In February, the Trump administration proposed new rules for the Affordable Care Act’s (ACA) marketplaces in 2027. The annual regulatory package, known as the Notice of Benefit and Payment Parameters (NBPP), is expected to be finalized in the coming weeks.
In 2026, enrollment in the Affordable Care Act (ACA) Marketplaces dropped for the first time since 2020 and is expected to keep falling over the course of the year, as a series of federal policy changes in 2025 made coverage far less affordable. The Centers for Medicare & Medicaid Services (CMS) estimates that the sweeping changes proposed in the 2027 NBPP would cause up to 2 million people to lose Marketplace insurance, though some experts project even steeper losses.
CMS received more than 1,000 comments on the proposed NBPP. To better understand the impact of proposed policies, CHIR reviewed comments submitted by select stakeholder groups in response to the proposed rule. This second installment of our four-part series examines comments from state departments of insurance (DOIs), state-based marketplaces (SBMs), and their representative associations (collectively referred to here as “states”). A prior post looked at comments from insurers and brokers, and future installments will look at comments from consumer groups and health care providers.
For this post, we reviewed comments from:
Massachusetts DOI and Marketplace
New Mexico DOI and Marketplace
National Association of Insurance Commissioners
The proposed Marketplace rule covers a wide range of policies (a detailed summary of its provisions, in three parts, is available on Health Affairs Forefront here, here, and here.) This summary of state feedback focuses on overarching comments from states, followed by feedback on a subset of proposed provisions that garnered the most attention from states in our sample.
Overarching comments
In general, responses from states had a few overarching themes across provisions:
- Impractical timeline. Several state comments called for delays in implementation until plan year 2028. States raised concerns that they would be unable to make all of the systems and operational changes needed in advance of 2027 Open Enrollment, given that this rule was released relatively late compared to previous years, as well as the volume of changes already in development to comply with H.R. 1 and the Marketplace Integrity rule. Changes for 2027 would need to be made well before marketplaces open to consumers on November 1, 2026. The Massachusetts SBM, for example, noted that it will begin eligibility redeterminations for 2027 coverage in August 2026, leaving insufficient time for changes. States also noted that issuers are already developing products for 2027. Washington has a mid-May filing deadline for 2027 plans, and raised concerns that there will not be sufficient time after the final rule is released for the state to issue new filing guidance and for issuers to modify plans and rates before submitting.
- Support for state flexibility and authority. States voiced their strong support for flexibility in implementation and maintaining traditional state authority of insurance markets and SBMs. The State Marketplace Network notes that flexibility allows states to tailor policies to be responsive to their specific markets and residents. States often expressed support for provisions where CMS extended or maintained state flexibility and authority, such as with network adequacy reviews, and expressed concern where state authority was curtailed, such as with income verification standards.
- Inconsistent approaches related to program integrity. States supported the goal of program integrity and pointed out where they felt the proposal has inconsistent approaches to it. As they did with last year’s Marketplace Integrity rule, states noted that significant issues with fraudulent enrollment are limited to the federal marketplace and are not present in SBMs. Accordingly, states pushed back on improper enrollment activity as a justification for adding more red tape to SBM enrollment. For example, New Mexico urged CMS to “directly address issues on the federal platform and Enhanced Direct Enrollment with agents, brokers, or web-brokers conducting unauthorized enrollments rather than shifting this burden to consumers.” At the same time, states also questioned proposals that seemed to run counter to program integrity goals, such as broadening the role of Enhanced Direct Enrollment entities in states, despite their role in facilitating improper enrollment in the federal marketplace.
Certifying non-network plan options
CMS proposes to enable plans that do not have a provider network to participate in the Marketplaces. The agency proposes a regulatory framework to assess whether such plans meet the Marketplace certification criteria.
No state in our sample voiced support for certifying non-network plans. States strongly supported maintaining the authority to prohibit sales of non-network plans in their markets.
