The 2027 ACA Exchange Rule – The Good and Bad

February 12, 2026

Critics question the changes, but doesn’t something have to be done to tackle affordability

It is hard to digest all the ramifications of the Trump administration’s proposed 2027 Affordable Care Act (ACA) Exchange rule. The proposal was issued just this week and the rule is voluminous – it is 195 pages in small font PDF form!

But here goes my best take on some of the changes proposed by the Trump administration on the benefit and coverage front under the Affordable Care Act (ACA) on and off the Exchanges. These changes are seminal and mark a major change from the philosophy of the Obama and Biden administrations. They build on changes under regulations during Trump 45, regulations finalized by Trump 47 in 2025, as well as in the One Big Beautiful Bill Act (OBBBA).

Hopelessly devoted to generous benefits and subsidies

As some background on the Obama and Biden years, you could describe their relationship as a famous song from Grease – “Hopelessly Devoted To You” (huge ON-J fan growing up). Obama and Biden emphasized standardized benefits, limits on plan variability and proliferation, and rich actuarial valuation within the prescribed metal tiers.

I have been a supporter of the Exchanges and the greater Medicaid expansion since the beginning. I believe in affordable universal access. The Medicaid expansion is cost-effective. I also think that the community rating in the Exchanges drives up premiums but is justified to ensure everyone is covered.

I have always taken issue with the generosity of plan benefits and mandates, which drive annual premium inflation and costs. The Obama and Biden administrations drove enrollment via liberal enrollment policies. This led to growing numbers enrolled in the Exchanges. Generous subsidies hid the high costs and inflationary aspects of the program – some 92% of enrollees receive some premium subsidy. Subsidies were enhanced during COVID and those over 400% of the federal poverty limit (FPL) were made eligible for some subsidies because of it. The former was justified during the pandemic and the latter a good development that fixed a flaw.

But it is true, too, that the enhanced premium subsidies during COVID drove even more enrollment and hid rising premiums as well. Some argue, and I think there is some truth here, that free and very low monthly premiums, also led to millions of improper or fraudulent enrollments.

Those enhancements are now gone. While I supported subsidy enhancements and still think a fix should be made permanent for some middle-income earners without insurance, subsidy enhancements could not go on forever. Sure, subsidies could be extended, but they very much would paper over the problem — rising premiums in a very high-cost system. Some would champion the fact that people are now insured. True, but many of them, as incomes rise, leave the ranks of the uninsured only to become underinsured. Premiums, deductibles, cost-sharing, and out-of-pocket costs are so high that they cannot afford to use the coverage.

Trump’s paradigm shift

To some degree in Trump 45, but more so in Trump 47, the administration seeks to attack the premium affordability and underinsured issue. It is a bit of a structural reset on the Exchange product design (well, to some degree – read on). The Biden-era Exchange framework emphasized both rich (and standardized) benefits as well as rich subsidies. Trump 45 and 47 have pushed for introducing products with stripped down benefits to reduce premiums, thereby attacking affordability issues.

In Trump 45 and 47, we have seen so far:

The establishment of health reimbursement ICHRAs, which allows employers to pay for premiums for Exchange products. This helps smaller employers set costs and move people to less benefit rich offerings (Silver, Bronze and Catastrophic).
Tying Exchange Bronze and Catastrophic coverage to health savings accounts (HSAs). This again promotes lower premium plans with the ability to fund care before deductibles are met via savings (either employer or employee contributed).
Promoting pathways to Direct Primary Care (DPC), a cost-effective alternative to traditional insurance that can now be financed through Health Savings Accounts (HSAs).

What does the 2027 Exchange rule seek to do?

The 2027 Exchange rule seeks to go a step further on the structural reset through:

Expansion and multi-year catastrophic plans
Non-traditional network designs
More flexible benefit structures
Infusing primary care into catastrophic coverage

The details

Here are more details on the major benefits and coverage changes in the 2027 Exchange rule:

