Editor’s Note: This testimony has been lightly edited for length. Ms. Corlette’s full testimony is available here.
At CHIR, we study how health insurance works and doesn’t work for people. People cannot take advantage of technological advances in health care if they do not have health insurance coverage or face insurmountable financial barriers to health care services. Therefore, I will be focusing my remarks today on how proposed federal policies, in particular the House-passed H.R. 1, will affect people’s access to affordable, high quality health insurance.
The budget reconciliation package—H.R. 1—passed by the U.S. House of Representatives on May 22 represents a massive redistribution of wealth from the least to the most well off. Specifically, families at the bottom 10% of the income scale would experience a resource decline of on average $1,600 per year, largely due to reductions in Medicaid and SNAP spending. Meanwhile, families in the top 10% of income would experience an increase in resources by on average $12,000 per family, largely due to the bill’s tax cuts.
If this bill is enacted and Congress fails to extend the enhanced premium tax credits that expire at the end of this year, CBO projects that 16 million people will become uninsured. This represents an over 50 percent increase in the number of people who are currently uninsured, reversing coverage gains achieved by the Affordable Care Act (ACA).
The bill would also have a devastating impact on health care providers, particularly those providers serving rural and underserved communities. The Urban Institute has estimated that the combined cuts in H.R. 1 and end of enhanced premium tax credits will reduce provider revenue by $1.03 trillion between 2025-2034, with 40% of the decline attributable to hospitals and 11% to physician services.
Deep, Damaging Cuts to Medicaid and CHIP
H.R. 1 contains numerous provisions that will cut gross Medicaid and CHIP spending by $863.4 billion over the 10-year budget window, leading to 7.8 million newly uninsured people. In particular, the bill takes aim at the ACA’s Medicaid expansion by sharply cutting enrollment among people eligible for expansion, making it harder for expansion enrollees to access care, and reducing states’ incentives to adopt or continue their expansion programs.
Work requirements
H.R. 1 includes a requirement that states implement a work requirement for their Medicaid programs. The Urban Institute has examined the impact of a less restrictive 2023 work requirement proposal and found that 5.5 million to 6.3 million expansion individuals ages 19-64 would be disenrolled because they could not successfully navigate burdensome processes and systems to report their work activities or obtain exemptions.
More frequent eligibility redeterminations
Currently, states reassess eligibility for Medicaid expansion enrollees every twelve months. This bill would require all states to conduct eligibility redeterminations for expansion individuals every six months. This policy would significantly elevate the risk that people are removed from coverage solely because of paperwork issues, interrupting continuity of care and increasing administrative burdens for states, providers, and managed care plans.
Increasing costs for eligible Medicaid enrollees
Most Medicaid enrollees, due to their low income, do not face premiums and are subject to only nominal co-payments. H.R. 1 would require all states to charge cost-sharing to expansion enrollees with annual incomes between $15,650 and $21,597. The research literature on cost-sharing in Medicaid is clear: Even modest increases in co-payments lead to reduced access to necessary care.
Discouraging states from closing the Medicaid “coverage gap”
H.R. 1 would repeal current financial incentives under the ACA for states to expand their Medicaid programs, making it less likely that the remaining 10 non-expansion states take up the expansion and leaving nearly 2.9 million low-income adults uninsured. This includes 1.5 million people in the “coverage gap” which is where people are too poor for Marketplace tax credits but not poor enough to qualify for their state’s Medicaid program.
Preventing states from financially supporting Medicaid through provider taxes
All states except for Alaska rely on provider taxes as a critical source of revenue to support their Medicaid programs. Under H.R. 1, states would be prohibited from establishing any new provider taxes or increasing existing taxes. This means that states would no longer be able to use new or increased provider taxes to raise additional revenues to finance their share of Medicaid costs. States also would have zero flexibility on provider taxes moving forward. This could hinder states’ ability to respond to the evolving needs of the program and economic conditions.
Tying people up in red tape
In addition to requiring people to undergo the eligibility redetermination process twice per year, the bill would block regulatory policies that significantly improve the speed and efficiency of Medicaid and CHIP eligibility and enrollment systems. CBO has previously estimated that by itself, rescinding these regulations would cut Medicaid enrollment by 2.3 million people in 2034.
Financially punishing states that use their own funds to cover certain residents
Under this bill, expansion states that provide coverage or financial assistance to undocumented immigrants or to certain lawfully residing immigrants using their own funds would face a cut in the federal matching rate for the Medicaid expansion population from 90 to 80%. This would include efforts to cover people lawfully admitted to the U.S. for humanitarian reasons, such as, most recently, people from Ukraine and Afghanistan.
Threats to Marketplace Enrollment, Affordability, and Stability
Approximately 8.2 million people are projected to lose insurance due to the combined impact of Congress’ failure to extend the enhanced premium tax credits that expire in 2025 and the Marketplace provisions in H.R. 1. Policies that make it harder to enroll in and keep health insurance deter healthy people from enrolling in Marketplace health plans, while people with high medical costs will persevere through these hurdles. This will result in a smaller, sicker pool of enrollees. Insurers will need to raise their premiums to account for a more costly group of people and some may choose to exit the market entirely (as the company Aetna recently decided to do).