Many state concerns centered on harms and risks for consumers. The NAIC expressed concern that “the real-world application of this benefit design will leave consumers without adequate access” to affordable care. It also noted blind spots for regulators, commenting that the proposal “does not provide effective mechanisms for monitoring consumer experiences” given that the amount a non-contracted provider will accept “as payment in full is a ‘moving target’” subject to change “at any time, for any reason.” The Alaska DOI opposed this provision, which would exacerbate access issues in its state, where “geography and population density already make access to health care providers challenging.” Costs were also a concern. Oregon noted that consumers in non-network plans may face “significant risk of unexpected and incalculable expenses.” Finally, states questioned whether consumers have the information and leverage needed to use non-network coverage as envisioned by the proposal. The NAIC noted that “[c]onsumers frequently lack information about what services they need before they see a provider and often do not have ready access to comparative prices for use in negotiations.” Washington added that “[a]sking consumers, rather than issuers, to negotiate reimbursement rates with large, consolidated health systems is simply not realistic.”
Oregon raised concerns about how non-network plans would affect the affordability of traditional plans. If non-network plans are less expensive, they “would undermine the amount” of federal premium tax credits, driving up net premiums for consumers in traditional plans. A few states pointed out that the concept of non-network plans appears to be contrary to the statute. Finally, several states said the proposal lacked clarity. New Mexico outlined many unknowns and asked for “additional clarification regarding the operational mechanics, compliance expectations, and consumer safeguards associated with non-network plans.”
Changes to catastrophic and bronze plans
The proposed rule includes policies that would expand eligibility for catastrophic plans to more people, permit catastrophic plans with multi-year terms, and allow catastrophic and bronze-level plans to exceed the statutorily mandated annual maximum out-of-pocket (MOOP) cost-sharing liability for enrollees.
All states in our sample that commented on these provisions expressed concerns about or opposition to them. States generally called for CMS not to finalize these provisions or, at a minimum, to delay implementation until 2028 or later to give regulators and issuers sufficient time to assess and mitigate negative impacts. States strongly supported the authority to opt out of implementing these changes in their markets and marketplaces.
With respect to multi-year catastrophic plans, states roundly called for additional clarification on the proposal. They pointed to many significant unanswered questions about how ACA consumer protections and market structures would apply to these plans, including risk adjustment, rating rules, medical loss ratio requirements, cost-sharing protections, guaranteed renewability, and issuer discontinuation. They also pointed to likely harms to their markets. Massachusetts said multi-year catastrophic plans “may create issuer solvency issues and destabilize insurance markets,” and the Alaska DOI “believes the overall market will be negatively impacted” by them.
States expressed concern that changes to catastrophic health plans, particularly broadening eligibility, could harm the risk pool, driving up the cost of metal-level plans. The California DOI expects a “meaningful migration of younger, healthier enrollees” to catastrophic plans. The NAIC echoed the view that people who migrate to catastrophic plans are “likely to be healthier as a group” and expressed concern about adverse selection in metal-level plans. New Mexico cautioned against “introducing additional volatility into an already tenuous environment.”
States are also concerned about harms to consumers from increasing access to catastrophic plans and eroding cost-sharing protections in bronze and catastrophic plans. Massachusetts noted that higher cost-sharing “will lead to increased medical debt and forgone care.” The Pennsylvania SBM pointed to its survey data, noting that “consumers regularly cite cost-sharing requirements as being one of the most significant barriers to enrolling and using coverage.”
Despite their concerns, several states acknowledged the challenge with creating bronze plans within current constraints, a problem CMS aimed to address with changes to maximum out-of-pocket limits. These states encouraged alternative approaches that do not erode consumer affordability protections.
Requiring additional income verification
CMS proposes requiring consumers to submit additional verification of their income in two scenarios: 1) if third-party data sources indicate their income is below 100% of the federal poverty level (FPL), and 2) when the IRS lacks their tax data. These additional paperwork requirements would apply to both SBMs and the federal marketplace.
States generally argued that additional income verification imposes burdens on consumers, is costly to implement and administer, is unjustified in SBM states, and will drive adverse selection, thereby worsening the risk pool. Oregon explained that having to submit additional verification will not deter enrollment by “sicker individuals [who] will jump through all hoops to get coverage,” but will discourage enrollment of younger and healthier individuals, “degrad[ing] the risk pool and lead[ing] to higher premium prices.”
