Newsletter

WHY THE WORST MAY BE YET TO COME FOR THE INSURANCE EXCHANGES

The following article was written by Noah Tong for the February 23 issue of Modern Healthcare.

A large share of health insurance exchange customers confronting higher costs switched to lower-tier plans or went without coverage this year. (Adobe Stock/Modern Healthcare compilation)

Early indications suggest this is going to be a volatile year for the health insurance exchanges.

State-based marketplaces and insurers such as Centene, Elevance Health and UnitedHealth Group are reporting declining enrollments since the close of the recent sign-up campaign, and they expect the numbers to keep coming down as consumers contend with high premiums and smaller federal subsidies.

Although preliminary federal data show only a minor drop in exchange plan selections from last year’s record high, insurance company disclosures and figures from state exchanges indicate that the final tally — which likely won’t be available for months — will be substantially lower.

Virginia’s Insurance Marketplace, for example, has seen more than 35,000 cancellations since the end of its sign-up period on January 30. Last year, there were only 8,000 cancellations over the same time-period, according to the exchange. Open enrollment ended January 15 in most states.

Consumers confronted premium increases as high as 90%, said Kevin Patchett, director of the Virginia Health Benefit Exchange. “For a lot of people, that’s just not sustainable,” he said.

Health insurers in Kentucky canceled coverage for more than 9,500 people who signed up during open enrollment but didn’t pay premiums. That’s 46% higher than a year before despite an 8.5% drop in plan selections, according to a spokesperson for the Kentucky Cabinet for Health and Family Services, which operates the Kynect exchange.

Data from state authorities tell a consistent story of reduced enrollment and a high rate of cancellations, although the effects were mitigated in states such as Massachusetts and New Mexico that took action to support consumers who lost enhanced federal subsidies.

“We were always aware that the cost increases that were going to befall people as a result of federal policy changes would mean some people would immediately try to pull themselves out of coverage,” said Audrey Gasteier, executive director of the Massachusetts Health Connector. “Other people would try to hang on but ultimately couldn’t afford it and would therefore be terminated.”

The number of terminations for nonpayment doubled on the Massachusetts Health Connector, said Executive Director Audrey Gasteier. A similar trend has emerged for New York State of Health exchange enrollment, a Department of Health spokesperson said.

Most states and publicly traded insurers foresee further membership losses. The Washington Health Benefit Exchange expects a 10% contraction on Washington Healthplanfinder throughout the year.

Market leader Centene expects more than one-third of its exchange policyholders will drop coverage by the end of the first quarter. Cigna, Elevance Health, Molina Healthcare and UnitedHealth Group subsidiary UnitedHealthcare anticipate collectively losing approximately 3.4 million exchange members by the end of 2026 despite selling more policies this year, executives said when announcing fourth-quarter earnings in recent weeks.

State policies made a difference. Ten states including New Mexico, Connecticut and California offered some form of financial assistance to exchange customers to offset the less generous federal support, according to the health policy research organization Kaiser Family Foundation (KFF). These programs are temporary, however, and may not be renewed.

Reports from state exchanges offer more detail. New Mexico fully replaced the lost federal subsidies, contributing to a 17.8% membership spike on the BeWell exchange by the end of open enrollment. Plan selections increased 4% on Connecticut’s Access Health CT, and the 2.6% decline on the Covered California exchange was lower than the national average.

President Donald Trump’s tax law, stricter enrollment requirements and sweeping new CMS rules will continue to drive down exchange membership, said Katie Keith, director of the Georgetown University Center for Health Policy and the Law.

“All of this is going to get exacerbated over time between the coverage losses and enrollment barriers that are going to be created,” Keith said.

DIRECT PRIMARY CARE: A GROWING, PATIENT‑CENTERED ALTERNATIVE 

Direct Primary Care (DPC) continues to gain momentum as more Americans look for predictable, relationship‑driven healthcare without the bureaucracy of insurance billing. Instead of paying copays and navigating complex networks, patients pay a simple monthly membership fee directly to their doctor. The result is longer visits, easier access, transparent pricing, and a dramatically improved patient‑physician relationship.