Indeed, in states with early filing deadlines for insurance companies to submit their proposed premiums for 2026, we are seeing eye-popping increases. Although non-expansion states have later rate filing deadlines, we can expect insurers to project even bigger premium spikes in those states, as a greater proportion of their populations are enrolled in Marketplace coverage. In the rate filings we’ve reviewed at CHIR to date, insurers are warning state insurance regulators that their premiums will need to rise even further if H.R. 1 is enacted.
Raising Costs for People with Commercial Health Insurances
H.R. 1 raises people’s health care costs by:
- Modifying the formula for determining an individual or family’s premiums and cost-sharing. This would allow insurance companies to impose an additional $900 in deductibles and other cost sharing on families (up to $450 for an individual) with any private health insurance, including the 160 million people with employer-based insurance.
- Imposing significant new tax burdens on low-income Marketplace enrollees by requiring them to repay premium tax credits if they under-estimate their income.
- Changing federal policy regarding cost-sharing reductions for Marketplace health plans, which in turn would end a state-driven practice known as “silver loading,” raising net premiums for at least 10 million Marketplace enrollees, and increasing the numbers of uninsured by 1.2 million.
- Allowing insurers to reduce the generosity of their plans, so that they could cover as little as 66% of costs but still be called a “Silver” plan, even though the ACA requires such plans to cover 70% of costs. This provision allows the bill sponsors to say they are “reducing” premiums, even though they’re doing so mainly by making coverage skimpier.
- Imposing a $5-month premium penalty on certain low-income enrollees, even though they are eligible for $0 premium coverage.
- Prohibiting coverage of treatment for gender dysphoria, raising patient costs for services recommended by virtually all major medical associations.
Limiting Eligibility and Enrollment Opportunities
The bill would further slash enrollment in Marketplace coverage by taking away eligibility for over 1 million lawfully present immigrants and cutting back on enrollment opportunities, including by:
- Reducing open enrollment periods for all Marketplaces, including state-based Marketplaces (SBMs), from 76 to just 44 days.
- Taking away SBMs’ traditional authority to establish special enrollment periods (SEP) to meet the needs of their consumers and markets. The bill would prohibit all Marketplaces from establishing a SEP based on income, eliminating a key pathway for low-income people to access coverage as soon as they learn they are eligible.
- Barring most lawfully present immigrants, including people with people with “Deferred Action for Childhood Arrivals” (DACA) status, from eligibility for Marketplace premium tax credits.
Increasing Red Tape
H.R. 1 requires applicants and enrollees to navigate a maze of red tape to obtain and maintain affordable health insurance coverage, including by:
- Imposing onerous new paperwork requirements on all Marketplace applicants. This provision would effectively prohibit automatic re-enrollment in the Marketplaces, a long standing industry practice across all lines of insurance. All consumers, new or returning, would be required to pay full price until they actively verify, and the Marketplace has confirmed, specific eligibility requirements. If they cannot pay full price, coverage would be cancelled or terminated, leaving them uninsured for a full year until the next open enrollment period.
- Requiring people enrolling in a SEP to manually submit additional paperwork proving their eligibility before they can get coverage.
- Requiring Marketplaces to deny premium tax credits to people when the IRS doesn’t have a record of them filing the correct tax form.
- Requiring 2.5 million more people to manually submit documents to prove their income, and shorten the amount of time they have to provide that documentation.
These new paperwork requirements will be imposed after the federal government has eliminated the jobs of hundreds of Marketplace caseworkers and reduced funding for Marketplace Navigators by 90%, meaning consumers won’t get the help they’ll need to cut through the red tape.
Unprecedented federal mandates and new costs for states
H.R. 1 would eliminate flexibilities states have long had to operate an SBM, impose costly new mandates, and reduce their revenue base. These changes would undermine states’ value proposition for establishing or maintaining an SBM. At the same time, the bill would infringe on states’ long-standing primacy over the regulation of private health insurance by imposing arbitrary new federal rules. This is why the National Association of Insurance Commissioners (NAIC) and a coalition of state-based Marketplaces have expressed their strong objections to this legislation.
The reconciliation bill would eliminate this long-standing flexibility across a wide range of SBM functions, from enrollment periods to eligibility systems, while also imposing several new and costly operational mandates. This will make establishing or maintaining an SBM less attractive for states.
“Waste, Fraud and Abuse” as Red Herring – a Missed Opportunity to Counter Marketplace Fraud
Supporters of changes to Marketplace eligibility and enrollment policies refer to a serious Marketplace issue: Unscrupulous brokers enrolling people in Marketplace coverage or switching their plans without their permission in the pursuit of commissions from health plans. However, the bill does absolutely nothing to increase oversight or accountability for unethical brokers and ignores straightforward measures to address broker fraud. In fact, in a telling move, H.R. 1 would enshrine into law every provision of the Marketplace Integrity rule that hinders consumer enrollment but not the one provision that touches on broker oversight.
Cost effective and innovative technologies that can help people better track and control chronic conditions are exciting opportunities to improve health outcomes and lower costs. But people need to be able to access and afford health insurance coverage in order to take advantage of such technologies. As drafted, H.R. 1, combined with inaction to extend enhanced premium tax credits, would actually make it harder for people to obtain health care, by tying them up in a maze of bureaucracy, raising their premiums, and imposing new federal mandates. The result will be 16 million people newly uninsured and millions more facing higher costs in order to obtain needed health care services.