The State Marketplace Network said the proposals would “require system updates and manual documentation submission and review, adding complexity and cost.” Several states pointed out that there is no incentive in Medicaid-expansion states for individuals to inflate their projected income to get Marketplace subsidies since they would qualify for Medicaid instead. Massachusetts noted that “applying this one-size-fits-all proposal to SBMs” in Medicaid expansion states that do not have broker fraud issues “would only create costly and unnecessary administrative and operational burdens without any added benefit.”
States urged CMS to allow SBMs to maintain flexibility around income verification methods, often arguing that costly system changes and enrollment burdens cannot be justified given the lack of improper enrollment in SBMs. If CMS moves forward as proposed, some states asked that implementation be delayed beyond 2027. California’s SBM called the proposed timeline “operationally unfeasible due to system limitations, competing federal and state requirements, and the volume of changes already underway.”
Allowing SBMs to enroll people exclusively through private web-brokers
The NBPP proposes to establish a new SBM model, the State Exchange Enhanced Direct Enrollment option, or SBE-EDE. It would allow SBMs to forgo offering a centralized, consumer-facing eligibility and enrollment website, and instead, conduct enrollment exclusively through a diffuse system of private web brokers and insurers.
No state commenter offered unqualified support for the SBE-EDE model, but a couple expressed gratitude for the additional flexibility. Georgia’s comments are perhaps the most interesting, given that it is the only state to have pursued an SBM with exclusively private enrollment channels, though it eventually implemented a traditional SBM with a centralized, state-run enrollment platform that also allows EDE entities to conduct enrollment. Georgia’s DOI promoted its “EDE-first approach,” established under current authority, and said it “would not consider an EDE-only model to be viable at this time.” Georgia said most of its enrollees use EDE, but “hundreds of thousands of Georgians continue to rely” on the centralized SMB enrollment site, and the state considers it “a vitally important element” so the state has all options available if there are issues with EDE entities. The NAIC “appreciate[ed] the proposed flexibility,” but raised concerns about CMS encouraging wider EDE use without cracking down on the use of shared broker identifier numbers, a step it says is needed help prevent EDE-enabled improper enrollment activity.
Other state commenters expressed concerns about the SME-EDE concept, particularly regarding the shift of crucial marketplace functions to private entities, which reduces oversight and raises program integrity concerns. Pennsylvania’s SBM questioned “the continued policy push towards a channel that is cited as a main source of improper enrollments” in the federal marketplace, as well as the proposal to subject brokers in SBE-EDEs to less federal oversight than in other SBMs. Massachusetts raised concerns that encouraging multiple enrollment platforms in a state will make it harder for consumers to “tell the difference between a legitimate enrollment entity and a fraudulent actor.” Regulators in Massachusetts described consumer confusion caused by entities outside the marketplace that falsely claim to offer marketplace plans, even in a state that does not use EDE. Finally, Massachusetts noted that centralized SBM platforms encourage competition among issuers by providing an “impartial and complete display of all certified plans.” In contrast, differential displays and incomplete plan listings in EDE can decrease competition.
Establishing the State Exchange Improper Payment Measurement program
The proposed rule would establish the State Exchange Improper Payment Measurement (SEIPM) program and require SBMs to annually submit information on eligibility determinations to CMS to estimate improper payments of federal premium tax credits. The proposal would take effect in January 2027 to review payments made in 2026.
While states in our sample affirmed their shared goals of program integrity and accountability, they widely called for changes to the program as proposed to eliminate duplication with other audits, reduce operational burdens, and establish a more feasible implementation timeline.
Many states found implementation premature. Some states are currently piloting an improper payment audit, and, with no findings from the pilot showing issues, Oregon argued that the burden and expense of the SEIPM audit are not justified. The State Marketplace Network suggested that a delayed implementation would allow CMS to “incorporate lessons learned” from the pilot. New Mexico expressed concerns about the proposal’s “absence of critical implementation details,” limiting its ability to “meaningfully assess burden, feasibility, or cost at this time.”
Several states pointed to an existing annual independent audit of SBMs that measures compliance with subsidy eligibility requirements. Pennsylvania’s SBM suggested using information from that audit to evaluate improper payments instead, and other states urged CMS to eliminate duplicative data collection between the SEIPM audit and existing reporting requirements.
