We Interrupt This Program for a Marketplace Alert: Reenrollment Rollback Risks Significant Coverage Loss

Editor: Patti Boozang and Amanda Eisenberg
Authors: Ellen Montz and Tara Straw

Click here to subscribe to receive more content like this!
Help shape The 80 Million: What should we write about next?

tl;dr

• The House-passed “One Big Beautiful Bill Act” (“House bill”) erects barriers to coverage by increasing verification requirements for financial assistance and ending automatic reenrollment in the Affordable Care Act’s (ACA) health insurance Marketplaces — a coverage pathway chosen by 10.8 million people for 2025 coverage, or 45% of all Marketplace enrollments.

• The House-passed bill’s changes to verification processes would eradicate recent years’ coverage gains by ratcheting up “hassle factors” at the time of reenrollment. The result would be lower enrollment and higher premiums, as younger and healthier people opt out of Marketplace coverage and trigger higher premiums for others in the market.  

• CBO estimates that only 700,000 people would lose coverage under the onerous new requirements. This estimate greatly understates the likely impact. 

• Overall, CBO’s estimate that the Marketplace provisions will increase the number of uninsured people by only 4 million people underestimates the House bill’s real-world impact on low- and moderate-income families who rely on financial help to afford private insurance coverage.

The 80 Million Impact

The Marketplaces allow people to enroll in private health insurance, and, if they meet certain criteria, qualify for financial assistance through advance payments of the premium tax credit (APTC) and cost-sharing reductions (CSRs), both of which lower upfront costs. Verification is required when people apply. Among the requirements, as a threshold matter, Marketplaces verify U.S. citizen or lawfully present immigrant status, since undocumented people are ineligible for enrollment in a Marketplace plan. Tax data and other electronic sources of income are accessed through the federal data services hub (the Hub) to verify income and family size to appropriately calculate the projected tax credit amount. Some Marketplaces go a step further and use their state quarterly wage data or private electronic data sources to supplement gaps in tax data. In any case, if data elements cannot verify the information an applicant attests to, applicants are asked for more information to prove their eligibility via a manual process. In the meantime, they are conditionally eligible for APTC in order to afford coverage.

While citizenship and immigration status are unlikely to change year-to-year, at reenrollment each year, enrollees are sent a notice directing them to make any necessary changes to their information, like income or family size, and informing them what will happen if no action is taken.  Like many employer-sponsored health plans and Medicare Advantage, enrollees are reenrolled in their existing plan unless they visit the Marketplace to make another selection or opt out altogether. For the 2025 plan year, 45% of Marketplace enrollees chose to automatically reenroll. For state-based Marketplaces (SBMs), this number is even higher: 13 states have passive reenrollment rates greater than 60%, with one (Rhode Island) as high as 75%.  

Automatic renewal of coverage and APTC helps ensure a strong and stable market  by helping people maintain and afford their coverage across years. And it doesn’t mean that eligibility is not verified across years. Premium tax credit eligibility is not just based on front-end application verification; premium tax credits must be checked during tax filing, where the exact amount a household is eligible for is calculated and compared to the amount received. This process safeguards against misstating information to get APTC or higher APTC than a person is entitled to receive. If enrollees receive too much in APTC, they owe a portion back, and if they receive too little, they receive those tax credit dollars on the return. All individuals who receive APTC are required under the law to file taxes and reconcile their tax credit.

The House-passed bill complicates verification processes in the Marketplaces by requiring the same verification, year after year. Specifically, the House bill would require annual re-verification of income, immigration status, health coverage status or eligibility for coverage, place of residence, family size, and “such other information” determined necessary. The requirement that each element be “provided or verified” by an enrollee implies a “manual touch” on each requirement, rather than the use of federal and state electronic data matching as a source of truth. This is not only contrary to processes used in the Marketplace today, but also to those in Medicaid, where “ex parte” enrollment using data matching is considered a best practice and would be further relied upon in the House bill for new provisions, like the implementation of work requirements.  

The consequences of this change are severe for enrollees, Marketplaces, health plans and providers. Marketplaces, health plans, and providers will need to establish new ways to convince 11 million people who would otherwise prefer to be auto-renewed to go into the Marketplace and go through the same front-end verification again, and the other 13 million to spend more time and effort than the previous year to renew coverage. Enrollees will need to enter their Marketplace account to re-verify information they have already supplied, requiring “jumping through duplicative administrative hoops for no purpose,” according to the nation’s SBMs. This new requirement disproportionately burdens lower-income enrollees, who are less likely to be included in the Hub’s data and will need to re-verify these criteria through time-consuming manual processes. According to the bipartisan National Association of Insurance Commissioners, the provision is “written to delay access to coverage for entire families” when only some information is outstanding.

This new barrier to eligible people receiving coverage is compounded by another provision of the House bill that newly disallows APTC prior to completing this verification process. This means that enrollees will need to pay the full, undiscounted premium at the start of the year unless the whole process can be completed by the end of open enrollment. Even if the applicant has all documentation at the ready (a tall task) and immediately submits it, the applicant is still dependent on the Marketplace to process the information, often manually, by Dec. 15 to get APTC for January. If they can’t pay the initial January premium, they might lose coverage altogether or enter a grace period that sets a clock on full payment. Together, these provisions will undoubtedly leave uninsured more people than estimated by CBO.

When it comes to maintaining a competitive, vibrant market, it not only matters how many people get coverage but who gets coverage. Individuals who know they are sick and need coverage will spend the extra time and effort to reenroll in coverage every year, while younger and healthier people might chance fate and exit the market due to the new hassles. This leaves a less healthy group of individuals behind in the risk pool. Premiums will rise, and this destabilization will ripple through the entire insurance market.

Marketplaces will also incur exceedingly high new costs to perform the manual processes, at a time when enrollment-based user fees will fall. And although education and outreach services through navigators and assisters will be particularly needed to educate people about their new obligations and shepherd them through the process, they have also been sharply cut, with more cuts on the way.

The Bottom Line

While exact numbers aren’t known, given the current reliance on automatic reenrollment, the impact of these new bureaucratic hurdles faced by eligible enrollees is likely to be much higher than CBO estimates. Since 2020, Marketplace enrollment has more than doubled, but this provision will result in a dramatic downturn in enrollment of eligible people, solely due to administrative burden. It compounds the Medicaid coverage losses The 80 Million has highlighted for weeks. It’s another way in which the One Big Beautiful Bill Act harms the health coverage gains and affordable coverage infrastructure that the U.S. has built over the last 15 years for low- and middle-income families.

Help shape The 80 Million: What should we write about next?