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Medicare’s Proposed Cut to 340B Drug Payments Would Hit Safety-Net Hospitals While Benefiting For-Profit Hospitals

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Medicare’s Proposed Cut to 340B Drug Payments Would Hit Safety-Net Hospitals While Benefiting For-Profit Hospitals



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The recently proposed 2027 Medicare Hospital Outpatient Perspective Payment System (OPPS) rule from the Centers for Medicare & Medicaid Services (CMS) includes a proposal to reduce Medicare’s reimbursement for 340B drugs. The proposal would reduce reimbursement for 340B drugs from average sales price (ASP) plus 6% (what Medicare generally pays for Part B outpatient drugs administered by providers) to ASP minus 33.4%, a 37% reduction. CMS indicated that this change would better align Medicare reimbursement with hospitals’ costs of acquiring 340B drugs.

The 340B Drug Pricing Program requires drug manufacturers participating in Medicaid to sell outpatient drugs to eligible nonprofit and government providers at a substantial discount, allowing providers to earn larger profits when being reimbursed for 340B drugs. The intent of the program is to support providers, such as certain disproportionate share hospitals and federally qualified health clinics, that care for low-income and other underserved populations. Critics have raised concerns that the 340B program, which has grown substantially over time, is not well-targeted; that savings from the program are not shared with patients; and that the program incentivizes hospitals to acquire clinics and physician practices in order to extend 340B discounts to those settings, enabling them to generate more revenue. Supporters of the program say that revenues generated by the difference between Medicare (and other payer) reimbursement for 340B drugs and the discounted price help 340B providers care for underserved populations and invest in operations.

CMS based the amount of the proposed payment reduction on a cost acquisition survey of 340B drugs completed by hospitals in early 2026. This proposed change revives an earlier effort by CMS to reduce Medicare payments for 340B drugs that was implemented in 2018 under the first Trump administration, but the Supreme Court overturned that rule in 2022 because the agency had not first conducted a cost acquisition survey. If finalized, CMS’s proposed Medicare 340B payment reduction would take effect on January 1, 2027, and would have disparate effects on different types of hospitals, as described more below.

CMS’s proposed cut to 340B drug reimbursement would reduce Medicare spending on 340B drugs by an estimated $4.85 billion in 2027, while increasing spending on non-drug outpatient services by the same amount because of budget neutrality requirements. Under federal law, CMS is generally required to maintain the same amount of aggregate spending through OPPS regardless of reimbursement changes (i.e., maintain budget neutrality). Based on this requirement, CMS proposed an 8.44% across-the-board increase in payments for non-drug outpatient services covered under the OPPS, which the agency estimates will offset the impact of cuts to spending on 340B drugs in 2027.

The budget neutrality requirement means that savings from reductions in 340B payments to 340B hospitals would be redistributed to both 340B and non-340B hospitals through higher payments for non-drug outpatient services. Similarly, Medicare beneficiaries would face lower cost sharing on 340B drugs (e.g., based on 20% coinsurance applied to a lower amount) but higher cost sharing for non-drug outpatient hospital services. CMS estimates that Medicare beneficiaries who use 340B drugs would save $1.15 billion in total in 2027, but cost sharing would increase for beneficiaries who use non-drug outpatient hospital services based on Medicare’s proposed 8.44% payment increase.

Proposed cuts would reduce revenues among safety-net hospitals while increasing revenues among for-profit hospitals, among other differences. For 340B hospitals, total Medicare revenues would decrease or increase depending on how reliant they are on revenues from 340B drugs versus non-drug outpatient services, but non-340B hospitals would experience revenue increases only based on the higher payment rate for non-drug outpatient services. CMS’s proposal to reduce reimbursement for 340B drugs would exempt rural sole community hospitals (SCHs) (rural hospitals that are the only source of short-term, acute inpatient care in a region), children’s hospitals, and PPS-exempt cancer hospitals. Changes would not affect hospitals that are not reimbursed under the OPPS, including critical access hospitals (CAHs), which make up the majority of rural hospitals.

In the aggregate, some types of hospitals would lose or benefit more from these changes than others, based on estimates from CMS (Figure 1):

  • Safety-net hospitals would face a 5.8% net reduction of OPPS revenue under this proposal (see figure notes for definition of “safety-net hospitals”). Other types of hospitals would also see net reductions in OPPS revenue in the aggregate, including large urban hospitals (with 500 beds or more) (-5.2%), major teaching hospitals (-4.3%), government hospitals (-3.0%), and nonprofit hospitals (-0.5%). Some hospitals that would see the largest decrease in revenue likely fall into more than one of these categories (e.g., major teaching hospitals tend to be large urban hospitals).
  • For-profit hospitals would see a 7.4% net increase in OPPS revenues. For-profit hospitals are not eligible for the 340B program and so would only see increases in reimbursement for non-drug outpatient services. Other types of hospitals would also face net increases in Medicare OPPS reimbursement in aggregate, including rural SCHs (5.7%), small urban hospitals (with 0 to 99 beds) (4.8%), and non-teaching hospitals (3.5%). 

Proposed Change in Medicare Reimbursement for 340B Drugs Would Decrease Revenues for Safety-Net Hospitals but Increase Revenues for For-Profit Hospitals (Table)

Reductions in 340B payments could add to the financial challenges facing safety-net hospitals while increasing margins of for-profit hospitals. Safety-net hospitals have lower operating margins than average and so could have an especially difficult time absorbing any revenue losses from the 340B payment cut, while for-profit hospitals have much higher operating margins than the average hospital. Additionally, safety-net hospitals, which are particularly dependent on Medicaid revenues, are likely to be disproportionately affected by the 2025 reconciliation law, as it achieves most of its health care savings through federal Medicaid spending reductions.

The substantial growth of the 340B program in recent years has led hospitals, pharmaceutical companies, and policymakers to focus on whether and how to change the program. At the federal level, lawmakers have proposed options that would preserve or narrow the scope of the program and have proposed increasing transparency around the program, such as by requiring hospitals to report 340B savings. At the state level, some states have passed laws that would preserve the ability of hospitals to use multiple contract pharmacies to dispense 340B drugs, among other things. Other states have implemented requirements for hospitals to disclose the amount of savings generated from the 340B program (as required by Minnesota) or how those savings are spent.

Some pharmaceutical companies have attempted to start providing 340B drug discounts through a rebate model, an approach that would require hospitals to purchase 340B drugs at a non-discounted price and receive post-sale rebates after submitting claims information. These efforts have been halted by the courts due to lack of authorization from HHS, the agency that administers the 340B program. In 2025, the Trump administration attempted to implement the 340B Rebate Model Pilot Program, but a court halted the pilot after a lawsuit was filed by the hospital industry. HHS has recently requested information from stakeholders on a revised rebate model pilot.

This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

Appendix


Estimated Changes in 2027 Medicare OPPS Reimbursements Due to 340B Changes by Hospital Characteristics (Table)



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Are Health Care Costs THE Top Issue for Voters?

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Are Health Care Costs THE Top Issue for Voters?



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No matter which way pollsters ask the question, health care costs emerge as a top concern for voters. It’s at the top of the list of worries for voters, and one of several problems they say are affecting their family budgets, along with gas and food prices, housing costs and the cost of utilities. But it’s probably over-reading polls to say health care costs are the number one issue for voters, or that there is any single top issue. Health costs are part of a stew of affordability worries and problems driving voters now, which candidates can address separately or together. Depending on the poll and the question, one or the other may be at the top of the list. And worries and problems are not the same thing. Health care costs register most on the worries list.