Why DPC Is Expanding



The appeal is straightforward:

• No insurance middlemen
• Longer, unrushed appointments
• Direct communication with your doctor
• Near‑wholesale pricing on labs and medications
• Predictable monthly costs

This model has resonated with families, small businesses, and individuals frustrated with traditional insurance‑based primary care.

How Many DPC Practices Exist Today?

The number of DPC practices has grown rapidly. According to the DPC Frontier Mapper, there are 2,922 direct primary care practices across all 50 states and Washington, DC.

Other analyses show similar growth trends, with earlier counts noting more than 2,000 practices nationwide and roughly 250,000 patients benefiting from the model.

This expansion reflects a strong shift toward simpler, more transparent primary care.

How to Find a Direct Primary Care Doctor

Readers can easily locate a DPC practice using the DPC Frontier Mapper, the most comprehensive and continuously updated directory of DPC clinics nationwide. It allows users to search by ZIP code, city, or state and view details about each practice.

Find a DPC doctor here:

https://mapper.dpcfrontier.com

CMS PROPOSED CHANGES TO ACA EXCHANGE PLANS FOR 2027

The Centers for Medicare and Medicaid Services (CMS) proposed several changes to Affordable Care Act exchange plans for 2027 on February 9 that could affect what people pay and which plans are available. Comments on the draft rule are due March 11.

Key Coverage Changes

CMS would let insurers drop or change standardized plans that now set uniform cost‑sharing at Gold, Silver, and Bronze levels. It would also allow some non‑network plans to qualify for the exchanges if they can show an adequate provider network. Catastrophic plans could be offered for durations from under one year up to 10 years (plans are presently offered only for one year durations), and CMS is asking whether similar flexibility should apply to other metal levels. CMS would also expand hardship exemptions for some people aged 30 and older.

Marketing And Enrollment Rules

The proposal bans brokers and marketers from offering cash incentives or implying people will get zero‑dollar premiums, and it also proposes to introduce a standardized form for agents to use to verify eligibility. CMS would also require stronger pre‑enrollment checks for many special enrollment period applicants and continue restrictions removing the ability for people earning under 150% of the federal poverty level to enroll outside of the open enrollment period (which will run from November 1 through December 15 for a January 1, 2027 enrollment on healthcare.gov).

Financial Oversight And Audits

User fees would stay at 2.5% of premiums on federal exchanges and 2% on state exchanges using the federal platform. (User fees are charges imposed on insurance companies that sell plans on HealthCare.gov or on state exchanges that use the federal platform. These fees are built into the ACA’s financing structure and help pay for the operation of the exchanges.)

CMS would expand audit powers over advance premium tax credits, apply routine audits, and align fines with tax identifiers [this means CMS wants to make sure that any penalties it issues are tied to the correct legal entity based on that entity’s official tax ID (TIN)—not just the marketing name, DBA, or corporate family name an organization uses].

CMS also plans to update risk‑adjustment audit methods and use 2021–2023 data to better detect errors. (Risk adjustment is the ACA’s mechanism for transferring funds from plans with healthier enrollees to plans with sicker enrollees. To make the model fair, CMS includes credits—adjustments that account for predictable differences in risk that aren’t fully captured by diagnoses alone. When CMS says it wants to “adjust risk adjustment credit methods,” it means it is proposing to change how these credits are calculated, awarded, or applied so that payments between insurers more accurately reflect true actuarial risk.)

State Flexibility And Other Changes

CMS would make it easier for states to move from federal to state‑based exchanges by removing the one‑year transition requirement for such states to continue to operate on healthcare.gov before becoming fully operational as a state exchange. CMS also wants to institute a program to monitor advance premium tax credits paid by state‑based exchanges.

Takeaway

If finalized, these changes aim to increase insurer flexibility and tighten oversight, but they could change plan choices, enrollment rules, and consumer protections on the ACA marketplaces.

About Paul Cholak

Paul has over forty years of benefits experience and has been Director of Employee Benefits for large companies, as well as a benefits consultant with major consulting firms. He understands the health and life insurance needs of individuals and families of all ages. He also has considerable experience in selling health and life insurance to employer groups.

He guides you through the steps of getting health and/or life insurance and is available to help you both BEFORE and AFTER you've made your purchase decision.