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CSR Funding, Budget Debates, and the Future of Marketplace Affordability

In May 2025, the US House of Representatives passed a budget bill that includes funding for cost-sharing reduction (CSR) payments, marking a potential end to the 鈥渟ilver loading鈥� practice that has shaped pricing in the Affordable Care Act (ACA) Marketplace pricing since 2017. The US Senate is now considering this legislation as part of a broader budget reconciliation package that includes major Medicaid reforms, such as new work requirements and changes to eligibility and financing rules.

This evolving policy landscape has significant implications for states, payers, providers, and consumers. Wakely, an 红领巾瓜报 Company, recently published , which outlines how reinstating CSR payments could reshape ACA marketplace plan pricing, enrollment patterns, and federal subsidy flows. It also highlights the operational and financial risks stakeholders must prepare for in 2026.

Broad Loading and Silver Loading

Because CSR loading increases premium costs on silver plans that determine subsidies, they also increase federal payments for premium tax credit (PTC) subsidies. Guidance from the US Department of Health and Human Services on silver plan pricing has evolved over time. Three types of CSR loading are occurring in ACA markets, specifically:

Broad loading: Increasing premiums for all metal level qualified health plans (QHPs) in the individual market to collect enough revenue to offset the CSR costs of the silver plan variants enrollees
Two means of silver loading:
- Increasing premiums for only silver QHPs in the individual market to collect enough revenue to offset the CSR costs of the silver plan variant enrollees
- Raising premiums, functionally, for only on-exchange silver QHPs

As discussed in the Wakely paper, the impact of silver loading is that the federal government is likely paying out more in additional PTC subsidies than would be paid if CSR payments were fully funded. On Friday, May 2, 2025, the Centers for Medicare & Medicaid Services (CMS) released guidance related to silver loading and CSR payments for 2026 rate filings. This action was urgently needed, especially for states with May filing deadlines.

What鈥檚 at Stake

If Congress does appropriate funding for CSR payments, some issuers will be reimbursed for the difference in cost sharing between standard and CSR-enhanced silver plans. Issuers that cover nonemergency pregnancy termination services, would be ineligible for CSR payments; however, as the Wakely paper indicates, these payments would not cover the additional utilization driven by richer benefits. For example, it is anticipated that a member in a 94 percent actuarial value CSR plan will use more services (i.e., four primary care visits versus three in a standard plan), but reimbursement would only reflect the cost-sharing difference鈥攏ot the increased volume of care.

States like Georgia and New Mexico, which mandate silver loading, could see significant shifts in premium relativities and enrollment behavior. Wakely鈥檚 modeling suggests that changes in CSR policy鈥攅specially if paired with the expiration of enhanced premium subsidies at the end of 2025鈥攃ould lead to higher net premiums, reduced enrollment, and a deterioration in risk pool morbidity.

What to Watch

The Senate鈥檚 deliberations will determine whether CSR funding is restored and could have significant implications on whether enhanced premium subsidies are extended beyond 2025. These decisions will directly affect the following:

2026 rate filings and benefit designs
Marketplace affordability and enrollment stability
State reinsurance funding and 1332 waiver dynamics
Consumer costs and plan switching behavior

Wakely鈥檚 analysis also cautions that if CSR funding is restored without accounting for induced utilization, issuers may still need to price for higher service use鈥攑otentially leading to premium volatility. In addition, if broad loading is mandated instead of silver loading, it could raise premiums across all metal tiers and reduce the value of premium tax credits for many enrollees.

Key Considerations for Stakeholders

States聽should assess how CSR policy changes affect reinsurance programs, waiver funding, and Medicaid redeterminations.
Payers聽must prepare for multiple pricing scenarios and evaluate how changes in subsidy structures influence enrollment and risk adjustment, 1332 reinsurance programs, and overall market risk.
Providers聽should anticipate shifts in patient mix and utilization (i.e., more uncompensated care with more uninsured patients).
Advocates聽need to monitor how policy changes affect access and affordability for low-income and underserved populations.

These developments also create more opportunities for movement between Medicaid, Marketplace, and uninsured populations, underscoring renewed opportunity for integrated eligibility systems and coordinated outreach.

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红领巾瓜报 (红领巾瓜报), experts are actively advising stakeholders on how to navigate these complex changes. Whether you鈥檙e a state policymaker, health plan executive, provider leader, or advocate, we can help you assess the impact and plan strategically.

These issues will also be explored in depth at the聽红领巾瓜报 Conference in October 2025. To discuss how these developments will affect your organization, contact our featured expert below.

House Committees Consider Policies to Meet Budget Reconciliation Instructions

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This week, key committees in the House of Representatives released recommendations for legislative language that meets their federal savings and spending targets required in the fiscal year (FY) 2025 budget resolution. On May 11, 2025, the House Energy and Commerce Committee released legislation鈥攁nd subsequently a substitute amendment鈥攖hat contains several substantive Medicaid proposals designed to address eligibility and enrollment; financing; fraud waste, and abuse; and to institute mandatory work and community engagement requirements and cost sharing. The Committee completed its markup on May 14, 2025, voting to approve the provisions in the substitute amendment.

The release of text and committee markups are key steps in Congress鈥檚 budget reconciliation process; however, proposals may change during Senate proceedings.

红领巾瓜报 (红领巾瓜报), and Leavitt Partners, an 红领巾瓜报 company, are tracking these developments and analyzing the extensive health and health-related legislative text, including the Medicaid, Medicare, and Affordable Care Act (ACA) Marketplace proposals. Below, we review the status of congressional efforts and key policies.

