Medicaid isn’t the only healthcare program that’s in for an overhaul under the Republican Party’s “one big, beautiful bill.”
The controversial tax and spending package, which passed the House Thursday with the help of pressure from President Trump, also includes several reforms to the Affordable Care Act that are expected to shrink the number of Americans who obtain insurance through the law’s marketplaces.
The legislation would end the option to automatically renew coverage each year and make signing up outside of the normal open enrollment period more difficult, adding red tape that some health experts say could end up blocking Americans from coverage they would otherwise qualify for.
It would also require people to return more money to the government if they receive overpayments on their insurance subsidies. As a result, many Americans could unexpectedly find themselves on the hook for thousands of dollars when they file taxes.
“Each one of the provisions sounds maybe a little wonky or technical,” said Cynthia Cox, director of the Program on the ACA at the healthcare think tank KFF. “But when you put it all together, especially when you think about all the interaction between them, it could make it much harder to sign up for coverage.”
The changes to Obamacare will leave about 4 million fewer Americans insured, according to estimates by the Congressional Budget Office. They are also coming on top of cuts to the law’s subsidies already scheduled for 2026, which were expected to knock more than 4 million people off its rolls.
About 24 million Americans signed up for coverage on the ACA’s exchanges this year.
Claims of fraud
Conservatives argue that the reforms are needed to fight what they describe as rampant fraud on Obamacare’s exchanges, driven in part by insurance brokers who use bogus sign-ups in order to earn commissions.
They point out that tens of thousands of Americans have complained about being enrolled in coverage or switched between plans without their permission in recent years. Federal investigators have also uncovered cases of brokers encouraging clients to lie about their finances in order to qualify for subsidized insurance.
For instance, according to Department of Justice prosecutors, last month one executive pleaded guilty to running a $133 million scheme in which “street marketers” rounded up and bribed “individuals experiencing homelessness, unemployment, and mental health and substance abuse disorders” to fraudulently sign up for subsidized ACA coverage when they lacked the minimum income.
Those schemes reflect a quirk in how Obamacare works. Under the program, Americans only qualify for premium tax credits if their earnings put them over the poverty line, since the law’s authors had wanted lower-income households to use Medicaid.
But in the states that have chosen not to expand Medicaid, people living below poverty find themselves stuck without an insurance option. As a result, some may have an incentive to sign up for ACA coverage and inflate their incomes on the application to qualify for subsidies.
The Biden administration took steps to make that coverage cheaper and easier to access. The 2021 American Rescue Plan temporarily expanded the ACA’s subsidies, dropping monthly premiums to zero for households making less than 150% of the poverty line. Regulators also issued new rules allowing those lower-income Americans to sign up any time of the year, instead of having to wait for the annual open enrollment period or life event like a job loss.
GOP critics say the year-round availability of no-cost insurance has likely exacerbated the fraud problem. But the scale of the issue is a matter of debate. Last year, the conservative Paragon Health Institute estimated that there were “upwards of 4 to 5 million fraudulently enrolled exchange sign-ups” costing the government $15 to $20 billion.
“Right now, the structure leads to massive amounts of improper spending,“ said Paragon President Brian Blase.
Healthcare and patient organizations have challenged those numbers, however, arguing they’re based on shoddy data analysis and noted that the Biden administration began taking serious steps to stop brokers from enrolling customers or changing their plans without consent in 2024.
“The fraud and abuse in the marketplace is primarily agent and broker behavior, and CMS took significant steps in my tenure to crack down on that fraud and increase oversight,” said Chiquita Brooks-LaSure, a senior fellow at The Century Foundation who headed the Centers for Medicare and Medicaid Services under Biden.
The major changes
Republicans argue that their approach will add needed guard rails to the exchanges by making sure enrollees are really interested in coverage and qualify for help.
The Trump administration was already pursuing some of the changes through regulatory moves. For instance, the Department of Health and Human Services proposed a rule earlier this year that would do away with year-round sign-ups for low-income households and shorten the open enrollment period so it ends in December instead of January. The GOP tax bill would enshrine those changes into law, making it harder to undo them later.
But other reforms will more fundamentally change how Americans buy insurance on the exchanges, possibly making it both riskier and more of a hassle.
One provision will effectively eliminate the ability to automatically reenroll in coverage from year to year by requiring marketplace customers to actively verify information like their income, residence, and family size before they can start receiving subsidy payments. Last year, about 45% of all marketplace sign-ups were automatic renewals.
While conservatives argue that the steps are necessary to prevent issues like broker fraud, critics say the extra hurdles could lead to more people accidentally dropping their coverage. The provision will also require the government to manually approve millions of applications from returning customers each year, which may prove difficult.
KFF’s Cox said one major concern is that people who buy coverage at the last minute won’t be able to get approved for financial help until after their first monthly payments come due and may be forced to drop their insurance as a result.
“It’s basically like coverage delayed is coverage denied,” Cox said.
Some healthcare experts also voiced concerns about GOP plans to deal with subsidy overpayments. When Americans sign up for marketplace coverage today, they are required to estimate what their income will be for the coming year, and that amount is then used to determine whether they’re eligible for tax credits. If customers guess wrong and end up receiving more help than they were entitled to, they are required to return some of the money at tax time.
Read more: Is health insurance tax deductible?
Currently, the government caps how much money lower- and many middle-income households are required to pay back to protect them from being stuck with a bill they can’t afford. The GOP legislation would remove those limits. People who sign up for subsidized coverage then find they didn’t qualify for help because their income fell too low to qualify could be required to return the entire subsidy.
The changes are aimed at discouraging fraudulent sign-ups. But some groups have warned they could penalize people who simply make honest mistakes guessing their income because it varies year to year. Americans who shop on the exchanges tend to have especially volatile earnings because they are often self-employed — think Uber drivers or small business owners — or they work in lower-wage industries like restaurants where employers don’t provide coverage and their hours can be difficult to predict.
Learn more: How do self-employment taxes work?
”For those who are in the gig economy, for those who run businesses, where irregular income is the norm, this is definitely a burden on them,” said Gregg Girvan, a healthcare expert at The Foundation for Research on Equal Opportunity, a free-market think tank.
He added that Republicans would be better off basing subsidies on how much enrollees earned the year before, which would take the guesswork out of the process. Failing that, the government should make it easier for people to report changes in their pay, Girvan said.
Hovering in the background of all these changes is the fact that the insurance subsidies Biden signed into law are scheduled to expire next year. The beefed-up tax credits grew enrollment on the exchanges by offering essentially free coverage to poorer households while capping premiums for higher earners. With those changes sunsetting, and the GOP’s new reforms set to add new hoops to enrollment, what could be left is a much more expensive, difficult to use insurance program, said Brooks-LaSure.
“It’s almost death by 1,000 cuts,” she said.
Jordan Weissmann is a Senior Reporter at Yahoo Finance.
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