States Push Back on Proposed 2027 Marketplace Rule

Key Clinical Summary

• A coalition of 20 state attorneys general has formally urged the US Department of Health and Human Services (HHS) to withdraw or delay key provisions of the proposed 2027 Marketplace rule, citing concerns about coverage losses and implementation challenges.
• The rule would introduce sweeping changes to enrollment, eligibility, subsidies, and plan design across ACA Marketplaces.
• Federal officials and industry analysts frame the proposal as strengthening program integrity and flexibility, while states and policy experts warn it could reduce affordability and destabilize coverage.

Debate over the future of the ACA Marketplaces is intensifying following a new multistate comment letter urging federal officials to reconsider major elements of the proposed 2027 Notice of Benefit and Payment Parameters.

In a March 13 filing, attorneys general from 20 states raised concerns that the proposed rule could reduce enrollment, increase costs, and impose significant operational burdens on state-based Marketplaces.¹

The response marks one of the most coordinated state-level challenges to recent federal Marketplace policy—and highlights broader disagreements about how to balance program integrity, affordability, and access in the individual market.

What the Rule Would Do

The proposed rule introduces wide-ranging changes that would affect how individuals enroll in coverage, how plans are designed, and how subsidies are calculated.

1. Tighten Enrollment and Eligibility Requirements

A central component of the proposal is stricter verification of Marketplace eligibility.

Key provisions include the following:

• Expanded income verification requirements and additional documentation for applicants
• Shorter timelines to resolve eligibility issues
• Loss of premium tax credit (PTC) eligibility after 1 year of failure to reconcile tax filings
• Increased verification for special enrollment periods (SEPs)

Federal officials have framed these changes as necessary to address improper enrollments. However, states argue the policies could create barriers to coverage—particularly for lower-income individuals—and note that similar provisions have previously faced legal challenges.¹

External policy analysts similarly note that increased documentation requirements and verification processes could discourage enrollment, particularly among populations with variable income or limited administrative capacity.²

2. Reduce Subsidies and Increase Consumer Cost Exposure

The proposal would also adjust key affordability mechanisms within the ACA.

Changes would include the following:

• Modifying the premium adjustment percentage, which could increase out-of-pocket maximums and reduce subsidy levels
• Allowing less generous plan designs, particularly for silver-tier plans that determine subsidy amounts
• Eliminating policies that automatically move eligible enrollees into more comprehensive coverage
• Lowering of federal spending on subsidies while increasing net premiums and out-of-pocket costs for many consumers, according to policy analysts²

3. Expand Plan Flexibility, Including Catastrophic Coverage

The Centers for Medicare & Medicaid Services (CMS) is also proposing significant changes to plan design:

• Expanded eligibility for catastrophic plans
• Higher allowable out-of-pocket costs
• Introduction of multi-year plan options
• Potential inclusion of non-network plans in the Marketplace

Supporters argue these changes could expand consumer choice and lower premiums. State officials counter that higher cost-sharing and limited coverage could expose enrollees to greater financial risk and shift costs across the system.¹

Industry analysis suggests these provisions reflect a broader shift toward plan flexibility and market-driven affordability strategies in a post-subsidy environment.³

4. Shorten Enrollment Periods and Limit Access Pathways

The rule would standardize and shorten enrollment opportunities nationwide:

• Reducing the open enrollment period to November 1 to December 15
• Eliminating the low-income monthly special enrollment period
• Reinstating stricter documentation requirements for SEP eligibility

While CMS suggests these changes may reduce confusion and adverse selection, analysts note that shorter enrollment windows and reduced access pathways may disproportionately affect lower-income and younger enrollees.²

5. Revisit Benefit Standards and State Authority

Additional provisions would:

• Reverse recent changes to Essential Health Benefits (EHB) policy, potentially increasing state costs and administrative complexity
• Limit coverage of certain services within EHB
• Introduce new considerations for medical loss ratio (MLR) adjustments and plan certification standards

States argue these changes could create regulatory uncertainty and shift financial responsibility to state governments.¹

Why States Are Raising Concerns Now

The recent multistate letter emphasizes both policy and timing concerns.

State officials argue the following:

• The proposal could lead to significant coverage losses—potentially affecting up to 2 million individuals
• Implementation timelines are compressed, with major system and policy changes required before the 2027 plan year
• Some provisions rely on data that may not reflect recent policy changes affecting Marketplace enrollment and risk pools
• Key provisions should be withdrawn or delayed, particularly those that have previously been challenged in court or that impose substantial administrative burdens.¹

These concerns align with independent estimates that between 750 000 and 2 million individuals could lose coverage under the proposed changes.²

A Broader Policy Divide

The proposed rule reflects a broader shift in how policymakers approach the ACA Marketplace. From a federal and market standpoint, the proposal is positioned as:

• Strengthening program integrity and reducing improper enrollments
• Expanding flexibility for insurers to design plans
• Adapting to evolving market conditions following subsidy changes

Industry analysts describe the rule as part of a broader recalibration of Marketplace policy, with implications for plan offerings, competition, and risk dynamics.³

State and Consumer Perspective

State officials and policy experts highlight potential tradeoffs:

• Reduced affordability due to lower subsidies and higher cost sharing
• Increased administrative burden for state-based Marketplaces
• Risk of destabilizing the risk pool if healthier enrollees shift to lower-coverage plans
• Barriers to enrollment for vulnerable populations

These competing perspectives underscore ongoing tension between oversight, flexibility, and access within the ACA framework.

Implications for Managed Care

For payers, managed care organizations, and Marketplace stakeholders, the proposal introduces several near-term considerations:

• Operational readiness: Significant updates to eligibility systems, verification processes, and enrollment workflows
• Product strategy: New flexibility in plan design, particularly for catastrophic and non-network offerings
• Financial risk: Potential shifts in risk pool composition and subsidy levels
• Member impact: Changes in affordability and access that may affect enrollment and retention

The Bottom Line

The proposed 2027 Marketplace rule is entering a critical phase as state officials formally push back on its scope and timeline.
With federal regulators emphasizing program integrity and market flexibility—and states warning of coverage and affordability risks—the outcome of this rulemaking process could shape the next phase of ACA Marketplace policy.

Stakeholders should closely monitor how these competing priorities are resolved as the rule moves toward finalization.

References

1. Multistate Attorneys General. Comments on Proposed Rule: HHS Notice of Benefit and Payment Parameters for 2027. Published March 13, 2026. Accessed March 19, 2026. https://oag.ca.gov/system/files/attachments/press-docs/2026%200313%20States%20Comment%20Letter%20on%20HHS%20Payment%20Rule.pdf
2. Corlette S, Levitis J. Recent federal marketplace proposal imposes new requirements for states and consumers. Georgetown Center on Health Insurance Reforms and Urban Institute. Published March 10, 2025. Accessed March 19, 2026. https://shvs.org/recent-federal-marketplace-proposal-imposes-new-requirements-for-states-and-consumers/
3. 2027 NBPP Proposed Rule Signals Further Marketplace Changes.Health Management Associates. Published February 26, 2026. Accessed March 19, 2026. https://www.healthmanagement.com/blog/in-focus/2027-nbpp-proposed-rule-signals-further-marketplace-changes/