States also pointed to significant burdens related to data collection and the implementation timeline. New Mexico noted that the audit would likely require both “substantial system modifications” and “manual data retrieval,” which would “impose significant and ongoing administrative strain.” California’s SBM stated that the annual cadence would cause “undue operational strain,” and not allow “time for implementing remediation measures before subsequent reviews.” Both the California SBM and State Marketplace Network suggested a three-year audit cadence instead. Several states questioned the feasibility of the implementation timeline, including New Mexico, which believes the “proposed January 2027 implementation timeline is not sufficient to design, build, test, and operationalize a program of this scale.” The NAIC urged “a longer transition period to full operation,” and the State Marketplace Network called for delaying implementation until after 2028.
Revising defrayal of state-mandated benefits
CMS proposes that states be required to defray the cost of any state-mandated benefits that are: (1) required by the state after December 31, 2011; (2) applicable to the small-group and/or individual market; (3) specific to required care, treatment, or services; and (4) not required by the state to comply with federal standards. This change reverses a policy from the 2025 NBPP that exempted state mandates from defrayal if they were included in the state’s EHB benchmark plan.
States in our sample roundly expressed opposition to or concern with this proposal. This NAIC comment exemplified the views in our state sample: “State insurance regulators oppose changes that impose new obligations on states based on decisions states made in the past in reliance on then-existing rules and guidance.” Several states noted that the proposed January 2027 effective date left them in a bind. For example, California’s DOI said “the timing of this proposed rule, combined with the majority of state legislative calendars, makes it exceedingly difficult—if not impossible—for states to repeal or amend benefit mandates, or alternatively, to appropriate funds to satisfy new defrayal obligations.” Washington reminded CMS that many state have “a shorter legislative session during even-numbered years.” New Mexico believes the short timeline creates the potential for “market instability and potential issuer solvency risks,” if issuers do not reflect the cost of certain mandates in their 2027 rates and states lack appropriated funding funds for defrayal.
Alaska anticipates a “significant financial impact” from the proposal and provided a specific example. In 2012, CMS advised Alaska that its autism coverage mandate fit under its existing mental health benefits and thus did not require defrayal. Later, Alaska included the autism coverage mandate in its EHB benchmark plan update, which CMS approved. The state estimates the proposal’s “abrupt change in direction after fifteen years” could have an annual defrayal cost of $500,000 to $800,000 for autism services alone.
States urged CMS to make two changes, if it finalizes this proposal: 1) apply the change only prospectively, creating a “safe harbor” for actions taken in good faith under prior guidance, and 2) delay implementation to 2028 or 2029, to allow time for state legislatures to study impacts and adjust mandates or appropriate funds for defrayal. In addition, the NAIC called on CMS to clarify that a state’s selection of an EHB benchmark plan “does not constitute [a] ‘state action’ to mandate benefits,” which was a point of confusion and concern in some state comments.
Additional reporting and narrowing flexibility on CSR loading
CMS proposes to expand the information collected from marketplace insurers on how they adjust (or “load”) premium rates to account for unreimbursed cost-sharing reductions (CSRs). It also proposes to limit what constitutes an actuarially justified CSR load factor in rate setting and review.
States in our sample had mixed responses to the additional data collection requirements. Both the Alaska DOI and NAIC support expanded data collection, while Massachusetts thought it would add burdens for insurers that could increase premiums without “creating any clear value” as the state is already “well positioned to continue to monitor” CSR loading.
Both the NAIC and Washington DOI registered opposition to limits that would impose a single acceptable methodology for CSR loading or a single standard for actuarial soundness. The NAIC noted that the proposal’s approach may “inadvertently preempt the State’s responsibility” to review actuarial soundness in states that operate Effective Rate Review Programs under the ACA. Washington urged CMS to “continue to accommodate state-directed, actuarially sound CSR loading practices authorized in state law,” and notes that its approach supports actuarially sound rates, market stability, and affordability.
Network adequacy oversight
CMS proposes to lift current rules that require SBMs to impose quantitative network adequacy standards that are at least as stringent as those set by the federal marketplace.