Background

The budget reconciliation process is a powerful tool for enacting significant fiscal policy changes, as it allows for expedited consideration and passage of budget-related legislation. It has been used in the past to enact major tax reforms, healthcare legislation, and other important budgetary measures.

In 2025, Congress has been actively working to develop its budget bills through a series of steps. The House adopted a budget resolution on February 25, 2025, which sets the framework for federal spending, revenue, and the debt limit for fiscal year 2025 and outlines budgetary levels for the following years through 2034. The Senate passed an amended version of the budget resolution on April 5, 2025. The Senate鈥檚 amendments included reconciliation instructions that require $4 billion in gross deficit reductions and allow a $5.8 trillion net deficit increase. On April 10, 2025, the House agreed to the Senate鈥檚 amendments with a vote of 216鈭�214. This agreement set the stage for the development of a reconciliation bill.

House Energy and Commerce Markup

On May 14, 2025, the House Committee on Energy and Commerce completed its second day of legislative language to comply with the Concurrent Resolution on the Budget for Fiscal Year 2025, voting to advance the proposals out of committee. The committee鈥檚 proposal excluded certain significant structural reforms that had generated concern among some members and stakeholders, such as broad reductions in the federal matching rate (enhanced federal matching assistance percentage (FMAP)) for Medicaid expansion populations, per-capita caps on federal Medicaid cost growth, or reductions in the safe harbor threshold for state Medicaid provider taxes. The proposal does, however, contain more than a dozen provisions that would reduce federal health care spending by $715 billion with the funding reductions mostly focused on Medicaid, which the Congressional Budget Office projects will reduce the federal share of Medicaid spending, including:

Adding mandatory work and community engagement requirements for individuals ages 19鈭�64 without dependents, subject to exceptions for pregnant women, people who are medically frail, people with disabilities, people in compliance with other government program work requirements, people living in areas experiencing a temporary hardship, and other individuals
Adding cost sharing for beneficiaries in the expansion population who earn more than 100 percent of the Federal Poverty Level, not to exceed $35 per item or service
Pausing implementation of several final rules published during the Biden Administration, including: the final rule published September 21, 2023, 鈥淪treamlining Medicaid; Medicare Savings Program Eligibility Determination and Enrollment鈥�; the April 2, 2024 rule, 鈥淪treamlining the Medicaid, Children鈥檚 Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes鈥�; and the May 10, 2024, final rule, 鈥淢inimum Staffing Standards for Long Term Care Facilities and Medicaid Institutional Payment Transparency Reporting鈥�
Adding provider screening requirements
Increasing frequency of eligibility redeterminations for certain individuals and adding enrollee address verification policies
Reducing expansion FMAP for certain states that provide Medicaid coverage to undocumented individuals and families, regardless of the source of funding
Preventing certain spread pricing arrangements in Medicaid between states and pharmacy benefit managers
Restricting funding for certain essential community providers that furnish family planning services, reproductive health, and related healthcare services
Ending a temporary increased FMAP to new states adopting Medicaid expansion, revising policies governing the use of Medicaid provider taxes, and payment limits for state directed payments

Committee Markups

Various other House committees have begun holding markups for the reconciliation package. The Committee on Ways and Means conducted its markup on May 13, 2025, to discuss its of the reconciliation bill, which involves $4.5 trillion in deficit increases. The initial Ways and Means proposal did not include many significant healthcare proposals, but on May 12, 2025, the committee released a substitute amendment that includes several changes that would affect private insurance coverage and Medicare. Key provisions include:

Changes to Medicare and ACA premium tax credit (PTC) eligibility requirements related to immigration status
Improvements to ACA PTC eligibility verification checks
Changes to Health Savings Account flexibilities
Codification and renaming of individual coverage health reimbursement accounts, which serve as a defined contribution that employees can use to purchase insurance in the individual market

Other committees, such as the Education and Workforce, Judiciary, Armed Services, and Homeland Security Committees, also have conducted markups and approved their respective portions of the reconciliation bill.

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These steps are part of the ongoing process to finalize the budget and reconciliation legislation for FY 2025. Our federal policy experts with Leavitt Partners and across 红领巾瓜报 are monitoring the legislative policies and ongoing negotiations in Congress and with the administration. They work with healthcare organizations and industry to plan for the range of scenarios and policies Congress is debating.

For more information about the impact of these policies, contact our featured federal policy experts聽below.

What鈥檚 Really Causing the Rise in Insurance Premiums, and What Can States Do About It?

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Healthcare cost increases are outpacing general inflation, which jeopardizes access to coverage and care, as well as investments in other priorities. As a result, states are looking for ways to reduce the cost burden for consumers, employers, and taxpayers. The State of Maine engaged Wakely Consulting Group, an 红领巾瓜报 Company, to analyze historical medical trends and the associated impact on premiums in Maine鈥檚 health insurance market for the period of 2021 to 2025. The goal was to assess what factors are driving rising insurance costs. This project was supported by an 红领巾瓜报 contract with Arnold Ventures, under which we provide technical assistance to states seeking to reduce healthcare cost growth.

Navigating CMS鈥檚 2025 Marketplace Rule: What It Means for ACA Marketplaces, Insurers, and Consumers

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This week, our In Focus section also reviews the , released by the Centers for Medicare & Medicaid Services (CMS) on March 10, 2025. The proposed rule calls for enhancing program integrity protections in the Affordable Care Act (ACA) marketplaces through targeted changes to eligibility and enrollment policies and procedures.