The big thing driving health care costs as an issue is voters’ worries about getting hit with big health care bills. That makes sense. Only 1 in 10 people are hospitalized each year but far more worry about incurring major medical bills if they get sick. Health care costs provoke special anxiety because they are less predictable than other household expenses. On the other hand, everyone has to buy food and gas (except a few of us EV owners) and pay their monthly housing costs, and people have a pretty good fix on what those costs are. This is why people are upset about drug prices, too—it’s the health cost they see almost as often as they pay for food or pay the rent. Two thirds of adults take a prescription drug and 3 in 10 take four or more.

You can see this in our polling:

  • In June, we asked voters: “How WORRRIED [my emphasis] are you about being able to afford each of the following for you and your family,” and gave them a list to choose from including health care costs, gas, rent and mortgage, food, utilities, and so forth. Health care costs were clearly the number one worry, as we reported at the time, followed by gas and rent and the mortgage, but worries about everything were reasonably closely clumped together:

Gallup asked a similar worries question and got a similar result: the “availability and cost of health care” was the public’s top worry, followed by the economy and inflation.

  • On other hand, in late spring, CNN asked voters to say in their own words what “the biggest economic PROBLEM [my emphasis] was facing their family.” General cost of living was named most often, with food, gas and housing well ahead of health costs. People see these costs more frequently but may worry about them less than they do a big health care bill. However, when gas prices and food costs or housing costs rise, it can also make it tougher for families to pay their health care bills, underscoring that a family budget is made up of interconnected parts and a bottom line, even as pollsters often try to rank them on a scorecard.
  • We also asked a different question in our polls: What issues do you want to hear the candidates talk about in health? Health care costs emerged as number one, followed by the future of Medicare, fraud in government health programs, and then the future of Medicaid.

Why does this matter?

First, be alert that the various polls are asking different things about health care when you see issue rankings: worries, problems facing people, problems facing the nation or for government to address, and what candidates should be talking about, are all different things that will get different answers and rankings from the public.

Second, both worries about unexpected health care costs and problems paying health care bills are motivating voter concern about health care. For candidates, appealing to worries is likely the smarter course that broadens the net of concerned voters.

Finally, voters clump health costs with a series of other problems and worries about their family budgets. I have come to the conclusion that the search for a single top issue through polling questions—whether it’s health costs, or gas prices, or the cost of food—is artificial. People worry about and experience these costs together. There is no top issue, unless that issue is the catchall, “cost of living.”

View all of Drew’s Beyond the Data Columns



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How Has ACA Marketplace Enrollment Changed Across States in 2026?

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How Has ACA Marketplace Enrollment Changed Across States in 2026?



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Following several years of rapid enrollment growth in the Affordable Care Act (ACA) Marketplaces that corresponded with temporary enhanced premium tax credits, enrollment fell for the first time in seven years in 2026, when those tax credits expired. The Assistant Secretary for Planning and Evaluation (ASPE) of the Department of Health and Human Services reported that enrollment declined by nearly three million people between 2025 and 2026.

Earlier federal data and analysis had focused on plan selections, or sign-ups, which decreased by about one million (5%) from last year, but plan selections do not account for enrollees who ultimately do not make their premium payments and are not covered. Effectuated enrollment is different from selection or sign-up data in that it accounts for who paid their premiums. Consumers who canceled their coverage or did not make their premium payments, resulting in termination of coverage, do not contribute to effectuated enrollment totals.

This analysis uses data from the Centers for Medicare and Medicaid Services (CMS) on effectuated enrollment in addition to Open Enrollment plan selections to examine how enrollment in the ACA Marketplaces has changed in 2026.

Key Findings

  • Every state except for New Mexico saw a drop in ACA Marketplace enrollment from 2025 to 2026. New Mexico is the only state to fully replace the expired federal enhanced premiums tax credits with state-funded subsidies.
  • State-based Marketplaces that run their own enrollment platforms, including those that partially offset the expiring federal enhanced tax credits, generally saw lower drops in enrollment (a 6% decline versus a 15% decline for states that use the federal marketplace).
  • The effectuation rate (the rate at which people who initially signed up for a plan kept their coverage by making their premium payments) was lower in 2026 than in recent years.
  • States that run their own Marketplaces, and particularly those that offered state-funded subsidies, generally saw higher-than-average effectuation rates.

February effectuated enrollment declined in 2026 to 19.2 million people (as of May 5, 2026), down from 21.8 million people in 2025, a record high enrollment (see note in Methods about 2025 total enrollment). This represents a 12% decline in enrollment year-over-year. Similarly,  KFF polling indicated about one in ten 2025 Marketplace enrollees (9%) said they became uninsured for the 2026 plan year. The decline in enrollment coincides with the expiration of the enhanced premium tax credits at the end of 2025.

Effectuated Enrollment Has Dropped for the First Time Since 2019 (Column Chart)

While effectuated enrollment data do not capture the reasons coverage lapsed, these significant declines in enrollment correspond with rising premium payments after the expiration of enhanced premium tax credits. Without the enhanced credits, premium payments increased substantially for most subsidized enrollees, and some middle-income enrollees who previously qualified for subsidies faced the full cost of coverage for the first time. On average, premium payments net of tax credits increased by 58% for people who signed up for 2026 coverage. A 2026 KFF follow-up survey of people who had been enrolled in ACA Marketplace coverage in 2025 found that eight in 10 enrollees who made changes to their ACA coverage or became uninsured cited cost as a reason, with 17% of returning Marketplace enrollees stating they worried about being able to pay their premiums for the entirety of 2026.

As shown in Figure 2, 2026 was the first year of widespread increases in premium payments. In prior years, including before the implementation of enhanced premium tax credits, people receiving a subsidy were largely sheltered from increases in the premiums charged by insurers. This may at least in part explain why the effectuation rate in 2026 was lower than some years preceding the enhanced premium tax credits. While the drop in enrollment from 2025 to 2026 is the largest drop since the Marketplaces opened, there are still more ACA Marketplace enrollees now than there were before the enhanced premium tax credits were passed.

Average Consumer Premium Payments Rose Substantially Between 2025 and 2026 (Stacked column chart)

Effectuated enrollment declined in nearly every state from 2025 to 2026, though the size of the decline varied substantially. New Mexico was the only state to see an increase in effectuated enrollment, growing 14% between 2025 and 2026, coinciding with the state’s premium assistance program that fully replaced the expiring federal enhanced tax credits with state-funded subsidies. Effectuated enrollment in Illinois, Connecticut, Pennsylvania, Idaho, the District of Columbia, Massachusetts, and Texas held relatively flat or fell by less than 5%. Of these states, Texas is the only state that is not a state-based Marketplace. Enrollment in Texas may have been buoyed by a state rule that mandates substantial silver loading, which can lead to more subsidized people being eligible for a bronze plan, or in some cases a gold plan, with little or no premium payment.

At the other end of the spectrum, effectuated enrollment fell by just over 32% in Ohio and Oklahoma, and by more than a quarter in Arizona (30%), South Carolina (29%), Indiana (28%), Michigan (27%), Minnesota (27%), Mississippi (26%), and Louisiana (26%). Of these states, Minnesota is unlike the others in that it offers a Basic Health Program covering low-income people who would otherwise sign up on-exchange. With a relatively higher-income group of Marketplace enrollees, Minnesota enrollees may have been disproportionately affected by the return of the subsidy cliff as enhanced tax credits expired.

A sortable table in the appendix shows the change in enrollment for each state, alongside other information about the type of Marketplace, whether state subsidies are available, and the effectuation rate.