Four commenters in our sample provided feedback on this provision, and they generally supported it. Washington’s DOI appreciated “CMS’ recognition that states uniquely understand provider dynamics and geographic regions.” Massachusetts appreciated the ability to keep using “the federal network adequacy standards, which required significant time and resources to implement,” as well as the “opportunity to modify this approach…to respond to the unique local needs of our market.”
Standardized plan options and limits on non-standardized plans
CMS proposes removing requirements that insurers in the federal marketplace and in SBMs on the federal platform (SBM-FPs) offer standardized health plans, and removing current limitations on the number of non-standardized plans that insurers can offer at each metal level. Under the proposal, SBMs would retain flexibility around standardized plans and non-standardized plan limits.
Four commenters in our sample provided feedback, supporting certain provisions. The Alaska DOI, Oregon, and the NAIC support removing limits on non-standardized plans in the federal marketplace and SBM-FPs. Alaska explains that “with only two participating insurers, the limitations on the number of plans had a negative impact on consumer choice and resulted in the loss of a plan that was requested by Alaska consumers.” In areas where the number of plan options is high and choice overload is an issue, the NAIC recommends that CMS collaborate with states to apply a “flexible meaningful difference standard.”
New Mexico pointed to its success with both standardized plans, which 37% of enrollees select, and limits on non-standardized plans. New Mexico and the NAIC supported continued state flexibility in these areas.
Requests for comment
In addition to proposing specific changes, the NBPP requested comments on topics for future rulemaking or action, including adjustments to the medical loss ratio standard and requirements for pre-enrollment verification required by H.R. 1.
Adjustments to the medical loss ratio standard
CMS solicits public comment on whether it should adjust the ACA’s medical loss ratio (MLR) standards, and if so, the best process for doing so. The agency suggests it is considering changes to the MLR, even in the absence of a state request.
Some states in our sample agreed that there is room to improve the MLR. For example, the Washington DOI welcomed collaboration “to improve the underlying MLR methodology to prevent ‘gaming’ and unintended consequences.” Despite this, states in our sample opposed action by CMS to unilaterally impose a lower MLR standard when not requested by a state. States argued that they are best positioned to understand and respond to local market dynamics and pointed out that MLR standards are intricately tied to market stability, issuer solvency, rate-setting, competition, and efforts to maximize consumer value. States also raised concerns about negative consequences for consumers. Washington offered that a “lower minimum MLR could become a new pricing target rather than a mechanism to produce consumer savings,” and the NAIC cautioned that “a broad lowering of MLRs could increase premiums.”
Upcoming pre-enrollment eligibility verification under H.R. 1
CMS requests comments on an H.R. 1 provision effective in plan year 2028, which will end automatic reenrollment and provisional eligibility for federal subsidies. It requires marketplaces to stand up new pre-enrollment verification systems by August 1, 2027, through which current enrollees would provide or confirm eligibility information, including income.
States urgently called for detailed and final guidance from CMS by July 2026 to give states adequate time to implement complex systems, operations, and policy changes, and to test systems, coordinate with issuers, and educate consumers. A couple of states further requested that CMS allow a 60-day comment window for related rules, to give states time to assess proposals and offer informed responses. States also urged CMS to be flexible in its approach, both to help make implementation feasible and reduce loss of coverage among people who remain eligible. For example, the State Marketplace Network recommended flexibility so states can “leverage current systems and processes” where possible, and Oregon requested “flexibility with respect to timing, deadlines, and in defining verification standards and applicable populations.” Several states raised concerns that burdensome new pre-enrollment verification requirements could lead healthier individuals to drop coverage, causing adverse selection and raising premiums. Massachusetts and the State Marketplace Network urged CMS to work to improve the federal data services hub, so that more reliable data sources would be available for electronic verification.
Note on Our Methodology
This blog is intended to provide a summary from a sample of comments submitted by state departments of insurance, state-based marketplaces, and their representative associations. This is not intended to be a comprehensive review of all comments on every provision in the proposed rule, nor does it capture every component of the comments reviewed. All comments received on this rule proposal are viewable here.