This proposed rule aligns with the overarching policy priorities President Trump has identified, including reducing federal costs and reforming policies related to immigrants. It also takes aim at fraud, waste, and abuse practices in the ACA Marketplaces, which is the cornerstone from which the US Department of Health and Human Services explains and justifies its proposed initiatives.

Notably, the proposed changes will occur alongside other potential federal policy revisions, including the December 31, 2025, expiration of the ACA enhanced subsides for consumers, which led to historically high coverage levels鈥� as of January 2025. The combined changes will have a varied but significant effect on all state health insurance markets, creating a need for scenario planning and preparation to start immediately.

CMS is providing the public 30 days to submit comments on the proposed rule. An overview of the proposed changes and key considerations follow.

Rule Components

Enrollment Timeline: CMS proposes shortening the open enrollment period for all individual market coverage, including for state-based marketplaces (SBMs), which traditionally have had flexibility to set later enrollment deadlines. If finalized, open enrollment will begin November 1 and end December 15, a month earlier than the current deadline of the following January 15.

Income Verification: The rule would require marketplaces to bolster their income verification processes to protect against manipulation of the authorization and calculation of advance premium tax credit (APTC) values. CMS policymakers believe these changes will be useful in addressing broker and consumer fraud and abuse of the APTC eligibility process. Proposed income verification changes include requirements that people provide the documentation of their income if they meet the following criteria:

The income on their application is between 100 percent and 400 percent of the federal poverty level (FPL), but the income returned from external data sources show they make less than 100 percent of the FPL
No tax data are available from external data sources to confirm the applicant鈥檚 self-attested income

Applicants who do not verify their income will have it adjusted to align with the income returned from external data sources, and their APTC eligibility will be updated accordingly. In some cases, such as when no returned income data are available, these individuals will become ineligible for the APTC.

CMS also plans to reinstate a 2015 policy that requires marketplaces to designate applicants or enrollees as ineligible for APTCs if they fail to file and reconcile their APTC on their federal income taxes. This requirement is known as the failure to file and reconcile (FTR). The Biden Administration changed the FTR requirements to find enrollees ineligible for APTCs if they fail to file and reconcile for two consecutive tax years.

Lastly, CMS proposes eliminating the additional 60 days consumers are granted to resolve income inconsistencies. Today, most marketplace consumers have up to 150 days to resolve income inconsistences. This proposal would return to the 90-day verification period that was in place prior to the Biden Administration.

CMS also requests input on alternative redetermination and re-enrollment policies for fully subsidized consumers, including whether $5 is the appropriate premium amount or should be higher or if fully subsidized consumers should be required to actively confirm their eligibility and reenroll every year.

Another proposal would remove the ability for marketplaces to automatically reenroll Bronze members who are eligible for a cost-sharing reduction (CSR) in a Silver plan if the Silver plan has the same provider network, is in the same product, and has a lower or equivalent net premium as the consumer鈥檚 Bronze plan.

Special Enrollment Period Changes: CMS is proposing multiple changes to special enrollment periods (SEPs), including the removal of monthly SEPs for individuals with household incomes that are projected to be at or below 150 percent of the FPL and a requirement that marketplaces verify eligibility for at least 75 percent of new enrollments during SEPs. CMS also proposes adopting a pre-enrollment income verification model for SEPs.

Bar Deferred Action for Childhood Arrivals (DACA) recipients from QHPs in the Marketplace and basic health programs, making them ineligible for APTCs and CSRs and returning to pre-Biden era DACA eligibility rules
Remove gender-affirming care as an essential health benefit
Allow insurers to require payment of past due premiums before effectuating new coverage, if state law permits
Increase cost sharing/lower premiums by increasing the maximum out-of-pocket limit and widening de minimis ranges

Implications

CMS is reverting to several policies that were put in place during President Trump鈥檚 first term, increasing the likelihood that CMS will finalize many of the changes as proposed or with minimal modification.

Insurers, SBMs, insurance departments and other stakeholders should engage in the federal policymaking process and begin planning immediately for the financial and operational changes that will be required to comply, as several of the requirements will take effect as soon as the rule is finalized. Stakeholders will also want to consider the direct impact on consumers.

红领巾瓜报 (红领巾瓜报) Marketplace experts identified the six key considerations for stakeholders:

Market share and risk.聽The proposed changes are projected to decrease Marketplace enrollment and聽Insurers and states need to plan for shifts in their market and consider approaches to manage these changes.
Administrative operations.聽A shorter enrollment period and additional eligibility and enrollment requirements may increase administrative actions for enrollees, insurers, and marketplaces. Examples include:
- Marketplaces will need to make system and operational changes to comply with the new income verification, SEP, and open enrollment period requirements.
- Departments of Insurance may need to adjust their rate and form filing instructions and timelines to give insurers the clarity and time they need to comply with new requirements.
Consumer education.聽Insurers and marketplaces will need to consider the effectiveness of their marketing and outreach and education strategies, given the shorter open enrollment period.
Interactions with the expiration of the enhanced subsidies in 2026.聽The Congressional Budget Office聽聽that the uninsured population will increase by 2.2 million in 2026 and up to 3.8 million by 2028 if the enhanced ACA subsidies expire. While it is too early to project or measure the impact of this proposed rule and the expiring subsidies, together they undoubtedly will have direct impacts on eligibility, enrollment levels, market dynamics including pricing and risk mix, and the overall stability of the Marketplaces in the long term. Congress may also take action on other policies related to Marketplace stability for which stakeholders should prepare.
State-level mitigation. States interested in mitigating the impacts of this proposed rule, as well as the expiring subsidies, will need to consider legislation to address the resulting affordability gaps and coverage losses. For example, states may look to state-funded subsidy wraps or reinsurance programs to minimize the net premium rate increases that most Marketplace plan members will experience when the enhanced subsidies expire in 2026.
Federal engagement. CMS is providing the public 30 days to comment on the proposed rule. This provides stakeholders the opportunity to voice their positions on the impact of this and future Marketplace policies. Comments on the proposed rule may also be shared with congressional policymakers and staff to help shape future legislative proposals.

