This year, enrollment in the Affordable Care Act (ACA) Marketplaces is at an all-time high, hitting 24.3 million during the most recent open enrollment season. The ACA allows states to use HealthCare.gov or establish their own state-based Marketplace (SBMs). Currently, 20 states operate SBMs, and two more are transitioning to this model. In March 2025, the Centers for Medicare & Medicaid Services (CMS) released a set of proposals that would change Marketplace benefits, enrollment, and eligibility rules such that, by its own estimates, between 750,000 and 2 million people would lose health insurance.
Although CMS offered just 23 days for public comment on its proposed rule, the agency received almost 26,000 comments. CHIR reviewed a sample of comments from four major categories of stakeholders to better understand how different groups view the administration’s proposals and how they might be impacted. The first two blogs in our series summarized comments from health plans and brokers and providers. An upcoming post will focus on comments from consumer and patient organizations. This third blog in our series examines comments submitted by state departments of insurance (DOIs), state-based marketplaces (SBMs), and their representative associations (referred to collectively here as “states”). Specifically, we reviewed comments from:
New Mexico DOI and marketplace
National Association of Insurance Commissioners (NAIC)
The proposed Marketplace rule covers a wide range of policies (a detailed summary of its provisions, in two parts, is available on Health Affairs Forefront here and here). This summary of feedback from state-based Marketplaces and departments of insurance focuses on overarching comments from states followed by comments on the following selected CMS proposals: (1) Changes to open and special enrollment periods; (2) New $5 premium charge for certain individuals automatically re-enrolled; (3) Cancelling subsidies for failure to reconcile the previous year’s premium tax credits; (4) Additional documentation requirements for income; (5) Changes to premium and benefit affordability; (6) Eliminating eligibility for DACA recipients; and (7) Coverage of treatment for gender dysphoria.
Overarching comments
Unrealistic Timeline and Added Costs
Some proposed changes in the rule would take effect immediately and others for plan year 2026, requiring SBMs to make significant system and operational changes on a compressed timeline. For plan year 2026 changes, the State Marketplace Network notes the proposal allows about three months to ensure “all necessary system updates are completed by August, at the latest, when several SBMs begin processing their first batch of renewals and notices.” Some states noted that the expedited timeline is “unworkable” for SBMs or would add significant unexpected costs. New Mexico’s SBM, for example, is transitioning to a new enrollment platform for 2026, a major operational undertaking, and would be unable to fully comply with the rule on the timeline proposed due to finite resources and capacity. New York’s SBM uses an eligibility system that is integrated with Medicaid and CHIP, and making changes to it can “take ten to twelve months to implement and cost up to $1 million.”
Some states also expressed concern about the proposal’s timeline given that insurers are currently in the process of setting and submitting rates for 2026. Washington flagged that insurers must submit 2026 rate and form filings by May 15, 2025, likely before the rule is finalized. The NAIC notes that insurers are unable to set appropriate rates without knowing what rules will be in place and expects “rate increases to result from the uncertainty generated by these late rule changes.”
Across a wide range of proposed provisions, states generally recommended a longer timeline for required changes.
Departure from State Flexibility
The proposal makes many changes for the federally facilitated marketplace (FFM) mandatory for SBMs as well. States consistently raised concerns about the rule’s “unprecedented” departure from long-standing flexibility extended to SBMs, allowing them to deploy innovative approaches that serve their unique markets and populations, as long as they adhered to federal floors. The State Marketplace Network “encourages continued recognition of state authority over markets and marketplaces,” and notes that one-size-fits-all approaches “risk destabilizing markets, increasing inefficiencies, and increasing consumer costs.” The NAIC objects to the rule’s many “limits to state authority.”
Across a wide range of proposed provisions, states roundly urged CMS to maintain long-standing flexibility for SBMs.
Lack of Enrollment-Related Fraud in SBMs
Many states questioned a key justification of the proposal as it relates to SBMs. States widely reported that the broker fraud and improper enrollment issues that the proposal seeks to address are limited to the FFM and are not present in SBMs. They widely recommended that proposed changes thus be made optional for SBMs. Several described “robust” activities to ensure program integrity, mitigate fraud, and safeguard taxpayer dollars. For example, Idaho requires insurers to send a monthly invoice to consumers, even to people with $0 premiums, and its SBM conducts outreach via text and email to all fully subsidized consumers about their enrollment and potential for tax liabilities. Both the Idaho and California SBMs note that only a consumer can initiate an online action to add an agent to their account. The Massachusetts SBM does not use agents or web-brokers for enrollment.