Figure 3

States that run their own enrollment platforms, and particularly those that offered state-funded subsidies, generally saw a smaller drop in enrollment (or an increase, in the case of New Mexico). When weighted by enrollment in each state, those that use theHealthCare.gov platform (and do not offer state-specific subsidies) saw a decline in effectuated enrollment of 15% from 2025 to 2026. However, state-based Marketplaces experienced a 6% decline during the same period. States that offered state-funded subsidies all saw below-average declines in enrollment, or an increase in the case of New Mexico. 


Figure 4

Of the 26 states with effectuated enrollment drops smaller than the national average, 18 were state-based Marketplaces, including all nine that offered their own state-funded subsidies. These differences across states suggest that the availability of state-level premium assistance helped cushion the effect of expiring enhanced premium tax credits on enrollees’ ability to maintain coverage, though enrollment changes likely also reflect broader differences in state populations and Marketplace administration.


Figure 5

Changes in both plan selections and effectuated enrollment from 2025 to 2026 varied considerably among states. However, changes in effectuated enrollment were not always well predicted by earlier reported changes in plan selections. In most states (37), both plan selections and effectuated enrollment declined, and the gap between the two widened, meaning that drops in plan selections underpredicted the change in effectuated enrollment. This pattern was particularly pronounced in states such as South Carolina, where plan selections fell 7% but effectuated enrollment fell 29%; Michigan, where plan selections fell 6% but effectuated enrollment fell 27%; and Minnesota, where plan selections fell 8% but effectuated enrollment fell 28%.

For nine states, plan selections rose from 2025 to 2026 but effectuated enrollment fell, reflecting a declining effectuation rate. Louisiana saw the largest divergence: plan selections increased by about 1% but effectuated enrollment fell by 27%. Texas showed the largest difference by number of enrollees: about 206,000 more people signed up this year (a 5% increase in sign-ups), with effectuated enrollment ultimately falling by about 146,000 people (a 4% decrease). Connecticut, Idaho, Massachusetts, Maryland, Pennsylvania, and Rhode Island saw smaller versions of this trend, with modest increases in plan selections alongside slight declines in effectuated enrollment.

Fewer Consumers Maintain Coverage than Sign Up During Open Enrollment (Line chart)

Nationwide, the February effectuation rate fell from 90% in 2025 to 83% in 2026. This means a larger share of the people who signed up for coverage during open enrollment did not maintain their coverage, perhaps because they did not pay the first month’s premium, canceled after enrolling, or fell behind on payments and had their coverage terminated. Since 2019, the effectuation rate (measured past the end of the three-month grace period for February premium payment) has been above 90% but was lower in the early years of Marketplace coverage.

This year, Mississippi had the lowest effectuation rate (61%), meaning nearly two in five consumers who signed up during open enrollment did not maintain coverage past January. Similarly, South Carolina, Louisiana, Indiana, and Oklahoma also saw effectuation rates below 70% in 2026. By contrast, New Mexico, California, Nevada, Vermont, and Idaho each had effectuation rates of 95% or more.


Figure 7

States that run their own Marketplaces generally maintained higher effectuation rates than states that use HealthCare.gov. The ten states with the lowest effectuation rates all use the Healthcare.gov platform, while the ten states with the highest effectuation rates are all state-based Marketplaces. These differences may reflect variation in state populations, subsidy structures, or outreach and enrollment assistance efforts. Of state-based Marketplaces, Minnesota and the District of Columbia were the only ones to see lower-than-average effectuation rates. Both markets skew relatively higher-income, as both offer Basic Health Programs that cover lower-income enrollees who would otherwise sign up on exchange. 


Figure 8

As with smaller drops in effectuated enrollment, states that implemented state-based subsidy programs to help offset the expiration of the enhanced premium tax credits through their state-based Marketplaces saw higher effectuation rates. Of the nine states offering state-based premium subsidies, seven saw effectuation rates higher than 90%, and all saw effectuation rates higher than the U.S. average. New Mexico, which, as mentioned earlier, fully replaced the lost enhanced premium tax credits through state funds, had the highest effectuation rate among all states at 96%.

These patterns suggest that state policies designed to blunt the effect of rising premiums may be associated with higher rates of enrollees maintaining active coverage, though other factors—such as income levels, Marketplace type, and state outreach efforts—likely also play a role. All states that offered state subsidies to backfill some portion of the expired enhanced premium tax credits were above the median change in effectuated enrollment.

Appendix

Plan Selections and Effectuated Enrollment (Table)

Methods

Open enrollment plan selections and monthly effectuated enrollment were collected from Centers for Medicare & Medicaid Services (CMS) sites. Effectuated enrollment in this current analysis refers to enrollees with any coverage in February. For 2025, effectuated enrollment is as of March 15, 2026; for 2026, as of May 5, 2026. Both of these dates are past end of the February premium payment grace period for consumers who had effectuated coverage. State-based subsidy information was obtained from state government websites; see Figure 3 for links to source data. States that operate their own exchanges but use the HealthCare.gov platform are included in the HealthCare.gov category; none of them provide state-funded premium assistance. Weighted average enrollment changes by platform type were calculated using the above described categorizations. Illinois, which switched from using HealthCare.gov in 2025 to its own state-based Marketplace platform in 2026, is counted as a state-based Marketplace for change in effectuated enrollment.

An analysis by ASPE reported the 2025 February effectuated enrollment total to be 22.1 million, but the CMS monthly effectuated enrollment data report a total of 21.8 million enrollees in February 2025. Effectuated enrollment totals may differ across data sources, potentially due to the date of measurement. This KFF analysis is based on CMS monthly effectuated enrollment data (linked above) which indicated a total of 21.8 million effectuated enrollees.



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Health insurance premium increases for 2027: Proposed rates by state and what consumers should know

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Health insurance premium increases for 2027: Proposed rates by state and what consumers should know



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Proposed individual market premium increases for 2027 have been published in about a third of the states as of mid-July, with a median proposed increase of about 14%.

Basic details of initial 2027 rate filings will be available for every state on ratereview.healthcare.gov starting on July 31, 2026.

After last year’s increases, another round of double-digit rate increases may sound alarming. But proposed rate increases do not necessarily reflect what Marketplace enrollees will ultimately pay, and several key factors make the outlook for 2027 very different than what we saw for 2026.

Here are the proposed weighted average health insurance rate increases that are available at this point:

* Market share details are not available in Hawaii or Kentucky, so a straight average has been calculated rather than a weighted average that accounts for each carrier’s enrollment.

Proposed 2027 individual market rate increases by state
State Average proposed increase
Vermont 6.5%
Iowa 6.7%
Washington, DC 9.5%
Hawaii 11.1%*
Minnesota 11.9%
Massachusetts 12.9%
Maryland 13.7%
Illinois 14.1%
Connecticut 16.2%
Maine 16.8%
Oregon 17.5%
Indiana 19.3%
Kentucky 19.6%*
Rhode Island 20.1%
Georgia 20.7%
New York 20.7%
Washington 22.4%

Federal subsidy enhancements expired last year, driving up the average net (after-subsidy) Marketplace premiums by 58% in 2026, even though many people downgraded to lower-priced Bronze plans.

Had the subsidy enhancements had been extended, premium subsidies would have been larger, offsetting the last year’s underlying premium growth – which was significantly larger than we had seen for the last several years.

(Premium subsidies are actually larger in 2026 than they were in 2025. In 2026, the average premium subsidy is $650/month, up from $550/month in 2025. But the average full-price premium grew by even more: It was $619/month in 2025, and increased to $741/month in 2026, despite all the people who downgraded their coverage.)