红领巾瓜报 experts have considerable experience working with marketplaces, Departments of Insurance, insurers, and federal policymakers with jurisdiction over the Marketplace. They work with these entities to inform, analyze, and influence federal policies and conduct impact analyses on pricing, enrollment, administration, and operations. 红领巾瓜报 also provides strategic and project management support for the implementation of finalized policies.

To learn more about how the proposed rule and the scheduled sunsetting of enhanced subsidies may affect your organization contact 红领巾瓜报 Marketplace experts聽below.

State Cost Growth Benchmarking Programs: An Evaluation of Eight States鈥� Experiences and the Lessons Stakeholders Have Learned

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Background

In 2024, 红领巾瓜报 (红领巾瓜报) evaluated programs implemented by eight states (California, Connecticut, Delaware, Massachusetts, New Jersey, Oregon, Rhode Island, and Washington) aimed at controlling healthcare cost growth. In recent years, these states have tried to address the trend of escalating healthcare costs using an approach referred to as cost growth benchmarking (CGB). This is the act of setting a target for annual healthcare cost growth and measuring actual performance against the target. Since 2018, the Peterson-Milbank Program (PMP) for Sustainable Health Care Costs has invested in state-based CGB efforts by funding program development, implementation, and technical assistance. 红领巾瓜报 evaluated the Peterson Center on Healthcare’s cost growth benchmarking efforts across the eight states.

Methodology

红领巾瓜报鈥檚 evaluation for the Peterson Center on Healthcare included a detailed landscape review for each of the eight states and interviews with 45 state officials, providers, payers, and other stakeholders in these states. The 红领巾瓜报 team synthesized findings from the landscape review and the key informant interviews and produced an internal evaluation report.

Analytic Approach

The landscape review captured the state鈥檚 CGB program chronology, governance structure, growth targets, enforcement authority, and performance against the target. The interviews examined the contextual factors, stakeholder influence, implementation developments, capacity to control costs, facilitators and barriers to developing cost control capabilities, and the lessons learned based on the states鈥� experience. The interview discussion guide included a scoring component which enabled quantitative analysis in addition to the qualitative findings. 红领巾瓜报 analyzed these findings by state, category of interviewee (state officials, payers, providers, or others) and implementation stage (early vs. more recent adopters).

Findings

States鈥� efforts to engage and gather stakeholders, establish cost growth targets, collect and report data, and identify cost drivers have been successful, but states have had challenges to date in developing policies aimed at containing costs.

Utility

The findings from this analysis can be useful to the existing states in enhancing their CGB programs and to states interested in launching new CGB initiatives.

Health policy priorities on the table: Understanding the post-election landscape for Marketplace, Medicaid, and Medicare programs

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This week’s In Focus鈥痵ection addresses post-election implications and initial considerations for understanding President-Elect Donald J. Trump鈥檚 possible federal healthcare policy agenda. Though healthcare was not the highest priority campaign issue, the president-elect and his team have signaled the policy agenda could include changes to the Affordable Care Act (ACA), Medicaid, and the nation鈥檚 public health programs.

Additionally, President Trump鈥檚 first term policy agenda and how these policies fared, provide critical insights into the policy direction for his second term, including policies on Medicare drug pricing, ACA marketplaces, and interoperability. Also vital to understanding and planning for a second term will be the appointees to key healthcare positions at the Department of Health and Human Services and in the White House.

Policy officials and specific policy agendas are still nascent, and 红领巾瓜报, Inc., federal and state experts are continuing to monitor these developments. The remainder of this article focuses on a few key considerations for the Marketplace, Medicaid, and Medicare healthcare insurance programs heading into 2025.

ACA Marketplace Issues to Watch

President-Elect Trump signaled he is uninterested in revisiting a legislative initiative to repeal and replace the ACA. However, one of the major defining issues facing the president-elect and the next Congress is the temporary policy providing enhanced tax credits that lower ACA premiums, which expires at the end of 2025. This and other tax policies are very likely to be on the table, particularly as budget reconciliation is an available tool in unified government.

Key considerations for healthcare stakeholders regarding the subsidy policy and federal funding for Marketplace outreach and education programs include:

The Congressional Budget Office (CBO)聽聽that extending the present enhanced subsidy policies would cost more than $300 billion over 10 years. The CBO also聽聽that ACA marketplace enrollment would drop from 22.8 million in 2025 to 18.9 million in 2026 if the subsidy policy is not renewed.聽
The loss of subsidies would increase the number of uninsured individuals in the United States, but the size of the increase would depend on the state-specific landscape. For example, states that have not adopted the ACA鈥檚 Medicaid expansion for adults are expected to have a higher increase relative to states that have more expansive Medicaid eligibility. One potential approach is for lawmakers to modify the enhanced subsidy policy, rather than let it expire entirely.
Marketplace plans should be prepared for a change in the acuity mix of enrollees while providers should expect a change in their payer mix, with more uninsured individuals in states that have not expanded Medicaid.

