Trump’s Health Care Affordability Pitch Shifts Costs to Patients
Photograph Source: The White House – Public Domain
It’s no secret that the failure of Congressional Republicans to extend the enhanced premium subsidies for insurance purchased on the Affordable Care Act (ACA) exchanges led to dramatic increases in premium costs for individuals. Health care jumped to the top of the list of affordability concerns of American consumers, ahead of monthly utilities, food and groceries, housing, and gasoline.
The Trump administration’s proposed solution to the health care affordability crisis is to offer an expansion of catastrophic insurance plans on the ACA exchanges. Catastrophic plans are generally available today to consumers under the age of 30 and are meant for people who make little use of health care services. There are also hardship exemptions (like being homeless) that allow individuals to enroll in these plans. About 54,000 of the 24.3 million people (0.2 percent) that got their health insurance on an ACA exchange have a catastrophic plan in 2026.
The Centers for Medicare and Medicaid Services (CMS), led by Trump appointee Mehmet Oz, has proposed broadening hardship exemptions to make more people eligible for these catastrophic plans. People who can’t afford policies currently available on the ACA exchanges will be offered bad policies that cover almost nothing. These plans may carry lower premiums, but they come with eye-popping deductibles and out-of-pocket maximums in 2027: $15,600 for an individual and $27,600 for a family, compared with $10,600 for an individual and $21,200 for a family this year. That may discourage all but the healthiest individuals from choosing these plans. This has a profound effect on the system at large: Taking the healthiest people out of the general health insurance pool will leave it with a greater share of people who are likely to use health insurance, and may lead to higher premiums for everyone else.
CMS has proposed covering individuals with incomes below $15,960 or above $39,900. However, these plans wouldn’t start covering claims until the individual’s health care costs exceeded the plan’s deductible and out-of-pocket expenses. Insurance companies could offer these policies with a term as long as 10 years, unprecedented for health insurance policies. The legal authority for these changes is unclear. The 10 year terms violate the ACA’s limits on plan duration while changes to maximum out-of-pocket costs and eligibility also fail to comply with the ACA.
Clearly, the effect of the expanded availability of catastrophic insurance plans on the ACA exchanges will be a transfer of health care costs from insurance companies to patients.
Premium price hikes in 2026 led to health insurers jumping the gun and not waiting until next year to offer alternative plans to consumers. Happy to collect premiums from cash-strapped individuals for policies that do not obligate them to pay much for care, some insurance companies began marketing low premium, skinny plans outside the ACA exchanges. United Health Group and lesser known companies such as Medi-Share, CrowdHealth and Lending Tree advertised these plans on social media and radio, targeting young adults and others unable to afford plans offered on the exchanges.
The kicker is that high deductible catastrophic plans may not even save consumers money. Bronze plans have the lowest premiums and highest deductibles on the ACA exchanges. A comparison of Bronze and catastrophic plans in 2026 by KFF, a health policy research institute, raises questions about whether the catastrophic plans with their skimpy benefits are actually the cheapest option. The deductible in catastrophic plans today is $10,600 for individual policies. For the average Bronze plan today, the deductible is $7,476 for an individual. The average monthly premium for the lowest-cost catastrophic plan is $346 this year, compared with an average $369 for a person 27 years of age with an unsubsidized Bronze plan. Meanwhile, the Bronze plan comes with all the robust standard coverages required by the ACA for plans on the exchange.
The catastrophic plans are apparently the Trump administration’s solution to the unaffordability of health insurance. But the insurance plans will carry premiums that will still be unaffordable for those who can’t afford a much superior Bronze plan. Shockingly high deductibles and skinny benefits make it unlikely that consumers will find the new plans a bargain.
This first appeared on CEPR.
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