead to lower costs for young healthy people but drive up the costs for older people with less than perfect health.

• Another proposal would slightly increase the share of people’s incomes they could be asked to pay for health insurance.

The Trump administration wants to require enrollees to pay the government back any extra tax credits they received because they incorrectly estimated their income (under current law, these so-called “reconciliation” payments are capped for low-income enrollees).

• The biggest effects are likely to be felt in rural areas, where enrollment is sparser and there is little competition among hospitals to help moderate prices.

These proposals would be similar to the 2017 “repeal and replace” push that would have left most protections for people with preexisting conditions in place but nonetheless would have left tens of millions without affordable health coverage due to budget cuts.

As was the case in 2017, changes to ACA and Medicaid funding will be done through budget reconciliation to avoid the filibuster.

Obamacare Today

Obamacare enrollment is at a record high. The marketplaces include Americans who don’t get insurance from their jobs, including low-income gig workers, middle-income freelancers and high-income entrepreneurs.

Much of the increased coverage is because of pandemic-era legislation that made premium tax credits more generous, lowering the out-of-pocket cost to buy insurance across the income spectrum.

♦ Growth has led to a spike in federal spending, from $43 billion in 2019 to $143 billion in 2025.

The extra spending has Republicans complaining that insurance has become too subsidized, too easy to get and too vulnerable to fraud.

• Fraud seems to be a word that is being used to justify every cut for everything these days, even when no fraud has actually been documented.

These enhanced subsidies expire at the end the year. There are a few Republicans like Susan Collens of Alaska saying they think the subsidies should be extended. But this is mostly talk.

♦ Without Congress acting to extend them, net premium payments are expected to increase by an average of 79% and more than double in some states. The CBO has estimated the cost to permanently extend the enhanced subsidies would be $335 billion over 10 years.

If subsidies are not renewed, ACA Marketplace enrollment will drop sharply from 22.8 million in 2025 to 18.9 million in 2026, reaching as low as 15.4 million in 2030.

• A newly formed coalition of the biggest and most powerful health care entities — including the nation’s top health insurers, largest health care systems and notable medical associations — have launched a campaign called “Keep Americans Covered” to lobby Congress on the issue.

Still, it’s an uphill fight with Republicans, some of whom voted against the Affordable Care Act initially and others who voted to repeal it years later. Most will try to remain quiet as they strip many of their constituents of healthcare coverage.

“Oh, I did not know that was in the bill I voted for.”

This has become one standard sentence for Republicans to use in trying to escape responsibility for something that hurts their voters. Expect to hear those words a lot more, especially as we go into the fall and start open enrollment.

New Rules

On March 10, the Trump administration issued proposed rule changes to the ACA and Medicaid.

The Trump administration said in a statement Monday that the new regulations include “critical and necessary steps to protect people from being enrolled in Marketplace coverage without their knowledge or consent, promote stable and affordable health insurance markets, and ensure taxpayer dollars fund financial assistance only for the people the ACA set out to support.”

• Policy experts said the changes, though, will impose new paperwork burdens likely to hamper enrollment.

Under this banner of trying to crack down on the bad actions of some insurance brokers, they are penalizing consumers, particularly low-income consumers, with more burdensome requirements and more limits on their access to coverage.

• Among other new requirements, consumers would have to provide more information proving their eligibility for special enrollment periods and for premium subsidies when they enroll.

• The regulation would also shorten the annual enrollment period by a month.

♦ It limits eligibility for “Dreamers” — a nickname for immigrants in the country illegally who were brought here as children, based on never-passed proposals in Congress called the DREAM Act.

It would reverse the Biden administration policy that allows Dreamers to qualify for subsidized ACA coverage. That decision is already the subject of a court challenge brought by 19 states seeking to overturn it.

• The administration proposes eliminating the year-round opportunity for a special enrollment period for people with very low incomes.

It would also set new requirements for the remaining special enrollment periods, which allow people to sign up after major life events, such as when their income changes, they lose their job-based coverage, or they get divorced, marry or move. They would now have to provide evidence of their eligibility when applying under those special situations.

• People auto-reenrolled into zero-premium plans during the regular enrollment period would be charged a small monthly payment until they confirm or update their information. Right now, it is proposed to be $5.