Here’s why 2027 will be different, despite the double-digit rate increase proposals that we’re seeing so far:

  • Most Marketplace enrollees still get premium subsidies, even after the subsidy enhancements expired. During the open enrollment period for 2026 coverage, 87% of enrollees qualified for premium subsidies.
  • The subsidies are designed to keep pace with the cost of the benchmark (second-lowest-cost) Silver plan in each area. So as premiums rise, so should subsidies. The reason people are paying much higher premiums this year, even if they’re still getting a subsidy, is because the expiration of the subsidy enhancements resulted in a significant increase in the percentage of income that people have to pay for their coverage.
  • For 2027, the percentage of income that people have to pay themselves will be indexed just the way it was each year from 2015 to 2021, but it won’t be the sort of drastic change that we saw for 2026.

The short story: For most Marketplace enrollees, larger subsidies will likely offset some or all of the premium increases for 2027. But the full brunt of the premium increases will mostly impact Marketplace enrollees who aren’t eligible for a subsidy, plus anyone who buys individual market coverage outside the Marketplace, where subsidies aren’t available.

Why Marketplace premiums are increasing

The factors driving full-price premiums higher for 2027 include some usual culprits and some that stem from recent federal changes. As is typically the case, the largest driver of higher premiums is the ever-increasing cost of healthcare. This includes a variety of factors, including higher hospital and drug costs (including the cost of GLP-1 medications), higher labor costs, and increased utilization of medical services.

Insurers also point to general economic inflation as a factor that has pushed prices higher across the board in recent years, including the price of healthcare.

Insurers also note that the expiration of the federal subsidy enhancements is expected to result in continued deterioration of the health of the overall risk pool in 2027, as healthier enrollees drop their coverage, leaving a sicker risk pool that costs more to insure on a per-person basis. Insurers also point to some other recent federal rule changes that are projected to result in lower enrollment (and thus a sicker risk pool), including the 2025 Marketplace Integrity rule, the “One Big Beautiful Bill,” and the 2027 Notice of Benefit and Payment Parameters.

Will I qualify for a subsidy in 2027 if I don’t qualify in 2026?

Because the subsidy enhancements were allowed to expire, the “subsidy cliff” returned in 2026. This means subsidy eligibility ends abruptly if household income goes above 400% of the federal poverty level (FPL), regardless of how much the household has to spend on health insurance.

During the open enrollment period for 2025 coverage, 92% of Marketplace enrollees qualified for a subsidy, but that dropped to 87% in 2026, largely because of the return of the subsidy cliff.

The subsidy cliff will still exist in 2027, so subsidies will not be available if household income is more than 400% FPL. But because of annual increases in the FPL, the income level at which subsidy eligibility ends will be a little higher in 2027:

  • A single person in the continental U.S. will qualify for a subsidy with an income as high as $63,840, up from $62,600 in 2026.
  • A household of four in the continental U.S. will qualify for a subsidy with a household income as high as $132,000, up from $128,600 in 2026.

Make sure you understand how household income is calculated under the ACA, as it’s a unique version of MAGI. And keep in mind that contributions to a health savings account or pre-tax retirement account will reduce your ACA-specific MAGI.

If I get a premium subsidy, will my subsidy increase in 2027?

If the cost of the benchmark plan in your area increases, your subsidy amount will generally increase too, assuming your income remains fairly steady.

But the benchmark plan is just one plan, and there are dozens of plans available in most areas. So it’s important to understand that the size of your subsidy is tied to the price of the benchmark plan, not the price of your specific plan.

Depending on the discrepancy between how much your plan’s premium changes and how much the benchmark plan’s premium changes, you may find that your subsidy doesn’t keep pace with your premium. But it’s also possible for the subsidy amount to increase by more than the premium increase for your plan, making your plan more affordable in the coming year.

Either way, it’s always a good idea to carefully comparison shop during open enrollment, which starts on November 1 in most states.

Should I switch to a different Marketplace plan for 2027?

Renewing your current plan for 2027 – if it’s still available – might be the best option, or you might be better served by switching to a different plan. You won’t know until you compare the plans available in your area during open enrollment.

Pay close attention to any notifications you get from your health plan and the Marketplace as we get closer to the start of open enrollment. If your net health insurance premium is increasing for 2027, you might prefer a different plan. But choosing a health insurance policy involves a lot more than just premiums, so be sure you consider all aspects of the various plans before picking the one you want for 2027.

Note: Roughly 700,000 people will need to select new plans for 2027 because of carriers exiting the Marketplace at the end of 2026. If your carrier is leaving the Marketplace and you pick a new plan by December 31, it will take effect on January 1, ensuring that you have seamless coverage.

Final rates could differ from proposed rates

The proposed rate increases listed above are initial proposals, so they could change before they’re finalized. In nearly all states, the rate review process is done by the state, and there’s significant variation in terms of how much approved rates tend to differ from the rates that the insurers initially file.

Last year, for example, New York regulators approved an overall average rate increase of 7.1% for 2026 individual market plans, which was significantly smaller than the 13.5% average rate increase the insurers had proposed.

But in Idaho, the approved health insurance rates were nearly identical to the insurers’ proposals, except for two carriers, one of which ended up with a larger-than-proposed rate increase, and one of which ended up with a smaller-than-proposed rate increase.



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Why Do We Hear More About High Drug Prices Than About Hospital Prices?

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Why Do We Hear More About High Drug Prices Than About Hospital Prices?



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In this JAMA Health Forum post, KFF’s Larry Levitt outlines four reasons why high drug prices are in the spotlight more than hospital prices, even though hospitals accounted for 40% of the growth in national health spending from 2022 to 2024, and explores the potential for policy action to restrain them.



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KFF Health Tracking Poll: Public Views on Fraud in Government Health Programs

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KFF Health Tracking Poll: Public Views on Fraud in Government Health Programs



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Key Takeaways

  • As the 2026 midterm elections approach, health care costs remain the public’s top economic worry, and rank among the top health issues voters most want to hear candidates discuss this election cycle. Majorities of Democratic and independent voters say it is extremely important that candidates talk about health costs (60% and 55%). However, recent Trump administration actions on fraud may be registering with Republicans, as the largest share of Republican voters (55%) say it is extremely important for candidates to discuss fraud in government health programs.
  • A majority of voters believe there is at least some fraud in government health programs and most say that addressing fraud would lead to reductions in federal spending overall, though fewer say it would lead to reductions in their own health care costs. Still, larger shares of voters perceive fraud in areas other than health: about half of voters say there is “a lot” of fraud in the federal tax system (52%), federal military and defense contracts (46%), and foreign aid programs (46%), compared to about four in ten who say there is “a lot” of fraud in government health programs such as Medicaid (40%) and Medicare (36%). About three in ten voters say there is “a lot” of fraud in Affordable Care Act (ACA) marketplaces (29%), the lowest share of all the areas asked about in this survey. Across party lines, larger shares of voters say fraud in Medicare and Medicaid is mostly perpetrated by health care providers and institutions rather than individual patients.
  • The Trump administration has recently deferred federal Medicaid payments in a few states with claims that these actions will save money and root out fraud. But voters are skeptical: fewer than half say these deferrals are “very” or “somewhat likely” to save taxpayers money (43%) or that it is likely to lower health care costs for people like them (31%). However, most voters – including majorities across partisans – say the deferrals are likely to cause eligible low-income people to lose access to care they rely on. About two-thirds of voters (65%) believe this approach is mostly motivated by politics, though most Republican voters say it is mostly motivated by a genuine effort to reduce fraud and protect Medicaid (69%).
  • Although a majority of voters say there is at least some fraud in Medicaid, most (71%) say ensuring Medicaid beneficiaries can access the care they need should be a higher priority than preventing fraud, even if it means some fraud may occur. Republican voters are closely split on this trade-off, with about half (52%) saying access to care should be a priority and about half (47%) saying preventing fraud should be a priority.