Elimination of limitation to two non-standard plan designs per metal level on the Exchanges as well as elimination of requirement to offer standardized options on the Exchanges. This effectively allows plans to innovate again on plan design. Critics argue it promotes confusion.
Expanding affordable options by allowing lower deductibles but higher out-of-pocket maximums and changing cost-sharing parameters for Bronze and catastrophic plans. The focus is on creating more affordability and tailored benefits. This could lower premiums, but critics argue it makes cost-sharing and out-of-pocket costs worse.
Allowing insurers to offer catastrophic coverage in one-year terms or in longer terms of up to 10 years as well as allowing these multi-year catastrophic plans to be permitted to utilize value-based insurance designs to cover preventive services over and above those that currently must be covered before the deductible. This creates reliable catastrophic premiums over time and focus on primary care, while critics say it makes richer benefit offerings more adverse.
Allowing more people over 30 to choose a catastrophic plan if they want to. This would make things cheaper for more people, but critics say the coverage is thinner and makes the richer benefits more adverse.
Allowing certain innovative, non-network plans to obtain qualified health plan status if they can demonstrate a broad enough slate of provider options. Critics are apoplectic about this, arguing these plans are really not plans at all. But proponents say it is yet another way to promote affordability and at least some coverage. And perhaps those qualified could be more generous than the current universe of so-called skinny plans (or plans could rush in to get their skinny plans qualified status). Indeed, the administration appears to be taking a solid policy approach to this concept. It is not simply allowing a plan to excise or severely limit coverage. Plans would set specific benefit amounts for covered services and communicate those benefit amounts to enrollees who may then seek covered services from any provider. Under this proposal, non-network plans would be required to ensure access to a range of providers that accept the non-network plan’s benefit amount as payment in full. Essentially this leverages reference pricing and price transparency, which remain nascent.

Where do I land?

Certainly, from an actuarial sense, the proposals will likely mean higher premiums for Platinum, Gold and perhaps Silver plans. This will occur because more will leave these products, leaving a sicker cohort and fewer enrollees in these tiers. Much of this will be made up for by additional subsidies funded by the federal government. The government says that healthier enrollees would be more likely to drop their coverage, leading to premium increases of up to 3 percent. But it also claims that these premium hikes would be balanced out by the other proposals that would lower premiums. It concludes overall that premums would drop 1.8%.

These changes add up quickly, and the proposed rule is expected to decrease marketplace enrollment by up to 2 million people for 2027. a claim that commenters are likely to dispute given that many of the proposed policies would contribute to adverse selection and disrupt the marketplace risk pool.

On enrollment, we could see losses as well at least initially. Exchange lives by a least 1 million for 2026 vs. 2025. The proposed rule changes could decrease Exchange enrollment by up to 2 million people in 2027.

But as I wrote in another recent blog, I have come to the conclusion that, while I support Exchange coverage, the clear and convincing evidence is that our current trajectory (with or without extended subsidies) creates a growing number of underinsured. This means we have to try something different. And could the push toward leaner and alternative products actually get some back to coverage? As well, could insurers still benefit by having folks remain in their products even at lower-premium levels? Yes, products become more segmented and impact tier pricing, but might the universe of covered lives be greater, which in some ways addresses at least some of the overall risk compared with today (admittedly, that assumes each insurer has a good share of all product types). Finally, many of the benefit designs we are seeing emerge – HSAs with catastrophic, DPC, and digital and telehealth – are as much about affordability as they are responding to the wave of personalized care endorsed by younger generations. Even seniors are getting into the swing of peptides, GLP-1s, hair loss treatment, and cosmetic care.

So there will be fallout in the Exchanges – no one doubts this. But it is hard to argue that the answer is richer and richer subsidies and government funding. Some care through alternatives and leaner products may be better, whether on or off Exchange..

This is not meant to minimize the struggle Exchange plans may see here, but it is to say that the Trump administration’s reaction could be deemed political – it is the approach the GOP likes – but is very much reacting to at least two policy trends:

Unaffordability overall, which certainly is not driven entirely by the enhanced subsidy issue as Democrats would like the public to believe. Indeed, the nearly $27,000 cost for family coverage in the employer world shines a bright light on affordability, which has almost nothing to do with enhanced subsidy expiration.
Care trends in younger generations, who reject Mom and Dad’s view of what health insurance should be.

In the end, I come down on the side of getting people covered with at least some or adequate coverage right now. Comprehensiveness can be a goal, but with that goal should come a real reflection on the fact that gold-plated approaches might actually mean someone is underinsured, defeating the goal that many Democrats espouse.

If the parties were smart, they would come together with holistic solutions:

Relooking at Exchange subsidies to ensure everyone gets a fair subsidy, including some over 400% of FPL. Guarding against improper enrollments is important, as is having skin in the game in terms of even minimal premiums each month.
If you want lower premiums across the board, tackling price in the system is essential.
Reinvigorating primary care and management of disease is key.
Rethink coverage and benefits in a way that responds to the digital times and demands of younger generations. Skinnier plans do not have to represent poor coverage if we reform and think about this right – offering everyone upfront primary care and prevention and catastrophic protection.
Test consumer-driven approaches as well as reference-based pricing. This with price reform could fundamentally put us on a new cost path.

It is important to note that the rule is not upending some of the consumer protections, such as guaranteed issue and pre-existing condition protections.

For all the alarm from critics and even my saying this is seminal and a structural reset, the proposed changes are thoughtful and respond to real needs and trends. I just wish they courage would be there on both sides to attack the deepest dysfunction in healthcare.

#healthcarereform #aca #obamacare #exchanges

— Marc S. Ryan