Federal and state policymakers may pursue a combination of alternatives to fill gaps in access to healthcare coverage and services. For example, the president-elect and incoming congressional leaders may focus on alternative coverage options and other state-driven reforms to Marketplace programs. Alternatives that could become part of the regulatory policy agenda include:

Supporting association health plans (AHPs) and high-risk pools
Reverting to a federal regulatory environment that supports short-term limited-duration healthcare insurance (STLDI) plans
Approving Section 1332 waivers to allow state-designed programs

Medicaid Policy Outlook

During Mr. Trump鈥檚 first term, one of his administration鈥檚 signature was approving Section 1115 demonstrations that allowed states to apply work requirements to certain populations, including adult expansion populations. The first Trump Administration also revised the demonstration parameters for Section 1115 Institutions for Mental Disease (IMD), allowed coverage lockout for beneficiary noncompliance with premium payments, and a pilot program to test interventions addressing health-related social needs (HRSNs).

Key considerations for healthcare stakeholders regarding Medicaid flexibilities and funding include:

Officials in the first Trump Administration approved Medicaid 1115 demonstration program to address HRSNs. President Biden鈥檚 Administration expanded these policies and approved demonstrations in more than 10 states, with additional state applications pending. Incoming officials may maintain the overall policy direction with regard to HRSNs. However, they could pivot to narrow the scope of future state HRSN proposals. Another approach could include directing states to use in lieu of services (ILOS) authority in managed care delivery systems to address HRSN.
During President-Elect Trump鈥檚 first term, Centers for Medicare & Medicaid Services (CMS) officials prioritized work requirements and for certain components of a state鈥檚 Medicaid program. Some states might consider revisiting these options, with modifications. If this policy direction is refreshed, federal and state officials would benefit from the foundational work conducted during the first term.
New CMS officials could prioritize work on transparency in Medicaid financing and reimbursement to providers. Federal officials, regardless of political affiliation, historically have sought to improve their understanding of the flow of Medicaid funding. Incoming officials could prioritize this issue again, which would have a varied effect on health plans and providers.

Medicare Priorities:

Relative to Marketplace and Medicaid, first term Trump Medicare policies were advanced with less conflict. Notable policy initiatives included a focus on healthcare-related challenges in , improving , and reducing 鈥攁ll of which were also cross-cutting issues that encompassed policy work beyond Medicare and could continue to be central to the next Medicare policy agenda.

Key considerations for healthcare stakeholders regarding Medicare policy are as follows:

The president-elect鈥檚 first term to Medicare Advantage (MA) plans sought to maximize enrollment in MA and encourage . It鈥檚 reasonable to expect second term CMS officials to maintain an overall favorable approach to MA too. Incoming officials could narrow their scrutiny of MA plans to bipartisan concerns, for example MA plans鈥� prior authorization policies.
While improving outcomes for dually eligibles beneficiaries generally is a bipartisan issue, state agencies, MA and Medicaid managed care plans, and other interested stakeholders should monitor the incoming Administration鈥檚 policy agenda for dually enrolled beneficiaries in Medicare and Medicaid. During the Biden Administration, CMS issued for Medicare Advantage Dual Eligible Special Needs Plans (D-SNPs) to improve integration for the Medicare-Medicaid dually eligible population., Incoming Trump officials could revisit the approach, including the breadth of requirements and compliance timelines.
During his first term, President Trump was highly engaged in elevating concerns about and HHS and CMS announced models and policies to for patients. In his second term, however, the President could seek to rein in certain aspects of the Inflation Reduction Act (IRA), while revisiting some of his prior proposals.

What to Watch

The incoming Administration and its transition team are moving expeditiously to nominate new Cabinet Secretaries and to identify key staffers. The individuals appointed to departmental, agency, and advisory leadership positions will have significant leeway in shaping the federal and state healthcare policy landscapes 鈥� determining which existing policies to review and potentially revise, new policies to develop, and the approach to working with state and local officials and stakeholders. This includes the Secretary of Health and Human Services, CMS Administrator, Director of the Centers for Disease Control and Prevention, Food and Drug Administration Commissioner, and Director of the National Institutes of Health, all of which require Senate confirmation. Additionally, healthcare stakeholders should continue to monitor the leadership races for the House and Senate and the primary congressional committees with jurisdiction over healthcare programs. These leaders will be key to a second term Trump legislative policy agenda.

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This article focuses in on a subset of issues within Marketplace, Medicaid, and Medicare and in the overall healthcare sector. Our features our experts discussing these and other insights on the election results. They provided an overview of what to expect from Congress and the Administration, focusing on key legislative priorities and executive actions.