Changes to Open and Special Enrollment Periods
The proposed rule would shorten the annual FFM open enrollment period (OEP) from 76 to 44 days and eliminate a special enrollment period (SEP) that allows low-income individuals (earning below 150% of the federal poverty level (FPL) or $23,475 per year) to enroll any time during the year. CMS would also require people enrolling in the Marketplace through a SEP to submit extra paperwork. In a departure from past practice, CMS would require SBMs to adhere to the federally set OEP timeline and SEP policies.
Shortening OEP
States roundly oppose applying the shortened OEP to SBMs. Comments from Georgia emphasized the importance of flexibility “to respond to state-specific needs,” and noted that the state extended its 2025 OEP in response to two hurricanes. A few SBMs expressed concern about consumer confusion, noting the length of time their state-specific OEP had been in place, for example, “for over ten years” in California, and “since 2016” in New York. The NAIC notes that “requiring SMBs to abandon existing consistency” provides no tangible benefits for consumers.
A few states noted that the shorter timeframe would place a “substantial burden” on SBM call centers as well as agents and brokers. For example, Colorado notes agents and brokers would have to try to support “the same volume of enrollees during a truncated timeframe that overlaps” with enrollment in other coverage, like Medicare. Finally, many states argued that shortening the OEP would increase adverse selection, contrary to the proposal’s claims, and several backed their claims up with data. For example, in Massachusetts, just over half of enrollees sign up after December 15. People who enrolled by December 15 were older on average and had total medical expenses that were “10 percent higher compared to people who shopped after December 15.”
Eliminating the Low-income SEP
State commenters in our sample differed on whether the low-income SEP contributes to adverse selection or improper enrollment. The NAIC believes this “SEP creates some risk of adverse selection,” while the Colorado SBM argues that its data shows “younger, healthier individuals make up the large majority of enrollees” who use this SEP, thus “removing this SEP would actually harm the risk pool.”
While Georgia thinks that removing this SEP would “reduce the opportunity for bad actors to commit insurance fraud,” the NAIC does “not believe that the under 150% SEP is a major contributor” to improper enrollment. New Mexico sees no evidence that this SEP is misused and cites its own financial stake in the accurate administration of this SEP given the additional state-funded subsidies it provides. In addition, New Mexico noted that 59% of enrollees who used this SEP in 2024 lived in rural or frontier counties, where reducing uncompensated care to providers is important.
Other than Georgia, states in our sample that commented on this provision recommend that SBMs maintain the option to offer this SEP.
Pre-enrollment Verification for SEPs
Most states in our sample that offered comments on this provision urged CMS to maintain existing state flexibility in how to ensure the integrity of SEP verifications. Idaho was the only state in our sample to support the proposed change. It currently verifies 98% of SEPs using a streamlined process and “several forms of auto-verification.”
A few states argued this provision “would result in significant unfunded costs” (New York). For example, California observed that due to “limited real-time verification data sources,” the proposed change will require additional, unbudgeted staff to conduct “a largely manual process.” Colorado estimated that “initial technology costs” to make needed changes would exceed $330,000, on top of increased staff costs due to the “substantial increase in workload.”
In addition, a few states flagged concerns about adverse selection. For example, New York noted that “increasing the paperwork burden will likely deter healthier individuals from completing enrollment.” Massachusetts notes that the average age of people who enrolled through a SEP “was three years younger” than all enrollees in 2024, and in California, they have averaged nearly 6 years younger than total enrollees since 2019.
New $5 Premium Charge for Certain Individuals Automatically Re-enrolled
The proposed rule would require Marketplaces to impose a new $5 premium on individuals eligible for a $0 premium, unless they actively update their Marketplace application during open enrollment.
Most states that commented on this provision objected to it and/or recommended that it be made optional for SBMs. Idaho, however, supported the aim of “requiring fully subsidized consumers to confirm their information,” but proposed a different process that would grant conditional eligibility as opposed to imposing a $5 premium.