Health Care Costs Remain Voters’ Top Worry Heading Into the Midterms

With the midterm elections approaching, health care costs continue to top the list of the public’s economic anxieties. About six in ten adults say they are “very” (27%) or “somewhat worried” (35%) about affording health care costs for themselves and their families, including the cost of health insurance and out-of-pocket costs for things like office visits and prescription drugs.

This is followed by about one in five adults who are “very worried” about affording other household expenses, such as gasoline and transportation costs (22%), their rent or mortgage (21%), food and groceries (20%), or monthly utilities (19%).

This year, health costs have consistently topped the public’s list of economic worries, even as worries about gas prices have fluctuated. In April, worry about gasoline and transportation costs had risen to nearly match worry about health care costs, as the conflict with Iran drove gas prices sharply higher: 29% of adults said they were “very worried” about affording gas and transportation costs, compared to 30% who said the same about affording health care costs. Fewer adults now say they are very worried about affording gas (22% vs. 29% in April), as gas prices have fallen slightly amid U.S.-Iran negotiations.

Stacked bar chart showing the public's levels of worry when it comes to affording living necessities. Health care tops the list of the public's economic anxieties. Shown among total adults.

Beyond ranking as the top economic worry for the public, costs rank among the most important health care issues voters want to hear candidates talk about. Half (51%) of voters say it is “extremely important” for candidates to talk about health care costs, and a similar share says the same about the future of Medicare (48%). About four in ten say it is extremely important for candidates to discuss fraud in government health programs (43%) and the future of Medicaid (38%), and about a third say the same about the Affordable Care Act (36%) and food policy, including regulation of chemical food additives and pesticides (34%). About three in ten voters say it is extremely important that candidates talk about vaccine policy, including which vaccines are recommended for children (29%), or abortion policy (27%).

Across each of these areas, a majority say they are at least “very important” and few – one in seven or fewer – say any are “not important” for candidates to talk about, highlighting the salience of health care issues in the upcoming elections.

Stacked bar chart showing the health issues that voters want to hear candidates talk about in the 2026 midterm elections. Heath care costs tops the list. Shown among registered voters.

Partisans differ in what they see as the top health care priorities for the upcoming midterms. Large shares of Democratic voters say they want to hear from candidates about health costs and the future of health programs, with majorities saying the future of Medicare (61%), health care costs (60%), the future of Medicaid (56%), and the future of the Affordable Care Act (ACA) (54%) are extremely important issues for candidates to discuss. Fraud is the top health care issue for Republican voters, with a majority (55%) saying fraud in government health programs is extremely important for candidates to discuss, more than any other health issue and 18 percentage points higher than health care costs (37%), their second-ranked issue. Health care costs top the list for independent voters (55%), followed by the future of Medicare (46%), and fraud in health programs (42%).

Split bar chart showing the health issues the public thinks is extremely important for candidates talk about in the 2026 midterm elections. Shown among registered voters and voters by party identification. Health care costs and the future of Medicare is extremely important for Democrats and independents, while fraud in government health programs is extremely important for Republicans.

Voters’ Perceptions and Attitudes Toward Fraud in Health Programs

Republican voters’ interest in hearing about fraud comes as the Trump administration has made fraud a key talking point in discussions of lower health care costs. The administration has announced several new actions aimed at combatting fraud in government health care programs, including a March 2026 Executive Order establishing the Task Force to Eliminate Fraud chaired by Vice President J.D. Vance, nationwide and state-specific actions against suspected fraud in Medicare and Medicaid, and a Department of Justice (DOJ) National Health Care Fraud Takedown that resulted in hundreds of charges across 45 states. Most recently, the administration froze federal funding for New York’s state agency responsible for prosecuting fraud in its Medicaid program.

Most voters think there is at least some fraud in government health programs, though there are other areas of government where even larger shares see fraud as widespread. About half of voters say there is “a lot” of fraud in the federal tax system (52%), foreign aid programs (46%), and federal military and defense contracts (46%). Between three and four in ten voters say there is “a lot” of fraud in government health programs such as Medicaid (40%), Medicare (36%), and Affordable Care Act Marketplaces (29%), and about one-third of voters say there is “a lot” of fraud in Social Security (34%).

In each of these areas, roughly four in ten voters say there is “some fraud,” while 4% or fewer say there is no fraud at all.

Stacked bar chart showing government areas the public thinks there is fraud. Shown among registered voters. The federal tax system tops the list.

Voters’ perceptions of fraud in various areas of government are divided along partisan lines. Republican voters are more than twice as likely as Democratic voters to say there is “a lot” of fraud in foreign aid programs (67% vs. 23%), Medicaid (62% vs. 21%), Medicare (54% vs. 19%), Social Security (49% vs. 20%), and ACA Marketplaces (47% vs. 15%). About half of independent (54%) and Democratic (51%) voters say there is “a lot” of fraud in federal military and defense contracts, compared to about one-third (32%) of Republican voters.

The federal tax system is one area where partisans are more united in their perceptions of fraud; about half of Republican (48%) and Democratic (46%) voters say there is “a lot” of fraud in the tax system, as do nearly six in ten independent voters (58%).

Split bar chart showing the share of the public who say there is a lot of fraud in the following government areas. Shown among registered voters and voters by party identification. At least half of voters across partisanship think there is a lot of fraud in the federal tax system.

When asked who is mostly carrying out fraud in Medicare and Medicaid, voters are more likely to say health care providers – including private doctors’ offices and hospital systems – rather than individual patients, but many are unsure. About half of voters overall say Medicare fraud is mostly carried out by providers (53%), compared to 13% who say it is carried out by individual patients. The pattern is similar for Medicaid, where about half of voters say providers are the main perpetrators of fraud (49%), compared to 18% who say individual patients are. In both areas, three in ten voters say they are not sure (31% and 30% respectively).

Across partisans, about half of voters attribute fraud primarily to health care providers in both Medicare (Republican voters 56%, Democratic voters 52%, independent voters 52%) and Medicaid (Republican voters 52%, Democratic voters 49%, independent voters 46%). However, Republican voters are more likely than Democratic or independent voters to say fraud is carried out mostly by individual patients in Medicaid (27% vs. 14% and 16% respectively) and Medicare (18% vs. 10% and 12%). About one in five Republican voters and one-third of Democratic and independent voters say they are not sure who is most responsible for fraud in each of these programs.

Stacked bar chart showing share of the public who think fraud in Medicare or Medicaid is mostly carried out by individual patients, by health care providers, including private doctor’s offices and hospital systems, or who are not sure. Shown among registered voters and voters by party identification. Voters across partisanship think fraud in Medicare or Medicaid is carried out by health care providers.

Most voters say reducing fraud in government health programs would lead to reductions in federal spending overall, but fewer say it would reduce their own health care costs. Overall, about six in ten voters say reducing fraud in government health programs would lead to major (30%) or minor (31%) reductions in federal spending overall. Fewer – about four in ten – expect reducing fraud to have major (18%) or minor (25%) reductions in their own health costs. The Trump administration argues that cracking down on suspected health care fraud will save taxpayer dollars. KFF analyses show that recovered fraud dollars in Medicaid are a small percentage of health spending overall, and savings in the federal programs are unlikely to result in substantial individual out-of-pocket savings.

While majorities of voters across partisans expect fraud reductions in government health programs to reduce federal spending overall, Republicans (46%) are much more likely than independents (26%) and Democrats (18%) to expect “major reductions.” Fewer expect major reductions in their own health care costs, including about one in five Republican voters (22%), one in six independent voters (17%), and one in seven Democratic voters (14%). Majorities of independent and Democratic voters say reducing fraud would result in no reductions in their own health costs, or they are not sure.