Join us for our next two webinars in the series exploring the election results:

November 19: The Future of Medicare Advantage: How the Election Results Impact the Program
November 20: Electoral Consequences: Impact on the ACA Marketplace

Healthcare solutions unlocked: Key takeaways from the 2024 红领巾瓜报 Conference

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The 红领巾瓜报 Conference – Unlocking Solutions in Medicaid, Medicare, and Marketplace 鈥� was held in early October in Chicago, drawing a crowd of 350 participants hailing from all parts of the healthcare ecosystem. In the words of one attendee, what made the 红领巾瓜报 conference unique was that 鈥渋t was very rare to have providers, CBOs, health systems, insurers, and public sector organizations in one place鈥 gained significant value by viewing similar issues from different perspectives.鈥�

Attendees participated in plenary sessions and breakouts that were grounded in Medicaid, Medicare, and Marketplace, with each session extending beyond the traditional topics for these public health insurance programs. Attendees were challenged and inspired to consider the cross-cutting work underway to address health equity, the integration of housing into healthcare, innovative strategies for behavioral health coverage for adults as well as children and families involved in the child welfare system, and the opportunities for federally qualified health clinics to engage in value-based care delivery to improve outcomes.

Signature 红领巾瓜报 discussions with health plan leaders and Medicaid directors also provided valuable insights that will help guide the next phase of innovative programs and technologies designed and deployed to improve health. Breakout sessions offered in-depth exploration across Medicaid/Duals, Medicare/MA, and Marketplace/ACA tracks, alongside discussions on demand for innovation, advances in treating sickle cell disease, and creative workforce strategies. The conference concluded with a panel that prepared attendees for policymaking in the post-election, post-Chevron deference landscape.

The 红领巾瓜报 event created opportunities to learn and network with potential partners against the background of the city of Chicago skyline, as one participant put it, 鈥渁way from the daily craziness.鈥� The discussions were robust and focused on new ideas that can be deployed by stakeholders all trying to improve the accessibility, quality, equity, and value of healthcare.

Listed below are conference takeaways that will be of interest and relevant to the broader healthcare ecosystem:

Systemize the little things that improve outcomes.

Keynote speaker Dr. Darshak Sanghavi from ARPA-H challenged people to focus on systematizing the 鈥渓ittle things鈥� that drive measurable improvements in outcomes as a source of meaningful innovation. His presentation focused on how ARPA-H is investing differently in private sector innovation 鈥� not just big breakthroughs, but also in data-informed approaches that produce consistent quality.

Housing is a healthcare issue.

There is increasing overlap between initiatives to address housing support in Medicare and Medicaid. Bridging diverse sectors and stakeholders is essential to address critical gaps in service delivery. 红领巾瓜报鈥檚 new Housing Services & Supports practice group recognizes that housing is part of healthcare, but it does not have to be fully funded by healthcare entities.

Cross-payer collaboration would improve behavioral health.

Behavioral health coverage has historically relied on the Medicaid-based chassis of coverage, but the breadth of needs and federal parity requirements have created an urgent need for new approaches to coverage across all systems and all payers. Cross-payer innovation and collaboration are essential, and systems need to position themselves to scale effective solutions that allow individuals to access services when they need them. In particular, youth and family voices must be part of the transformation of children’s mental health systems to smooth their experience.

The ACA is stable, but 2025 brings uncertainty.

The stability and future success of the ACA marketplaces hinge on the decisions of the 119th Congress regarding the extension of subsidies. If these subsidies are reduced or cancelled it could disrupt what has become a robust and reliable segment of the health insurance market, potentially requiring another pivotal transformation.

Community collaboration can bridge Medicaid health gaps.

New norms are emerging in the Medicaid program. There is unprecedented policy and programmatic work underway to ensure member experiences are informing the design of Medicaid programs as well as the type and pathways for accessing health and health adjacent services. Federal and state government, managed care plans, and providers must work together to bridge the gap to ensure Medicaid programs are best able to serve their members.

Interoperability remains foundational to quality improvement.

We have many different information systems, but when data is pushed to providers to help them manage their patient panel — ED visits, medications, and other data 鈥� higher quality care is more likely to be provided to patients.

Provider networks can be structured to ensure success in value.

Medicare providers are embracing value-based care on different timelines and in varied ways. Policymakers, health plans, and other stakeholders need to think carefully about how to structure networks with those providers who are doing it well to get the best results.

Clinics need help with data and financing to drive value-based outcomes.

Poverty is the primary diagnosis for patients of federally qualified health centers (FQHCs), and payment can better recognize the connections FQHCs make to anti-poverty services and programs. As the healthcare industry moves providers along the trajectory of value-based payment, FQHCs will be positioned to deliver whole person care if their data and financing is aligned.

These 鈥� and other takeaways and partnerships 鈥� will inform strategic, policy, programmatic and operational decisions at the hundreds of organizations represented at the 红领巾瓜报 conference. They are also key points as we shape the conversations for the 2025 event.

Webinar Replay: Electoral Consequences: Impact on the ACA Marketplace

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This webinar was held on November 20, 2024.

The 2024 elections could create dramatic changes in the ACA marketplace. Enhanced ACA subsidies passed during the pandemic are set to expire in 2025, and a new CMS administrator will shape policy and regulatory components that affect marketplace and consumer dynamics. This webinar is designed for health plans currently participating in the ACA marketplaces, plans who are considering attending, as well as state regulators and marketplace leaders who need to understand changes that might be coming their way. The webinar covered not only what is expected to change (2026 Notice of Benefit and Payment Parameters, AVC) but also what could possibly change that will affect 2025 Marketplaces and beyond.

CMS releases draft benefit and payment parameters for 2026 Marketplace

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Our second In Focus article reviews the recently proposed Notice of Benefit and Payment Parameters (NBPP) for 2026. The Centers for Medicare & Medicaid Services (CMS) , released October 10, 2024, describes the policy and payment changes that will affect the Affordable Care Act (ACA) markets in 2026. Public comments must be submitted to CMS by November 12, 2024. Key highlights from the proposed rule follow.