States raised concerns that the provision would require costly system changes, lead to loss of coverage, increase adverse selection, and create consumer confusion, all to address a supposed problem that does not exist in SBM states. For example, New York noted that “there is no evidence that consumers in New York have been fraudulently enrolled in $0 plans.” Pennsylvania commented that “forcing an arbitrary five-dollar penalty only on low-income individuals unnecessarily increases barriers to coverage and would lead to consumer confusion.” New Mexico argued that “those most likely to lose coverage due to nominal premiums are healthier, lower-cost enrollees,” which could “contribute to adverse selection, increasing premiums and undermining market stability.” Massachusetts commented on the importance of auto-renewal for its coverage strategies and in “supporting a strong merged market risk pool.”
A couple of states questioned whether the change was legally permissible. Oregon, for example, “questions the legal authority for HHS’s proposal to withhold any amount of [premium subsidy] paid on behalf of a taxpayer who has been determined legally entitled to the entire [subsidy] amount.”
Cancelling Subsidies for Failure to Reconcile
The proposed rule would require the Marketplace to end subsidies sooner—after one year, not two—for enrollees who fail to file their taxes and reconcile their estimated income, on which the subsidy is initially based, with their actual income.
State commenters had mixed views on this provision. Georgia called it “commonsense,” and Idaho supported the change as well. New Mexico called the change “prudent,” but both New Mexico and Oregon urged a longer lead time to accommodate significant system changes, staff training, and consumer education.
A few states raised concerns related to known IRS issues with this process. New York notes that the shorter timeframe would create a “significant burden for many consumers” who are flagged as failing to reconcile in error, while the two-year timeframe “provides a balance between program integrity and administrative burden to consumers and SBMs.” Colorado argues that the two-year timeframe is appropriate given the “substantial risk of inappropriate loss of [subsidies]” due to “data quality limitations in the available IRS records.”
Colorado and Massachusetts reiterated that the broker-fraud justification for this change is not an issue in their states.
Additional Documentation Requirements for Income
CMS proposes to require consumers to submit documentation proving their income if third-party data sources suggest their income is below 100 percent of the federal poverty level (FPL). Consumers would also be required to submit additional documentation proving their income if the IRS lacks tax data.
Verification When Data Show Income Below the Poverty Line
States in our sample that commented on this provision uniformly questioned the rationale for applying it to states that have expanded Medicaid and recommended state flexibility. Several states argued that there is no incentive in Medicaid-expansion states for individuals or agents to inflate the income of a person under the poverty line in order to qualify for coverage. For example, Idaho does “not believe this change aligns well with expansion-state eligibility thresholds.” In addition, New York commented that the proposal would require Medicaid-expansion states “to expend significant IT system and Customer Service Center costs, without altering resulting consumer eligibility.”
New Documentation When IRS Data is Unavailable
States in our sample that commented on this provision generally objected to its mandatory application in SBM states, with one exception. Idaho generally supports the goal of requiring additional income verification when the IRS lacks tax data, but recommends that CMS allow the use of state income data sources.
New Mexico argued that it is “reasonable” to accept self-attestation of income when the IRS cannot provide information because enrollees must later reconcile their actual income at tax time. Massachusetts commented that “individuals and families should not have to experience burdensome, unnecessary, and costly consequences to correct for IRS data challenges.” A couple of states noted that the increased burden on applicants would increase adverse selection. For example, Colorado noted that the IRS is less likely to have tax data for younger applicants who “are more likely to be deterred” by additional paperwork, yet “whose participation in the risk pool helps drive down premiums.” A couple of states also commented on the significant additional cost for systems changes and staff to process manual verifications.
Changes to Premium and Benefit Affordability
The proposed rule would adjust the methodology for determining the amount Marketplace enrollees contribute to their premium. This same methodology also determines the maximum annual out-of-pocket cost for people in both individual and group market health plans, including employer-based coverage. If finalized as proposed, deductibles and other cost-sharing for the typical family could increase by $900 in 2026. Families enrolled in the Marketplace could face an additional $313 in premiums. Additionally, CMS proposes to give insurers more flexibility to offer plans at each metal level with lower actuarial values than permitted under current rules.
Not all the states in our sample expressed views on these provisions, but those that did expressed concerns about their negative effects on consumers and state markets, and a few states registered opposition.