Stacked bar chart showing share of the public who say reducing fraud in government health programs would lead to major, minor, or no reductions in federal spending overall or their own health care costs, or they are not sure. Shown among registered voters and voters by party identification

Voters Prioritize Access to Care for Medicaid Enrollees Over Fraud Prevention

The Trump administration has taken recent actions that aim to combat fraud in the Medicaid program. These actions, such as requesting that states revalidate providers deemed high risk for fraud, have the potential to delay or disrupt access to care for people who rely on it while cases are evaluated. Although a majority of voters say there is at least some fraud in Medicaid, when asked to choose a priority, most prioritize protecting access to care for eligible people over rooting out fraud. Seven in ten voters (71%) say the higher priority for managing the Medicaid program should be ensuring that eligible people have access to the care they need, even if it means some fraud may occur, while three in ten (28%) say preventing fraud should be the priority, even if it means some people who are eligible may have less access to certain services.

More than eight in ten Democratic voters (84%) and three in four independent voters say ensuring access to care should be prioritized over preventing fraud. Republican voters are more evenly split, with about half prioritizing access (52%) and half prioritizing fraud prevention (47%). Notably, Republican and Republican-leaning voters who do not support the Make America Great Again (MAGA) movement lean toward prioritizing access to care (62%), while about half of MAGA Republican voters say preventing fraud should be prioritized and about half say ensuring access to care should be prioritized (50% and 49%).

Stacked bar chart showing the public's priority when it comes to managing the Medicaid program: preventing fraud, even if that means some people who are eligible may have less access to certain services, or ensuring that eligible people have access to the care they need. Shown among registered voters and voters by party identification. Democratic and independent voters prioritize ensuring access to care, while Republicans are more split.

Anti-Fraud Actions and Their Impact on Medicaid

The Trump administration’s focus on rooting out fraud, waste, and abuse in Medicaid includes 50-state initiatives such as asking states to revalidate high risk providers and review all state Medicaid Fraud Control Units (MFCUs) as well as targeted actions that focus on issues in specific states. The administration has deferred federal Medicaid payments in Minnesota and California and denied recertification of the MFCUs in Hawaii and New York. Notably, these actions have focused on states with Democratic governors, even though fraud may occur across all states.

Asked about the potential impact of these deferrals, voters are much more likely to say these actions will harm beneficiaries and unfairly target states based on politics than reduce fraud or lower costs. About three in four voters (77%) say funding delays to states that the federal government says are mismanaging their Medicaid programs would likely cause some eligible low-income people to lose access to health care services, including about four in ten (41%) who say this is very likely. About two-thirds of voters (65%) say federal payment deferrals are likely to unfairly target Democratic-led states based on politics rather than actual mismanagement. Voters are evenly split in their assessment of whether delaying federal funding to states would be likely to significantly reduce fraud in state Medicaid programs (50% likely vs. 50% not likely). Fewer voters say it is likely that payment deferrals would save taxpayers money (43%) or address their top economic concern by lowering health care costs for people like them (31%).

Stacked bar chart showing the share of the public who say if the federal government delayed funding to states it says are mismanaging their Medicaid programs, each of the listed items are very likely, somewhat likely, not to likely, or not at all likely to happen. Shown among registered voters. Most voters think this action would cause some eligible low-income people to lose access to health care services they rely on.

Majorities of Democratic (89%), independent (81%), and Republican (61%) voters say this approach is “very” or “somewhat likely” to cause some eligible low-income people to lose access to health care services they rely on. At the same time, fewer than half of voters across partisans say it is likely to lower health costs for people like them, including 46% of Republican voters, and smaller shares – about one in four – of Democratic (26%) and independent (25%) voters.

Partisans divide sharply when it comes to other expectations. Republican voters are more than twice as likely as Democratic voters to say the funding delays would significantly reduce fraud in state Medicaid programs (77% vs. 34%) and save taxpayers money (73% vs. 24%). Democratic voters, meanwhile, are much more likely to say the delays would unfairly target Democratic-led states based on politics (90%) than Republican voters (34%).

Seven in ten independent voters (69%) say the actions would unfairly target Democratic-led states based on politics, and four in ten or fewer say it is likely to significantly reduce fraud in state Medicaid programs (42%) or save taxpayers money (36%).

Split bar chart showing the share of the public who say if the federal government delayed funding to states it says are mismanaging their Medicaid programs, each of the listed items are very or somewhat likely to happen. Shown among registered voters. Voters across partisanship think this would cause some eligible low-income people to lose access to health care services they rely on. Democratic and independent voters think this would unfairly target Democratic-led states based on politics rather than actual mismanagement, while Republican voters think this would significantly reduce fraud in state Medicaid programs and save taxpayers money.

Beyond skepticism about the potential impacts of deferrals, nearly two-thirds of voters (65%) say this action to delay Medicaid funding is mostly motivated by politics, while one-third say it is mostly motivated by wanting to reduce fraud to protect Medicaid (35%). Partisans are once again divided, with large majorities of Democratic (89%) and independent (70%) voters saying the approach is motivated by politics, while most Republican voters say it is motivated mostly by wanting to reduce fraud (69%). Non-MAGA Republican voters are evenly split (51% say it is motivated by wanting to reduce fraud, 49% say it is motivated by politics), while three in four MAGA Republican voters say the policy is mostly motivated by wanting to reduce fraud to protect Medicaid.

Split bar chart showing the share of the public who say the proposal to delay some funding to states the federal government says are mismanaging their state Medicaid programs is mostly motivated by wanting to reduce fraud to protect Medicaid, or do you think this action is mostly motivated by politics. Shown among registered voters and voters by party identification. Democratic and independent voters say this proposal is mostly motivated by politics, while Republicans say it is mostly motivated by wanting to reduce fraud.



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Can AI help you shop for health insurance?

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Can AI help you shop for health insurance?



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Artificial intelligence (AI) is changing the way that people look for information – offering the promise of speedy searches and increasingly personalized answers. But if you’re hoping AI can be a personal shopper for health insurance that perfectly fits your healthcare needs and your budget, you should consider that AI can get a lot wrong.

How can AI help if you’re curious about health insurance?

As a health policy analyst, I’m aware that artificial intelligence is becoming a starting point for people who have questions about health insurance. And it makes sense: AI can sift through enormous amounts of historical information to explain concepts like the health insurance Marketplace, Medicaid, premium subsidies and cost-sharing reductions, and other forms of federal and state financial assistance. It can explain how deductibles and copays work, what the essential health benefits are, and how plans are categorized by metal level.

AI can also help consumers better understand the basics of how health coverage works. But after decades as both a health insurance broker helping consumers enroll in coverage and a health policy analyst tracking changes in federal and state rules, I’ve also seen where AI reaches its limits.

To test AI’s capabilities – and limitations – I did some basic searches that might be conducted by individual health insurance shoppers. In doing so, I identified some key challenges AI faces when answering your questions about health insurance:

1. Keeping up with constantly changing rules

Health insurance rules don’t just change every few years. Numerous provisions change each year, including premiums, plan designs, out-of-pocket limits, plan availability, the federal poverty level, and the percentage of income that a subsidy-eligible person has to pay for the benchmark plan.

Rules also evolve over time. Examples are changes to subsidy eligibility for immigrants starting in 2026 and 2027, the expiration of federal subsidy enhancements at the end of 2025, and the expansion of HSA-eligible plans to include all Bronze and Catastrophic Marketplace plans starting in 2026.

Example: When I asked Google, “Am I eligible for a health insurance subsidy?” its AI asked me to provide my household size and estimated household income, and my hypothetical response was a household of four with a $100,000 annual income.

