Affordable Care Act marketplace enrollment likely to decrease under proposed regulations

The Trump administration’s first regulations on the Affordable Care Act health insurance marketplaces are projected to reduce enrollment.

As announced by CMS on March 10, a soon-to-be-published proposed rule would implement new program integrity standards for the marketplaces. Part of the motivation stated in the rule is to address “a substantial risk of improper enrollment.”

Specifically, CMS says the number of applications that were submitted to healthcare.gov and had data-matching issues increased from 2.6 million in 2020 to 6.3 million in 2022, the second year in which enhanced subsidies were available. The agency says it also tracked a sharp rise in consumer complaints about being enrolled in a marketplace health plan without consent, and it cited a report by the conservative-leaning Paragon Health Institute that at least 4 million people were improperly enrolled in a subsidized marketplace plan in 2024.

“This rule is really to ensure that the right folks are able to provide the right information to ensure that we’re getting that [coverage] to the right people,” Stephanie Carlton, CMS acting administrator, said during a March 12 virtual summit hosted by the University of Michigan’s Center for Value-Based Insurance Design.

More broadly, she said, the administration seeks to “ensure resources are really targeted on the folks that programs are designed to serve.”

Comments on the proposed rule are due April 11 at regulations.gov.

In related previous news, CMS in February announced it would trim funding for the ACA Navigator program by roughly 90%, to $10 million, for 2026. Navigators help prospective enrollees understand their options and enroll in coverage.

Industry impact

Implementing the proposed rule will reduce improper federal spending on advance subsidy payments by at least $11 billion in 2027, CMS said.

A goal is to reduce taxpayer burden while also making marketplace plans more affordable for nonsubsidized enrollees. For example, proposals to restrict special enrollment periods are anticipated to reduce nonsubsidized premiums by between 4% and 6% in 2027, according to the rule. However, out-of-pocket cost-sharing limits would be 4.4% higher than projected before the new rule.

The projected impact on ACA enrollment, which reached a record 24.1 million for 2025, includes a reduction of between 750,000 and 2 million per year, CMS wrote in the rule.

There likely would be an increase in costs and medical debt for individuals deterred from enrolling due to some of the proposals, and that increase “in turn could be incurred by hospitals and municipalities,” according to the proposed rule. More generally, the rule foresees “potential costs to state governments and private hospitals in the form of charity care for individuals who become uninsured as a result of the proposals in this rule.”

A “small negative impact on the individual-market risk pool” could arise from a proposal to end marketplace-plan eligibility of U.S. residents with Deferred Action for Childhood Arrivals (DACA) immigration status. A change in a regulatory definition would render a DACA recipient ineligible to enroll in an ACA plan or a state-based Basic Health Program, reversing a Biden administration policy that took effect in 2024 but was halted by a federal judge in December for 19 states that challenged the regulations.

Looking ahead, a bigger industry impact than anything in the proposed rule will be felt if Congress allows the enhanced subsidies to expire at the end of 2025.

Enrollment restrictions

A key provision of the proposed rule would end open enrollment in healthcare.gov and state-based exchanges on Dec. 15, a month earlier than in recent years, leaving a 45-day window in which to enroll. The change also would apply to individual-insurance health plans that are available outside the marketplaces.

The rule states that limitations on the open-enrollment period are important to protect “the stability of the individual-market risk pool within the structure of the ACA. Adverse selection remains a serious concern under the ACA’s guaranteed availability and modified community rating requirements.”

Another aspect would eliminate the monthly special enrollment period (SEP) for individuals whose household income is below 150% of federal poverty, with CMS saying the current policy “allows people to wait to enroll until they become sick instead of promoting continuous enrollment that fosters prevention and better health outcomes.” While much of the rule would take effect in 2026, this policy would begin with the effective date of the final rule (generally 60 days after publication).

During the VBID Summit, healthcare strategist Jim Parker, a senior advisor to HHS during the first Trump administration, said providers operating under the marketplace rules of the last few years could enroll individuals in coverage at the point of care “in order to get paid.” The current administration is seeking to curtail that practice, he indicated.

“That’s just not insurance,” Parker said.

Pre-enrollment verification would be reinstated for SEP eligibility, with the requirement extending to state-based marketplaces as well as healthcare.gov. Eligibility would need to be verified for at least 75% of enrollments that take place during an SEP.

Another enrollment-focused provision would change the standards for barring insurance agents and brokers from operating in the marketplaces, making a ban easier to implement based on perceived misconduct.

Premiums and subsidies

Where allowed by state law, the proposed rule would authorize marketplace insurers to require payment of past-due premium amounts before offering new coverage to an enrollee.

In describing the rationale for that provision, the rule refers to enrollees who “choose to move in and out of coverage based on anticipated healthcare needs by exploiting or utilizing loopholes in the insurance system, such as extended grace periods and allowing coverage to lapse without addressing premium obligations even when seeking to enroll in new coverage.

“By addressing these circumstances, the proposed policy would encourage continuous coverage and reduce the burden on issuers to collect past-due premiums in other ways. The proposed policy would reduce the risk of gaming and adverse selection by consumers.”

Failure to file a tax return would result in loss of subsidies, as would failure by enrollees to resolve discrepancies in their subsidy amount stemming from a gap between projected and actual income. Under regulations that took effect in 2024, enrollees have been subject to that penalty only if they fail to “file and reconcile” for two consecutive tax years. Another change would reduce the amount of time to reconcile reported income with verifiable income from 120 days to 60 days.

Overall, CMS said the rule “seeks to balance market stability considerations by maintaining appropriate access to coverage and promoting continuity of coverage among enrollees. While some consumers may face challenges paying past-due premiums and could become or remain uninsured, the longer-term effects could include more stable risk pools and potentially more moderate premium trends.”