The Affordable Care Act (ACA) is facing significant changes under a new tax and spending bill pushed by President Donald Trump. The bill, which is expected to be signed into law, includes provisions that could undermine the gains in health insurance coverage made under the ACA. The changes would affect consumers, particularly in the 19 states that run their own ACA exchanges, and could lead to a significant loss of coverage for millions of people.
One of the key changes is the end of automatic reenrollment, which would require consumers to update their information every year before the close of open enrollment. This change is intended to combat enrollment fraud, but critics argue that it would create unnecessary barriers for consumers and lead to a significant drop in enrollment. In fact, estimates suggest that up to half of enrollees in some states could lose or drop coverage as a result of this change, combined with the expiration of enhanced premium subsidies and a new rule from the Trump administration.
The state-run marketplaces, which have tighter control over broker access and additional security measures, have seen few problems with enrollment fraud. They credit their security measures for the relative lack of problems, and argue that the changes would disproportionately affect their policyholders. For example, in Pennsylvania, 65% of policyholders were automatically reenrolled this year, and the state’s ACA marketplace, Pennie, estimates that a minimum of 30% of enrollees could lose coverage, and up to 50% in the worst-case scenario.
The changes would also lead to higher premiums, as older or sicker policyholders are more likely to try to jump through the additional hoops, while those who rarely use coverage would be less likely to enroll. This would lead to a sicker risk pool, which would drive up premiums and make it more difficult for insurers to operate in the market. In fact, federal data shows that about 22% of federal sign-ups in 2024 were automatic reenrollments, versus 58% in state-based plans.
Critics of the bill argue that the changes are unnecessary and would have a devastating impact on the uninsured rate, which has dropped by about half since the ACA was implemented. They point out that the changes would disproportionately affect low-income people and those who are most vulnerable to losing coverage. The administration and its supporters, on the other hand, argue that the changes are needed to combat enrollment fraud and make the ACA more sustainable.
According to a white paper written for Capital Policy Analytics, the changes could push four to six million eligible people out of Marketplace plans, trading limited fraud savings for a surge in uninsurance. The paper concludes that the changes would have little upside and would likely lead to further premium increases and selective market exits by insurers. Overall, the changes to the ACA under the new tax and spending bill could have a significant impact on the health insurance market and could undermine the progress made in reducing the uninsured rate.