Broker Oversight and Monitoring

CMS proposes to increase oversight and accountability for brokers and agents that write policies through HealthCare.gov. In response to the earlier this year of fraudulent actors reassigning broker designations and switching consumer enrollments without their permission or knowledge, CMS has already implemented several , including the of 850 Healthcare.gov agents and brokers. CMS intends to build on these actions through the following interventions:

Clarify that lead agents, typically an agency owner or executive, are subject to the same rules as individual brokers, agents, and web-brokers and that enforcement action can be taken against the lead agents if they explicitly or implicitly condone misconduct or fraud
Broaden CMS鈥檚 authority to suspend broker and agent system access, inclusive of instances of suspected misconduct that affects eligibility determinations, operations, applicants, or systems
Update the model consent form to include documentation of the broker reviewing and confirming the accuracy of submitted application information with the consumer.

Marketplace User Fees

CMS proposes to increase the user fee collected to pay for administration of HealthCare.gov as follows:

Between 1.8 percent and 2.5 percent in 2026 for federally facilitated marketplaces (FFM) states, up from 1.5 percent of monthly premiums in 2025
Between 1.4 percent and 2 percent in 2026 for state-based marketplaces on the federal platform (SBM-FPs), up from 1.2 percent in 2025

The proposed changes are due, in part, to uncertainty caused by the future of the enhanced premium tax credits that are set to expire at the end of 2025. The enhanced premium tax credits are the driving force behind the in nationwide marketplace enrollment to more than 21 million people in 2020 from 11.4 million in 2020. If not extended, or if it takes past March 2025 for Congress to act, CMS has indicated the user fees will increase in 2026 to 2.5 percent for FFM states and 2% for SBM-FPs to accommodate expected enrollment declines. Notably, after several years of significant decreases, CMS is proposing to increase the user fees above 2025 levels regardless of the outcome of the enhanced premium tax credits.

Plan Limits for Non-Standard Plans

CMS proposes to clarify rules limiting the number of non-standardized plans an issuer can offer through HealthCare.gov (two or less in 2025). The limit is applied per product network type (e.g., HMO, PPO), per metal level, per service area, per inclusion of adult/pediatric dental and/or vision benefits (with additional exceptions, starting in payment year (PY) 2025, for plans with specific design features that would substantially benefit consumers and meet other requirements). To maximize the number of non-standardized plans offered on HealthCare.gov, an issuer could offer up to 16 plans per metal level and network type in a given service area by creating every combination of adult dental, pediatric dental, and adult vision (or even more, if plans meet the exception requirements).

Though CMS does not limit the number of standardized plan options an issuer offers on HealthCare.gov, they propose reinstating a meaningful difference standard to prevent consumer confusion and unnecessary plan proliferation. The proposed standard is similar to the removed standard from 2019; for plans in the same metal level, product type, and service area, a reasonable consumer needs to be able to identify at least one material difference in benefit coverage, provider networks, and/or formulary.

New Premium Payment Threshold Options for Issuers

CMS proposes new options for issuers to avoid triggering late payment grace periods for consumers who make most but not all of their premium payment to minimize termination of coverage for consumers who owe a small amount. The options include:

The current option of a 鈥渞easonable鈥� percentage of net premium. CMS proposes codifying 95 percent as the minimum threshold.
New proposals of as low as 99 percent of gross premium and a fixed-dollar threshold of $5 or less.

CMS is also considering limiting issuers to offering just one payment threshold option鈥攅ither fixed-dollar or percent of premium鈥攖o avoid consumer confusion.

Increased Transparency for State-Based Marketplaces

CMS proposes new initiatives to promote transparency into state-based marketplace (SBM) program operations. These initiatives include:

Publishing State Marketplace Annual Report Tool (SMART) submissions, which are used to monitor SBM compliance with select eligibility and enrollment, program integrity, and financial reporting requirements. SBMs must annually participate in independent programmatic and financial audits as part of SMART. CMS proposes to make the 2023 SMART submissions public in spring 2025.
Expanding the disclosure of SBM information to include data collected but not currently published, including details on SBM eligibility, enrollment, and plan certification policies as well as Navigator program spending, call center metrics, and website traffic data.

SBMs already are required to publish programmatic and financial audit summaries and generally publish robust data and information on their program operations through public reports and meetings; however, this information is neither centrally located nor consistently published across all SBMs.

Key Considerations

The proposed 2026 NBPP would build on previous actions that CMS has taken to address fraudulent broker and agent activity and to shore up financial sustainability of Healthcare.gov operations in light of uncertainty about the enhanced premium tax credits. It also seeks to make clear how plan variations adding dental or vision benefits factor into HealthCare.gov plan limits and gives issuers new premium payment threshold options. Lastly, it proposes new transparency requirements for SBMs. Interested stakeholders, including SBMs and issuers, should monitor how these proposed changes will affect consumers, operational processes, product strategy, and financial sustainability.

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The 红领巾瓜报, Inc., team has the depth, experience, and subject matter expertise to assist with tailored analysis and the modeling capabilities to assess the policy impacts to consumers, marketplaces, and issuers. If you have questions or want to discuss the proposed rule, contact our featured experts below.