• The ACA marketplaces, according to the proposal, would have to seek additional data from consumers, including the self-employed or gig workers, who estimate their income for the coming year but don’t have tax return data filed with the IRS for previous years.

♦ The Trump proposals also touch on social issues.

Under the Trump proposals, gender-affirming care would not be considered part of the “essential health benefits” that all plans must cover.

This provision could lead to increased out-of-pocket costs for individuals requiring sex-trait modification services, as they may need to seek plans that offer this coverage as a non-EHB or pay for services out-of-pocket.

None of these proposals will go into effect right away. The proposals now face a public comment period and potential revision before being finalized.

They are not likely to be softened even by strong public push back.

The follow excerpt comes from CMS.

2025 Marketplace Integrity and Affordability Proposed Rule

Overview of Proposals

Increasing Consumer Accountability and Continuous Coverage

Satisfying Debt for Past-Due Premiums

CMS proposes to allow issuers to require payment of past-due premiums before effectuating new coverage, which would adopt a policy similar to one initially established under the 2017 Market Stabilization Rule and later reversed in the 2023 Payment Notice.

To the extent permitted by state law, this would permit an issuer to establish terms of coverage that add past-due premium amounts owed to the issuer to the initial premium the enrollee must pay to effectuate new coverage.

Eliminating Gross Premium Percentage-Based and Fixed-Dollar Premium Payment Thresholds

CMS proposes to eliminate the fixed-dollar and gross percentage-based premium payment thresholds, allowing issuers to only adopt the net percentage-based threshold.

This change is intended to enhance program integrity by ensuring enrollees pay at least some of the premium owed, reducing the risk of improper enrollments.

Shortening the Annual Open Enrollment Period for Individual Market Coverage

CMS proposes changing the annual OEP for all individual market coverage to run from November 1 through December 15 preceding the coverage year, instead of through January 15 of the coverage year.

This adjustment would apply to both on- and off-Marketplace individual market coverage.

They say this is to reduce confusion. Experts say it will discourage enrollment.

Ensuring Subsidies for Eligible Individuals

Affirming Previous Interpretation of “Lawfully Present” Definition

CMS proposes to amend the definition of “lawfully present” to exclude DACA recipients, realigning with the interpretation set forth in the 2012 Interim Final Rule (77 FR 52614).

This change would make DACA recipients ineligible to enroll in a Qualified Health Plan (QHP) through the Marketplace, for premium tax credits, APTC, and cost-sharing reduction (CSRs), and for the BHP in states that elect to operate a BHP, reversing the 2024 DACA Rule.

Verifying Consumer Income Eligibility for Insurance Affordability Programs

Addressing Failure to File and Reconcile

CMS proposes to reinstate its 2015 policy requiring Exchanges to determine an individual ineligible for APTC if they (or their tax filer) failed to file their federal income tax and reconcile APTC for one year, instead of for two consecutive tax years as implemented in the 2024 Payment Notice.

Under this proposed change, the Marketplace must determine a tax filer ineligible for APTC if (1) CMS notifies the Marketplace that the tax filer or someone in their household received APTC for a prior year for which tax data would be utilized for verification of income and (2) the tax filer or someone in their household did not comply with the requirement to file a tax return and reconcile APTC for that year.

Verifying Income When Data Sources Indicate Household Income Less than 100% of the Federal Poverty Level

CMS proposes to require Marketplaces to generate annual income inconsistencies in certain circumstances when a tax filer’s attested projected annual household income is equal to or greater than 100% of the FPL and no more than 400% of the FPL, while the income data returned by the Internal Revenue Service (IRS), Social Security Administration, or current income data sources are less than 100% of the FPL.

Verifying Income When Tax Data is Unavailable

CMS proposes changes to strengthen the verification process for income eligibility by removing the requirement that Marketplaces accept an applicant’s or enrollee’s self-attestation of projected annual household income when the Marketplace requests tax return data from the IRS to verify attested projected annual household income but the IRS confirms there is no such tax return data available.

Under this proposal, Marketplaces would be required to verify income with other trusted data sources (if available) and follow the alternative verification process, which requires applicants to submit documentary evidence or otherwise resolve the income inconsistency.