Massachusetts commented that the proposed change in methodology “would increase premiums and out-of-pocket costs for Massachusetts residents, increase state costs, lead to coverage loss, and harm our risk pool, further exacerbating premium increases for all.” Oregon commented that the proposal would exacerbate the “premium shock” consumers will face if enhanced subsidies expire at the end of the year and further “destabilize the individual insurance market.”
States also raised operational challenges due to the timing of the proposed methodology change. Oregon noted that CMS had “already released a final actuarial value calculator and premium adjustment percentage guidance for Plan Year 2026,” and making changes at this point creates “additional work for states and carriers.” Washington noted that, with the proposed change, “issuers would need to develop rates using new assumptions,” due to the state by May 15. It further flagged that, given the late timing of the methodology change for 2026 coverage, insurers are unlikely to offer any catastrophic health plans in Washington next year, so “the most affordable product on the market will no longer be available.”
States observed that allowing lower actuarial value plans would increase cost sharing for consumers, make plan comparisons harder for shoppers, and increase adverse selection. For example, New York noted that the change “will result in higher deductibles, copayments, and other cost-sharing while rising health care costs continue to be a primary concern for households.” Oregon noted that the current approach “allows for a much more effective ‘apples-to-apples’ comparison of the coverage offered at different metal tiers.”
Eliminating Eligibility for DACA Recipients
The proposed rule would eliminate Marketplace and Basic Health Program eligibility for Deferred Action for Childhood Arrival (DACA) recipients, reversing a rule change made last year. The proposed change would take effect immediately, upon the final rule’s effective date.
All seven states in our sample that commented on the DACA eligibility change raised concerns. Five explicitly opposed the change, and three urged CMS to delay it until the end of the year if it is finalized.
States raised concerns with the negative impacts on consumers, their markets, and SBM operations, which are exacerbated by the mid-year effective date. Colorado noted that the mid-year change would cause “significant confusion” for consumers, lead to “potential disruptions of medical care,” and “impose a substantial burden” on the SBM. New York commented that changes to its integrated eligibility system needed for a mid-year implementation “could cost up to $1 million.”
Oregon commented that SBMs will “need some time to operationalize this proposal and remove DACA recipients from their rolls because it’s unclear how state exchanges can determine the DACA status of any particular individual.” The state recommended a safe harbor to prevent repayment of subsidies paid “between the effective date of the rule and the termination of their coverage by the relevant exchange.”
Pennsylvania opposed the change and observed that DACA recipients “are generally younger” and “tend to be healthier,” which “positively benefits the risk pool.”
Coverage of Treatment for Gender Dysphoria
The proposed rule would prohibit insurers from covering items and services that treat gender dysphoria (referred to in the rule as “sex trait modification”) as part of essential health benefits (EHBs). States would still be permitted to mandate such coverage, but would need to defray the costs of such coverage using state funds.
Five states in our sample expressed views on this provision, and all urged CMS to preserve the existing regulatory structure in which states have flexibility to determine essential health benefits, within broad federal guardrails. Washington commented that the proposal “contravenes a core tenet of ACA implementation, which gives states the authority to designate their EHB benchmark plan.” It further argued that the standard required of EHBs “is based on the benefits offered by a typical employer plan in a given state.” California, New York, Oregon, and Washington pointed out that all fully insured plans, including employer plans, in their states must cover or cannot exclude gender affirming care. Some states pointed to coverage by large, self-insured employers as well.
States argued that excluding coverage of “medically necessary care for no reason other than [a person’s] health condition” (Washington) would violate a range of state and federal anti-discrimination laws. They also expressed concern that the proposal would limit access to medically necessary care recommended by major U.S. medical associations. For example, Massachusetts noted that the proposal would “significantly raise [out-of-pocket] costs for people…curtailing their access to needed health care.”
Comments from California and Washington noted that the handful of existing EHB exclusions in federal rule are all “excepted benefits,” those not generally covered by medical insurance, like vision check-ups for adults or nursing home care. California noted: “CMS’s proposal, for the first time, would exclude benefits that are traditionally embedded within a health plan.” In addition, New York flagged that “treatment for gender dysphoria falls into a number of the EHB categories.”
Note on Our Methodology
This blog is intended to provide a summary of comments submitted by state departments of insurance, state-based marketplaces, and 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 reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/.