The AI model told me that I qualify for a subsidy because a household of four is subsidy-eligible with an income up to $132,000. But that’s not the correct subsidy eligibility limit this year.

Subsidy eligibility extends to 400% of the federal poverty level (FPL) now that the “subsidy cliff” has returned, but it’s 400% of the prior year’s FPL, not the current year’s FPL.

So for 2026 coverage, subsidy eligibility in the continental U.S. ends at $128,600, which is 400% of the 2025 FPL. The AI model was using 400% of the 2026 FPL, which won’t be used to determine subsidy eligibility until the 2027 plan year.

Another example? When I prompted Google to calculate the actual subsidy amount, it replied, “Under standard ACA rules, households making between 300% and 400% of the FPL are expected to contribute up to 9.5% of their annual household income toward a benchmark health plan.”

What the AI model failed to understand is that while the expected contribution percentage started at 9.5% under the ACA in 2014, it is indexed annually by the IRS. In 2026, a household with income between 300% and 400% of the prior year’s FPL is expected to pay 9.96% of household income toward the benchmark plan (the second-lowest-cost Silver plan).

So when the AI model continued the calculation using 9.5% rather than 9.96%, it ended up understating how much the household would have to pay, and overstating how much the subsidy would be.

2. Understanding how different programs interact

Health coverage in the U.S. is made up of a patchwork of multiple types of coverage. Depending on a person’s circumstances, they might qualify for Marketplace subsidies (including state-funded subsidies in some states), full-price Marketplace coverage, Medicaid, a Basic Health Program, the Children’s Health Insurance Program (CHIP), Medicare, or employer-sponsored coverage.

So before we can determine whether a person is eligible for Marketplace subsidies, we have to first ensure that they aren’t eligible for any other coverage programs, such as Medicaid or an employer’s group plan. And an AI model won’t always get that correct.

For example, when I told Google’s AI that I’m a single Colorado resident earning $21,000, it concluded that I was “highly likely” to qualify for a subsidy, and that I would also qualify for Colorado’s state-funded subsidy of $80/month.

But neither of those is true. In Colorado (as is the case in DC and 39 other states), a person earning $21,000 this year is not eligible for subsidies, because they’re eligible for Medicaid instead. (Under the ACA, expanded Medicaid is available to adults with household income up to 138% of the current year’s FPL; in the continental U.S. in 2026, that’s $22,024 for a single person.)

3. Making assumptions based on conventional wisdom

Choosing health insurance isn’t simply about picking the plan with the lowest deductible or the richest benefits. Health insurance decisions often require comparing premiums, deductibles, out-of-pocket maximums, provider networks, prescription coverage, tax advantages such as HSAs, and expected utilization simultaneously. That’s a far more complex analysis than applying a general rule of thumb.

Example: In a conversation with ChatGPT, I said that I am 50 years old, live in Dallas, earn $80,000 per year, need double hip replacement surgery (each of which costs an average of about $39,000, meaning the maximum out-of-pocket limit will be reached on any ACA-compliant policy), and wanted help picking a Marketplace plan. I said that I hadn’t chosen a surgeon yet, so I was willing to consider any in-network providers for any of the available policies.

ChatGPT correctly noted that with an income of $80,000, I wouldn’t be eligible for Marketplace subsidies. But it also told me that “Bronze plans are usually a poor choice if you already know a major surgery is coming, because you’ll likely end up paying much of the deductible and cost-sharing anyway.” That’s in line with conventional wisdom, as people often believe that a plan with lower out-of-pocket costs is the better option if you know you’re going to need a lot of care. But you also have to add premiums into the equation.

I used HealthCare.gov’s plan comparison tool to get unsubsidized 2026 quotes for a 50-year-old in Dallas. Here are the total costs for a full year of premiums plus maximum out-of-pocket expenses for the lowest-premium Marketplace plan at each level:

  • Catastrophic: $17,501 ($6,901 in premiums plus $10,600 in out-of-pocket costs)
  • Bronze: $17,864 ($7,264 in premiums plus $10,600 in out-of-pocket costs)
  • Silver: $20,093 ($11,193 in premiums plus $8,900 in out-of-pocket costs)
  • Gold: $18,866 ($9,866 in premiums plus $9,000 in out-of-pocket costs)

(Note: The cost illustration includes premiums for the full year, assuming this person enrolled during the open enrollment period. If you sign up later in the year using a special enrollment period, your premiums would be prorated for the number of months you have coverage, but the out-of-pocket maximum would not change.)

In this case, if the person is happy with the in-network surgeons and facilities in the lowest-cost Catastrophic plan’s network, that plan will result in the lowest total costs. It has a maximum out-of-pocket limit of $10,600, which is higher than the out-of-pocket limits for the Silver and Gold plans. But the lower premiums more than offset the higher out-of-pocket costs.

It’s also important to note that all Catastrophic and Bronze Marketplace plans are now HSA-eligible. So if this person selects a Catastrophic or Bronze plan, they’ll be able to put up to $4,400 into a health savings account in 2026. That contribution will be pre-tax, and they’ll be able to withdraw it (still tax-free) to pay some of their out-of-pocket costs.

This example highlights why it’s not a great idea to make assumptions based on conventional wisdom when picking a health plan, which the AI model was doing.

4. Accounting for differences in state insurance programs

Some states have expanded Medicaid. Others have not. Some operate Basic Health Programs. Others offer state-funded subsidies or have unique enrollment rules.

So an answer about program eligibility that’s correct in Texas may be completely wrong in Colorado or Minnesota.

Example: I started by simply asking ChatGPT what Marketplace health policy I should choose. When it asked me where I live, how much I earn, and how much health care I think I might need, I told it that I live in Minnesota and earn $30,000. That would make me eligible for Minnesota’s Basic Health Program (BHP), MinnesotaCare. So the correct response would be to tell me that, and then provide guidance on choosing a managed care organization to provide my MinnesotaCare coverage.

But instead, ChatGPT incorrectly told me that I’d be eligible for premium subsidies and cost-sharing reductions via MNsure (the state-run Marketplace in Minnesota). To clarify, if a person is eligible for BHP coverage, they are not eligible for Marketplace subsidies.

5. Accounting for state-specific health insurance rules

Other examples of state-specific differences that could trip up AI?

  • Alaska and Hawaii have different FPLs than the other 48 contiguous states and D.C., so the income level that makes a person subsidy-eligible is different in those states.
  • Washington, D.C., Minnesota, New York, and Oregon have Basic Health Programs for people who earn too much for Medicaid but not more than 200% of FPL. So subsidy eligibility starts above 200% of FPL in those states.
  • Ten states provide state-funded subsidies to some Marketplace enrollees (including enrollees with income above 400% of FPL in New Jersey and New Mexico).
  • Carrier participation in the Marketplace varies considerably from one state to another, and sometimes changes from one year to the next (see details about carrier exits and entries for 2027).
  • Within a given state, Marketplace carriers often have different service areas. This is why accurate health insurance quotes always require a zip code.
  • American Indians and Alaska Natives get benefits and enrollment opportunities that aren’t available to other applicants.

Back up any AI research by checking reliable sources

An AI model may help you identify questions to ask and details that might apply to your specific circumstances. But keep in mind that AI answers can sound convincing, even when they’re incorrect.

Augment AI research, using official sources to verify the information you get from the AI tool. Seek out an agent in your area who can help you understand all the nuances and pick a plan.

A local broker or Navigator will provide you with zero-cost assistance. They’ll be familiar with all of the plans available in your area, and have a good understanding of each plan’s provider network. They’ll know about specific details like access to Medicaid or a BHP, how rates and plans are changing for the coming year, and whether there are any state-specific subsidies available. They’ll also be able to explain how subsidies get reconciled on your tax return.