Stopping Extensions of the Period to Resolve Income Inconsistencies

CMS proposes to remove the 60-day extension of the statutorily-required 90-day period for resolving income inconsistencies, introduced in the 2024 Payment Notice.

Reducing Improper Enrollments through Annual Eligibility Redeterminations and SEPs

Requiring $5 Premium Responsibility

CMS proposes to modify the annual eligibility redetermination process by requiring Marketplaces to ensure that consumers who are automatically re-enrolled without affirming or updating their eligibility information, and who would have been automatically re-enrolled in a QHP with a fully subsidized premium after the application of APTC, to instead be automatically re-enrolled with a $5 monthly premium.

Once consumers confirm their eligibility, the $5 monthly bill could be eliminated. Any premium paid would potentially be returned as a rebate to the enrollee when they file and reconcile their APTC on their taxes if they remain eligible for a fully-subsidized premium.

Removing Re-enrollment Hierarchy Standards

CMS proposes to remove the provision of current regulations that allows Marketplaces to automatically re-enroll CSR-eligible enrollees from a bronze to a silver QHP if the silver QHP is in the same product, has the same provider network, and has a lower or equivalent net premium as the bronze plan into which the enrollee would otherwise have been re-enrolled.

This proposal claims to benefits consumers by respecting consumer choice and reducing confusion caused by changing a consumer’s plan from bronze to silver, even when their existing bronze plan remains available.

Rationalizing the Monthly SEP for APTC-Eligible Individuals with Household Incomes at or Below 150% of FPL

CMS proposes to remove the monthly SEP for individuals with projected household incomes at or below 150% of the FPL due to concerns over increased unauthorized enrollments and adverse selection risks, as the SEP has been exploited by some agents and brokers to enroll consumers without their knowledge.

This proposed policy claims to help to reduce opportunities and incentives for unauthorized enrollments.

Conducting Eligibility Verification for SEPs

CMS proposes to mandate pre-enrollment verification for SEP eligibility across all Marketplaces, including state Marketplaces.

Conducting Eligibility Verification for 75% of New Enrollments through SEPs

CMS proposes to require that Marketplaces, including state Marketplaces, verify eligibility for at least 75% of new enrollments through SEPs.

If the Marketplace is unable to verify the consumer’s eligibility for enrollment through the SEP, then the consumer would not be eligible for enrollment through the Marketplace.

Aligning Essential Health Benefit and Employer-Sponsored Benefits

Prohibiting Coverage of Sex-Trait Modification Services on EHB

CMS proposes that, effective beginning in plan year 2026, issuers subject to EHB requirements (that is, non-grandfathered individual and small group market plans) may not cover sex-trait modification services as an EHB.

This proposal would not prohibit health plans from voluntarily covering sex-trait modification services; nor would it prohibit states from requiring such services in health plans, subject to the rules related to state-mandated benefits.

• The majority of consumers will have to pay for this themselves.

Improving Cost-Sharing, Premium Adjustments, and Plan Options

Updating Premium Adjustment Percentage (PAPI) Methodology

CMS proposes to update the methodology for calculating the premium adjustment percentage to establish a premium growth measure that captures premium changes, in both the individual and employer-sponsored insurance (ESI) markets, for the 2026 plan year and beyond.

CMS also proposes the plan year 2026 maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage using the proposed premium adjustment percentage methodology.

This proposed policy would likely lead to more costs being passed to the consumer along with higher premiums. "Less for more money" concept will discourage enrollment to some degree.

Simplifying De Minimis Thresholds

CMS proposes to change the de minimis thresholds for plans. A confusing term, used to rate a plan’s actuarial value (AV).

Actuarial value (AV) in health insurance represents the percentage of total average costs for covered benefits that a plan will pay.

CMS suggests that widening the de minimis range would allow insurers more flexibility in plan design, potentially leading to more options for consumers.

What this will actually do is lead to lower premium tax credits (PTC) and higher out-of-pocket costs for some individuals.

This change will disproportionately impact more vulnerable populations: Individuals with pre-existing conditions, serious illnesses, or injuries are more likely to reach their out-of-pocket limits, facing higher financial burdens.