The millions of Americans who rely on the Affordable Care Act marketplaces for coverage saw their premiums double at the beginning of this year, after Congress cut funding for marketplace premium tax credits. Efforts to mitigate the price spikes by restoring the credits to 2025 levels collapsed in January because of lack of support from the Senate and President. With costs high, enrollment started dropping in January — the first time that’s happened since 2020 — and it continues to fall.
On May 20, the Trump administration finalized extensive new regulations that will guide the marketplaces during this challenging period. The new rule reveals the administration’s priorities, even as consumers’ costs rise. It ratchets up scrutiny of the enrollment process and imposes administrative barriers it projects will cause up to 2 million people to lose coverage. At the same time, it relaxes standards for health insurers, greenlighting unprecedented flexibilities for companies to expose enrollees to massive out-of-pocket costs.
More Freedom for Insurance Companies . . .
. . . to Avoid Cost-Sharing Protections
While federal law limits how much enrollees can spend out of pocket in a year, the rule allows insurers to disregard this protection for bronze and catastrophic plans. Starting next year, insurers will have the option to sell bronze plans with spending maximums for enrollees that are 130 percent of the statutory limit (i.e., $15,600 annually for individuals, $31,200 for families in 2027). In 2028, catastrophic plans will be required to raise spending caps and deductibles to these levels.
. . . to Sell Plans Where Every Doctor and Hospital Is Out-of-Network
Americans face difficulties accessing care in a timely manner, ensuring their providers are in-network, and understanding their payment obligations. Congress sought to ameliorate some of these problems with the No Surprises Act (NSA), which shields consumers from medical bills for out-of-network care provided in circumstances outside the patient’s control.
The new rule circumvents the NSA framework and manages to make access and cost challenges more complicated by letting insurers sell plans where all providers are out of network and nearly every service an enrollee receives (except emergency care and helicopter transport) risks a surprise medical bill. Because these “nonnetwork” plans don’t contract with providers and instead shift the risks of higher costs to consumers, they are likely to have a lower premium than their competitors. This will depress the benchmark that is used to determine the size of all consumers’ premium tax credits. This means consumers who don’t want a nonnetwork plan will still be affected by them, through reduced financial assistance and higher costs.
. . . to Sell Low-Value Coverage
Under the banner of insurer flexibility, the administration also seeks to boost take-up of catastrophic coverage. Catastrophic plans are the skimpiest form of marketplace coverage and can’t be purchased with a premium tax credit. They were not designed to draw consumers away from more generous metal tier coverage, but rather to provide a last-ditch alternative to uninsurance in narrow circumstances: by law, the only people allowed to enroll in them are individuals under 30 and those who, due to income or individual hardship, are determined to be exempt from the individual mandate penalty, which no longer exists. The new rule allows insurers to market these plans to most adults, including people eligible to buy more generous marketplace coverage with a premium tax credit.
In addition, the rule allows insurers to sell multiyear catastrophic plans. Instead of lasting one year, these new offerings can continue for up to 10 years at a time. Such products don’t currently exist in U.S. health insurance, and the rule does not address questions about how these plans will operate in practice and the ways in which they are likely to affect consumers.
. . . to Give You a Loan?
One point on which the rule is clear is that these plans will have extremely high cost sharing. What if the $31,200 family deductible required is unaffordable and consumers need relief? In passing, the rule floats another potential innovation: consumers might find it “especially helpful” to ask their health insurer for a loan.
More Red Tape for Consumers
The rule’s interest in deregulation wanes when it comes to marketplace consumers. The administration asserts that current rules that govern enrollment by people with low incomes are too lax. It will now require millions of these consumers to submit additional paperwork substantiating eligibility. Similarly, most consumers who seek to enroll through HealthCare.gov midyear will now be subject to additional verification.
Paperwork burdens like these decrease enrollment by everyone, including eligible individuals. They disproportionately reduce enrollment by younger and healthier people, even as those in worse health struggle to jump through each new hoop to preserve their coverage. As the pool of insured people gets relatively sicker, the cost of insuring them rises and coverage becomes less affordable.
Looking Forward
The administration describes several of its new policies as “novel.” This is true. Many of the opportunities the rule grants insurers go beyond what even they think is prudent and seemingly beyond federal law itself.
Other new policies are more familiar. The administration has repeatedly attempted to implement several of the enrollment barriers described here. These attempts — the most recent of which was just last year — have led to litigation and court orders blocking the policies on the grounds that they hadn’t been adequately justified. The recently finalized rule claims it has new reasons to move forward with these same policies, while a just-filed lawsuit argues that much of the rule must again be set aside. Regardless of the outcome of this case, it is clear what the administration prioritizes and what it does not.
