Newly-inaugurated President Trump has issued a flurry of executive orders in his first 48 hours in office, including an order reversing President Biden’s directive that federal agencies identify and implement strategies for increasing enrollment in health insurance. More dramatic changes to health policy through executive decree are likely in the coming days. At the same time, policymakers at the other end of Pennsylvania Avenue are considering other destructive changes to federal health insurance programs. Merely a week after being sworn in, the House Budget Committee circulated a list of dramatic potential cuts to key federal programs. A week later, the Committee followed up with an even longer, more detailed wish-list of possible budget cuts. The policy options outlined in these memos echo many of the proposals found in Project 2025 and provide glimpses of how the Congressional majority, in concert with the Trump Administration, might finance an extension of expiring tax cuts for wealthy individuals and corporations, or to raise the funds they need for other purposes. And while Medicaid would experience particularly deep cuts should Congress adhere to some or all of these plans, the lists also target marketplace health insurance created by the Affordable Care Act (ACA). In sum, Congressional leadership is clearly planning to make health care more expensive for millions of low- and moderate-income families while undermining key ACA guarantees in the process.

House Committee Proposals to Cut ACA Funding

The two budget wish-lists include proposals that would pull billions of dollars out of ACA coverage. The most recent list of policy options from the House Budget Committee includes:

• Cutting premium tax credits by eliminating repayment caps. Premium tax credits support health insurance coverage for the vast majority of the more than 24 million individuals who have already enrolled in marketplace coverage for 2025. The Budget Committee document suggests ‘recapturing” $46 billion in premium tax credits over ten years by eliminating a key protection for enrollees who use premium tax credits to purchase marketplace coverage and whose income changes during the plan year. This provision limits the dollar amount most enrollees would pay back if their annual income ends up being more than they projected when enrolling in coverage. This protection applies to enrollees with incomes below 400 percent of the federal poverty line (FPL); higher-income enrollees must pay back the entire difference between the tax credit they received and the tax credit they were ultimately eligible for.

• Cutting premium tax credits for families with unaffordable premiums for employer coverage. In 2022, the Biden Administration fixed the so-called “family glitch,” a legal and regulatory misinterpretation that determined eligibility for premium tax credits, even for family members, based on the affordability of employee contributions for worker-only coverage, rather than the cost of family coverage. At the time, the Biden Administration noted that 200,000 uninsured individuals would gain coverage and nearly 1 million people would pay less for health insurance. If the House Budget Committee chooses to reinstate the glitch—thus cutting premium tax credit spending by $35 billion over ten years—families offered unaffordable employer coverage would once again be forced to choose between paying very high premiums for employer coverage, purchasing unsubsidized marketplace coverage, or leaving family members uninsured.

• Limiting eligibility for affordable health insurance for non-citizens. The House Budget Committee also proposes saving $35 billion over ten years by restricting eligibility for federal health insurance based on citizenship status. The language in the most recent options paper suggests a focus on restricting coverage for undocumented individuals. However, a reference to “specified classes of noncitizens” indicates Committee leadership may also propose eliminating marketplace subsidies for some groups lawfully present immigrants. The Committee’s options paper also envisions cutting $6 billion by prohibiting adults with Deferred Action Status as a Deferred Action for Childhood Arrivals (DACA) recipient from enrolling in marketplace coverage and receiving premium tax credits. (In general, DACA recipients may enroll in marketplace coverage and receive premium tax credits under a new rule, with the exception of individuals living in 19 states affected by a recent court order.)

• Undermining ACA guarantees. The Budget Committee also includes a trio of proposals that would undermine the ACA’s patient protections, including benefit requirements and premiums that do not vary based on gender or health status. These proposals would loosen rules for Association Health Plans (AHPs), eliminate state oversight of stop-loss plans, thus encouraging greater use of self-funded plans with this protection against high expenses (known as level funded products) among small employers instead of state-regulated insurance plans, and permit employers to offer telehealth as an excepted benefit—that is, without complying with federal standards for health insurance, including consumer protections. AHPs are not required to offer comprehensive coverage or Essential Health Benefits (EHBs) and may also charge higher premiums based on occupation, which provides a mechanism for gender-rating. Similarly, insurers selling excepted benefits may charge higher premiums to enrollees with pre- existing conditions, impose annual or lifetime caps on benefits, and require cost-sharing for preventive services. Level-funded products are also exempt from consumer protections such as EHBs. These three proposals would also make it easier for insurers (whether health insurers or stop-loss insurers) to sell their products to healthy employer groups, siphoning healthy enrollees out of other insurance markets and driving up premiums for those employers and enrollees who remain.

Beyond these relatively specific proposals, the House Budget Committee appears to be considering other changes that could fundamentally alter the ACA’s design and impact, including changes to the Marketplaces’ “market design” and eligibility rules and others that focus on “reforming” premium tax credits. These changes may include creating lower-value plans, limiting open enrollment periods, and reducing eligibility for – or the value of — premium tax credits. All of these policies could significantly reduce marketplace enrollment and increase costs for marketplace enrollees.

Implications for ACA Marketplaces

In their search for spending cuts to finance the majority’s policy priorities, including extending the 2017 tax cuts, House Budget Committee leadership have identified policy changes that would reap federal savings but also result in higher premiums, reduced financial protections, and fewer consumer protections for low- and moderate-income individuals who purchase health coverage through the ACA marketplaces. These cuts are also likely to reduce marketplace enrollment and increase the number of people without health insurance. Changes to the repayment caps, for example, could leave enrollees with variable incomes with unexpected and unmanageable tax bills because estimating their annual income can be so complex. Some individuals may be reluctant to take this risk and forego coverage altogether. In addition, legislative action to reverse the Biden Administration’s “glitch fix” would mean that families with affordable offers of employer coverage for worker-only policies, but not for full family coverage, would face new increases in health insurance premiums and the agonizing choice of doing without health insurance for other family members. And should Congress reduce or eliminate health insurance supports for broad range of non-citizens, marketplace coverage will become unaffordable or hard to access for a variety of lawfully-present non-citizens who currently rely on premium tax credits to purchase health insurance. Because current law already creates significant barriers to health coverage for non-citizens, 18 percent of lawfully present immigrant adults are uninsured, compared to eight percent of US-born adult citizens and six percent of naturalized adult citizens. This disparity in coverage will increase if the nearly 1 million non-citizen, non-elderly adults who purchase coverage on the ACA marketplaces no longer qualify for premium tax credits or become wary of enrolling in coverage.

Finally, efforts to reduce regulatory requirements for AHPs and level funded plans and create a new excepted benefit for telehealth could increase premiums for many while leaving enrollees without critical ACA consumer protections. Marketplace enrollees and people enrolled in fully-insured employer health benefits may experience higher premiums as the insurance plans selling these products lure healthy groups out of the fully-insured market, and drop them back into this market as employees or dependents develop high-cost conditions.

Takeaway

While Congressional action on budget legislation may be some weeks or months away, Budget Committee leadership is shopping a conglomeration of spending cuts that will severely damage the affordability of health insurance and health care services for marketplace enrollees. If Congress combines these changes with draconian cuts to Medicaid, as described in the Committee’s latest wish-list, low and middle-class working families will finance a significant share of continued tax cuts for wealthy people and corporations. The early executive order on coverage gave an early signal of health policy priorities for the new Administration and their allies, with potentially more to come. When combined with these daunting proposed cuts for budget reconciliation legislation, we have further indication that 2025 will be an important year in coverage policy.