Got questions? Healthinsurance.org has resources that can help:



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How Unaffordable is Health Care and What Can We Do About It?

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How Unaffordable is Health Care and What Can We Do About It?



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For decades, the cost of medical care, prescription drugs and health insurance has consistently risen faster than general inflation and wage growth, posing financial challenges for government, businesses and people. KFF polling has found that the cost of health care ranks as the top economic worry for adults and their families, and has implications for their financial security and access to care. Even people with insurance say they struggle to afford health care costs, and health care debt is a burden for a large share of Americans. Policymakers and experts across the ideological spectrum define affordability in different ways and have different policy solutions.

At 12:30 p.m. ET on Tuesday, July 21, three experts will join Health Wonk Shop series moderator Larry Levitt in an hour-long discussion of health care affordability. During the discussion, panelists will consider affordability from a variety of perspectives, including how to define affordability and the question of affordability for whom, how to measure it, and what can be done to address affordability and the underlying cost of health care.

Moderator

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Larry Levitt

Executive Vice President for Health Policy

Panelists

Sherry Glied

Professor of Public Service, New York University’s Robert F. Wagner Graduate School of Public Service

Benedic Ippolito

Senior Fellow in Economic Policy Studies, American Enterprise Institute

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Ashley Kirzinger

Director of Survey Methodology, Associate Director for Public Opinion and Survey Research



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In Preliminary Rate Filings, ACA Marketplace Insurers Largely Propose Double-Digit Premium Increase For 2027, Following a Steep Climb This Year 

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In Preliminary Rate Filings, ACA Marketplace Insurers Largely Propose Double-Digit Premium Increase For 2027, Following a Steep Climb This Year 



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ACA Marketplace insurers are proposing a median premium increase of 14% for 2027— indicating a likely second consecutive year of double-digit increases, according to a new analysis of preliminary rate filings in 16 states and DC. If these increases hold, typical premiums for insurers participating in the ACA Marketplaces would jump by more than one-third between 2025 and 2027.

Across the 77 ACA Marketplace insurers in the 16 states and DC that have submitted rate filings so far, most are requesting premium increases of between 10% and 20% for 2027, with 20 insurers requesting premium increases of more than 20%.  

July 15 is the deadline for health insurance companies to submit their proposed premiums for 2027 ACA Marketplace plans. These preliminary filings provide insight into the factors insurers expect to drive health costs for the coming year. Among the key drivers, insurers cite the rising cost of health services, the expiration of the enhanced premium tax credits, and some federal regulatory changes.

  • The rising cost of health services have been driven by the cost of hospitalizations, physician visits, and prescription drugs—including GLP-1s and other specialty medications. Relatedly, labor shortages and general economic inflation have driven up provider wages and costs, increasing the cost of health services as well. The underlying cost of medical care and prescription drugs has risen by 10% for 2027—greater than the 8% average growth seen over the last few years.
  • The ACA’s enhanced premium tax credits expired at the end of 2025—leading to a 58% average increase in out-of-pocket premiums in 2026 and deductibles of about $1,000 more per person. Most Marketplace enrollees are largely protected from the premium increases because they still qualify for ACA subsidies, though at a lower level. However, people with incomes at 400% or more of the federal poverty level ($62,600 for a single person in 2026) lost subsidies entirely when the enhanced credits expired and, therefore, face the full increase in premiums. This caused many healthier enrollees to leave the ACA Marketplaces in 2026, leaving behind a smaller number of enrollees who are somewhat sicker and more expensive to cover on average. Further market deterioration is expected heading into 2027. Insurers estimate that the sicker risk pool drove 2026 premiums up by roughly four percentage points and expect another four percentage point increase in 2027.
  • Federal regulatory changes, including the recent Notice of Benefit and Payment Parameters and the Marketplace Integrity and Affordability Rule, have also been cited as having an upward effect on premiums.  

The full analysis and other data on health costs are available on the Peterson-KFF Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.



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The Trump Administration Continues to Advance Incremental Site-Neutral Payment Reforms

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The Trump Administration Continues to Advance Incremental Site-Neutral Payment Reforms



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The Centers for Medicare & Medicaid Services (CMS) recently released the 2027 proposed rule for Medicare’s hospital outpatient prospective payment system (OPPS), including new site-neutral payment reforms for certain imaging services. Site-neutral payment reforms seek to align reimbursement for a given service across care settings, subject to safety and quality safeguards. To that end, the proposed rule includes a 60 percent reduction in reimbursement for imaging services (like X-rays and MRIs) without contrast when provided in off-campus hospital outpatient departments (HOPDs) beginning in 2027, a change intended to better align reimbursement with that of other settings. The reform would not apply to most rural hospitals (79%), as critical access hospitals are not reimbursed under the OPPS and the proposed change carves out rural sole community hospitals. The Administration’s proposed changes for certain imaging services would further advance site-neutral payment reform but, like prior changes, are modest relative to more expansive options raised by MedPAC and others.

The Administration’s Proposed Changes for Certain Imaging Services Would Further Advance Site-Neutral Reform but Are Modest Relative to More Expansive Options (Table)

The Congressional Budget Office (CBO) has projected that site-neutral reforms for imaging services in off-campus HOPDs would generate $7.6 billion in federal savings over ten years, while reforms for services commonly provided in physician offices for both on- and off-campus HOPDs would save $156.9 billion (see Figure 1) (this estimate predated recent drug administration reforms; CBO estimated that drug administration reforms would save $5.6 billion over ten years). The former is broader than CMS’s proposed change, as it also includes imaging services with contrast. The latter is similar in spirit to options raised by MedPAC and others, which in at least some cases would also apply to services commonly provided in ambulatory surgical centers. Another relatively expansive option would extend reforms broadly to services at all off-campus HOPDs (not shown). CMS estimates that proposed changes for imaging services without contrast would reduce net Medicare program spending by $7.2 billion over ten years and beneficiary cost sharing and premiums by a total of $4.9 billion over ten years.

CMS’s current proposal follows other incremental site-neutral payment reforms that Medicare has implemented over time. This includes site-neutral payment reforms introduced through legislation (for all services provided in relatively new off-campus HOPDs, beginning in 2017) and through rulemaking (for clinic visits in off-campus HOPDs, beginning in 2019, and for drug administration services, beginning in 2026). Given this history, it is likely that CMS will consider making additional site-neutral payment reforms through future rulemaking. For example, CMS signaled interest in the past in potentially applying reforms to on-campus clinic visits, an option MedPAC has also raised. It is not yet clear whether the hospital industry will, as it has done in the past, bring legal challenges to CMS’s efforts to introduce reforms through the rulemaking process.

Medicare site-neutral payment reforms to date have focused on off-campus HOPDs. Reforms would generate much larger savings if extended to on-campus HOPDs. For example, one study estimated that site-neutral payment reforms for all services at off-campus HOPDs would reduce federal spending by $28.3 billion over ten years (an estimate that predated CMS’s implementation of this policy for drug administration services), while reforms for services in on-campus HOPDs more commonly provided in physician offices or ambulatory surgical centers would save $119.3 billion over ten years.  

When exploring additional reforms, policymakers and regulators will likely weigh potential savings against the impact on hospital finances and access to care, among other considerations. While there has been bipartisan support for site-neutral reforms, it’s unclear how much momentum remains following the enactment of large reductions to federal health care spending as part of the 2025 budget reconciliation package, once known as the “One Big Beautiful Bill.” As a result of these changes, there may be greater interest in limiting or offsetting the impact of site-neutral payment reforms on certain providers, such as rural hospitals that are not already exempt or urban safety-net hospitals.



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