For additional information on elements of the proposed NBPP not discussed here, Wakely Consulting鈥檚聽white paper, , highlights the proposed changes to the Risk Adjustment program, Medical Loss Ratio, and the Actuarial Value Calculator, among other changes.聽

红领巾瓜报 conference keynote speaker discusses innovation in Medicaid, Medicare, and Marketplaces

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Given that 50 percent of Americans have publicly funded health insurance鈥攊ncluding Medicare, Medicaid, or Affordable Care Act Marketplace plans in which many premiums are subsidized鈥攖he need is growing for innovations that will yield better quality at lower total cost. The 红领巾瓜报 (红领巾瓜报) Fall Conference, , offers an agenda that dives deeply into the latest innovations and opportunities in these critical programs. Focused on improving collaboration and information sharing, the event will explore strategies and practical solutions to reduce health disparities and enhance outcomes for aging, disabled, and chronically ill people.

The federal government recently created the Advanced Research Projects Agency for Health (ARPA-Health), which is charged with supporting the development of high-impact solutions to improve health outcomes. We are fortunate to have as our keynote speaker from ARPA-H. We have asked him to share his thoughts on why innovation in the public healthcare space is critical.

Dr. Sanghavi will kick off the 红领巾瓜报 conference with a discussion on how ARPA-H initiatives are intended to support new solutions to modernize today鈥檚 healthcare landscape鈥攏ot only with technology, but also through changes in our approaches to healthcare delivery and payment.

Only a month before the November elections, the 红领巾瓜报 conference presents a valuable opportunity to engage with healthcare leaders across the public and private sectors to hear how they are thinking about potential policy and regulatory changes that could affect publicly funded programs and supplemental coverage. Attendees will take home insights and actionable ideas to drive improvements in health and well-being. Join us to shape the solutions that will impact the future of healthcare!

The case for a state-based marketplace

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Former Speaker of the House Tip O鈥橬eill made famous the phrase 鈥渁ll politics is local,鈥� meaning electoral success is related directly to a politician鈥檚 understanding of and ability to address the local issues that matter most to constituents. This concluded that local knowledge of health care challenges and collaboration among local organizations to find solutions were major contributors to communities鈥� improvement on scorecard rankings.

One state-level decision that can boost responsiveness to local needs is whether to establish a state-based marketplace (SBM) for health insurance. Health insurance marketplaces are required in every state under the Affordable Care Act (ACA). Under the ACA, states were given a choice about whether to establish an SBM and receive some federal funding to do so or rely on the federally facilitated marketplace (FFM) to serve their residents. Marketplaces are designed to do two basic things: (1) enroll individuals and families who do not have access to Medicaid, Medicare, or employer-sponsored health insurance coverage in private coverage and (2) connect eligible individuals with financial assistance (premium tax credits and cost-sharing reductions) to reduce their cost of coverage. To date, 19 states have established SBMs and others continue to entertain the possibility of establishing one.

Why would states want to establish and operate a new agency of government to administer coverage for people who are receiving federal tax credits for their health insurance coverage? Surely this could create redundant and/or uncoordinated functions between states and the federal government and place an unwanted burden on capacity-strapped state governments. However, states that have established SBMs have not found this to be the case. Instead, in evaluating the FFM versus SBM decision, and in operating SBMs, states have found that SBMs offer distinct advantages over the FFM. These include:

Lower Costs: States have historically demonstrated that they can operate SBMs at a lower overall cost than they would pay in fees through the FFM which has led, in part, to the recent reductions to the Healthcare.gov user fee. States also directly benefit through their ability to retain marketplace revenue and spend it locally. Lastly, SBMs can claim federal financial participation for functions they perform supporting and facilitating Medicaid enrollment.
Better Service: States have an almost 60-year history of enrolling low-income individuals and families enroll in and stay enrolled in Medicaid. Many of these individuals cycle in and out of Medicaid eligibility due to changes in income. States can coordinate between SBMs and Medicaid to reduce gaps in coverage. They also can simplify eligibility and enrollment through SBMs that deliver a better customer experience through knowledge of their markets and residents and on the ground enrollment assistance and initiatives.
More Policy Influence: SBMs can be launchpads for access and affordability innovations not possible with the FFM. State innovations to date include public option plans, state-funded subsidies such as premium and cost-sharing wraparound support, basic health plans, undocumented immigrant coverage programs, and collaborative enrollment initiatives with Medicaid agencies, unemployment programs, and tax departments.

In addition to states, managed care organizations (MCOs), particularly local and regional MCOs, can also reap the benefits of an SBM:

Local Governance: With governance for an SBM taking place at the state level (versus the federal level), MCOs have the opportunity for more thorough engagement with state officials around operational and policy decisions and issues.
Aligned Market Expectations: MCOs participating in both the marketplace and Medicaid will benefit from a higher probability of aligned expectations and priorities across both markets with those expectations and priorities being uniformly set at the state level with an SBM.
Local Market Sensitivity: MCOs that operate and are rooted locally can count on market-specific dynamics being better reflected in decision-making with an SBM.

Establishing a SBM is not an easy or straightforward decision, but state policymakers and MCOs should consider the benefits that have accrued to other states and the role that SBMs can serve in addressing local health priorities.

If you have questions about how 红领巾瓜报 can support your state or MCO related to SBMs, please contact our featured experts.

What would it take to make the ACA more affordable?

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Liz Wroe is a principal at Leavitt Partners DC office and former Senate health policy director. Liz talks about the evolution of the Affordable Care Act (ACA), sharing her experiences during the ACA’s passage, repeal efforts, and stabilization of the individual market. She discusses challenges in bending the cost curve, the impact of ACA subsidies and silver loading, and the need for more honest conversations in healthcare policy.

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