HMA Weekly Roundup

Wakely White Paper Projects Major ACA Marketplace Disruption Under House Reconciliation Bill

This week, our In Focus section features a new white paper from Wakely Consulting Group, an HMA Company. The paper, “Future of the Individual Market: Impact of the House Reconciliation Bill and Other Changes on the ACA Individual Market”, examines the total impact of the expiration of enhanced premium tax credits (ePTCs) and the House reconciliation bill on the Affordable Care Act (ACA)-compliant individual market.

The report was released June 23, 2025, amid active congressional debate over the future of ACA Marketplace policy and reflects policies under consideration as of June 18, 2025, prior to the Centers for Medicare & Medicaid Services (CMS) issuing a related final rule.

Experts from Wakely, Health Management Associates (HMA), and Leavitt Partners—also an HMA Company—will host an in-depth discussion on the future of the individual market and the impacts of potential congressional and regulatory changes to the ACA.

The remainder of this article discusses key findings from the analysis and insights to prepare for the changes that will reshape the individual market landscape.

Federal Policy Developments

On May 22, 2025, the US House of Representatives passed a budget reconciliation bill, H.R. 1—the “One Big Beautiful Bill Act”—that would make several changes to the individual market. The bill would codify several provisions from CMS’  proposed Marketplace Program Integrity and Affordability rule, some of which were later revised or made temporary in the final rule that CMS issued June 20, 2025. The Wakely analysis examines the House-passed bill and the end of ePTC.

Important developments have occurred since, including:

• On June 16, 2025, the Senate Finance Committee released initial budget reconciliation legislative text, which omitted language from CMS’s Program Integrity and Affordability proposed rule.
• On June 20, 2025, CMS finalized its Program Integrity and Affordability rule, with important revisions from the proposed version, such as making certain provisions temporary. In so doing, CMS has left room for Congress to determine whether to make them permanent through the reconciliation process, signaling a coordinated policy direction.

Report Findings

Wakely experts evaluated the cumulative effects of H.R. 1 and the sunset of ePTCs using data from State-Based Marketplaces (SBMs); ePTCs apply to roughly half of the SBM population. The authors modeled steady-state impacts as if all changes were to take effect in 2026. Their findings included:

• The combination of the bill’s provisions and the scheduled expiration of ePTCs could reduce enrollment in the individual market by 47−57 percent, or between 11.2 and 13.6 million enrollees.
• Non-Medicaid expansion states would experience the steepest enrollment losses, with reductions ranging from 53 percent to 64 percent. These changes would likely result in a sicker, more expensive risk pool, further destabilizing the market.
• The combined effects could increase average premiums by 7−11.5 percent because of market attrition and residual risk pool morbidity increases, not accounting for incremental claims cost trend implications. The impact on premiums, however, will vary greatly by state and by issuer.
• R. 1 alone could reduce enrollment by 22−27 percent, or 5.2 million to 6.4 million enrollees.

What to Watch

While CMS’s final rule will shape near-term operations, the House bill signals a broader federal policy direction. If enacted, it would institutionalize these changes and add new constraints on eligibility and subsidies, reshaping the ACA Marketplace landscape for years to come.

Senate leaders are negotiating their version of the reconciliation package, and the path to final legislation remains uncertain. Key questions include whether the Senate will retain the House’s Marketplace provisions, how it will address the expiration of ePTCs, and whether any compromise will emerge before the end of the year. The outcome will have significant implications for coverage, affordability, and state-level implementation. Stakeholders should monitor whether the Senate adopts similar Marketplace provisions, modifies them, or omits them entirely—each path carrying distinct implications for coverage and affordability.

Regardless of the legislative outcome, the alignment between CMS’s final rule and the House bill underscores a clear federal policy trajectory pointed toward tighter eligibility oversight, reduced subsidies, and a smaller individual market. These shifts will have ripple effects on local and regional markets, influencing plan benefit design, pricing strategies, and consumer outreach.

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Wakely and HMA experts—including actuaries, policy analysts, and former state and federal officials—are closely tracking these developments. Stakeholders should plan for this evolving landscape to require changes, ranging from benefit design and pricing to regulatory compliance and consumer engagement.

Regardless of the final legislative outcome, the alignment between CMS’s rule and the House bill signals a likely federal trajectory—one that will shape local and regional markets.

Experts from Wakely, HMA, and Leavitt Partners, on July 10, 2025, will host an in-depth discussion of the findings from the paper and the future of the individual market. Register here for The Future of the ACA Individual Market: Policy Shifts and the House Reconciliation Bill.

HMAIS Report Examines Medicaid Financial Accountability Policies and Emerging Strategies

This week, Health Management Associates Information Services (HMAIS) released a new report that provides a detailed, state-by-state analysis of how Medicaid managed care programs are implementing and enforcing medical loss ratio (MLR) requirements. The comprehensive report, Medicaid Financial Accountability and Risk Sharing Arrangement Report, looks at 43 states and the District of Columbia, drawing from the most recent publicly available rate certifications and model contracts.

The report—available exclusively to HMAIS subscribers— supports policy analysts, actuaries, and other interested Medicaid stakeholders with comparative analysis and identification of emerging trends, outliers, and best practices in managed care oversight.

Key Highlights in the 2025 Report

The HMAIS team examined rate certifications and model contracts, primarily covering rate periods ending in or extending through 2025. The report also reflects recent federal policy changes, including the Centers for Medicare & Medicaid Services (CMS) 2024 final rule requiring the inclusion of state-directed payments in MLR calculations—an update that is already influencing how states structure their payment, reporting, and oversight processes.

Each state profile outlines key elements of the following:

• MLR thresholds and remittance obligations
• Risk corridors and reinsurance strategies
• Other risk mitigation strategies, including high-cost drug pools and retroactive eligibility adjustments

Key findings include:

• Standardization is at 85 percent: Most states with risk-based programs (22) enforce the federal minimum MLR of 85 percent.
• Stricter Thresholds: 11 states have adopted thresholds above 85 percent, with some reaching as high as 91.3 percent (Mississippi).
• Most states require managed care organizations to remit funds if they fall below the MLR threshold. Enforcement varies, however, with strict enforcement in states like Georgia, Indiana, and Iowa, which require 100 percent of the shortfall to be returned, and more flexible policies in other states.
• The analysis finds states are modifying certain traditional policies and tools to strengthen financial accountability mechanisms and evolve policies to address the changing federal policy landscape. For example, in lieu of remittances, Oregon and Tennessee allow plans to reinvest funds in the community.

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As states continue to refine their approaches to financial accountability and program integrity and design innovative approaches to address enrollee healthcare needs, the HMAIS report offers a timely and actionable reference point.

This report is just one component of the broader HMAIS subscription platform, which offers exclusive access to:

• Searchable files that enable comparative analysis of key state program information and data
• Timely updates on Medicaid policy developments
• Downloadable state-by-state and industry files

For health plans, state agencies, provider organizations, partners, and advocacy groups, subscribing to HMAIS means staying ahead of regulatory changes, identifying emerging trends, and making informed decisions about strategy, compliance, and program design. For more information about the new report, contact featured HMAIS team member Gabby Palmieri.