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| Project 2025ifying the ACA |
On February 10, KFF (f.k.a. the Kaiser Family Foundation) hosted a webinar on the fate of the ACA under Republican rule (read the transcript). Moderated by Larry Levitt, who oversees all research at KFF — probably the chief nongovernmental source of data on U.S. healthcare coverage and usage — the discussion featured Cynthia Cox, director of KFF’s ACA-related research; Sarah Lueck, VP for Health Policy at the Center on Budget and Policy Priorities; and Brian Blase, president of the Paragon Institute, a conservative think tank, and former special assistant to Trump at the White House’s National Economic Counsel.
Blase is noteworthy as an inveterate enemy of the ACA marketplace, ACA Medicaid expansion, and really Medicaid generally, which he would shrink radically, as Republicans in Congress are now proposing. His Paragon Institute has put out position papers recommending that the enhanced premium subsidies enacted in 2021 in the American Rescue Plan Act (ARPA), which are funded only through 2025, not be extended, and that the federal funding mechanism for the ACA Medicaid expansion — a 90% federal match rate (or FMAP) — be phased out over ten years, along with further cutting the FMAP for “wealthy” states. The 90% FMAP phase-out appears to be envisioned in the Republican House budget resolution released this week.
Blase provides an ideological basis for Republicans to refuse to extend the ARPA subsidies — and in so doing, wields a political cudgel against Republican reps who would prefer not to uninsure tens of thousands of their constituents by letting the enhanced subsidies expire. So what he says is worth listening to for its likely practical effect.
Blase’s case against extending the ARPA subsidy increases is based mainly on allegations of pervasive fraud in ACA applications. These allegations, as Cox and Lueck acknowledged, have a basis in truth, as agent-induced fraud increased rapidly in 2023 and 2024. But as Lueck suggested, Blase exaggerates the extent of fraud and would needlessly disenroll millions to combat it. I responded to his arguments in detail in this post and added a TLDR in this one, pasted as a noted below.
What stood out to me in the roundtable was Blase’s concessions to those aiming to salvage as much of the marketplace status quo as possible under Trump. Those concessions reflect Trump’s grudging intimations in the campaign that he was not looking to repeal the ACA, which in public perception means the ACA marketplace — though Republicans are apparently aiming again to defund the ACA Medicaid expansion, which was always the submerged core issue. (Larry Levitt kept this discussion away from Medicaid.)
Here were the noteworthy concessions, if that is the right word:
No abolition: While Blase wants to stand up an ACA-noncompliant market as the Trump administration did in 2018 — that is, a market of medically underwritten plans not required to cover Essential Health Benefits or provide an out-of-pocket limit — he acknowledges that eradicating the ACA marketplace is not on the table. Below, he complains about the year-round enrollment for people with income below 150% FPL implemented by the Biden administration in early 2022. In that context, he concedes (my emphasis):
If you're going to have guaranteed issue and community rating... And I think we have decided that there's a political consensus to have a market that has guaranteed issue and community rating... You need to have an open enrollment period, otherwise you're going to have severe adverse selection forces that come in and disrupt that market.
The counterargument here is that year-round enrollment is appropriate at low incomes, where people’s situations change frequently and awareness about available programs is low. Medicaid enrollment is year-round, and the income bracket in which year-round enrollment is currently available in the marketplace is capped at a level — 150% FPL — only slightly above the ACA’s Medicaid eligibility level, 138% FPL (inoperative in nonexpansion states, where most marketplace enrollment below 150% FPL occurs). Moreover, year-round enrollment at 100-150% FPL has probably had an effect opposite to adverse selection, in that much of it is driven by year-round agent/broker marketing (some of it fraudulent), which is finding people who otherwise would not have enrolled and giving them something for free with relatively little friction.
But I digress. The point worth noting here is the alleged political consensus to more or less leave the ACA marketplace standing as it was pre-ARPA — albeit probably adulterated and confused by a more robust ACA-noncompliant parallel market than the one Trump 1.0 managed to stand up.
Preserving part of ARPA: Blase voices the conservative chestnut that people who get zero-premium health coverage (e.g., 79 million Americans on Medicaid?) don’t value it. (Lueck countered by citing positive feedback from low-income enrollees, and Cox alluded to usage data showing that they are getting needed care.) Blase regards the ARPA subsidy boosts at the low end of the income spectrum as wasteful — notwithstanding (or because) the ARPA subsidy boosts drove enrollment at the 100-150% FPL income level from 3.9 million in 2021 to 9.4 million in 2024,* with most of those gains coming in states that have refused to expand Medicaid. He alleges widespread fraud in the income estimates of people whose applications put them in this income bracket, untroubled by the fact that the 6-odd million enrollees who claim income in the 100-138% FPL range in the ten states that have not expanded Medicaid would be in Medicaid if their states accepted the expansion (which he also regards as wasteful spending).
On the other hand, the smaller contingent of those who gained coverage because ARPA removed the income cap on subsidy eligibility — about 1.5 million** — do gain his sympathy and willingness to help.
Cynthia Cox recounted that the pre-ARPA subsidy cliff did hurt a significant number of modestly affluent people, and that their predicament was a political cudgel against the law (as well as a genuine failure to live up to its promise of affordable coverage for all):
So this was a really vocal group. It's a relatively small number of people, but it was a group that was arguably harmed by the Affordable Care Act. Especially if they were relatively healthy before, they might've gotten a lower premium. And then with the protections that were put in place with the ACA that required that people with pre-existing conditions be able to get coverage, premium increases were probably fairly common for this group, and they didn't get a subsidy to offset it. So this was a really sympathetic group, especially in 2016 [sic] when we were talking about repealing and replacing the Affordable Care Act. It was often that news coverage would focus in on a really sympathetic group like a family, maybe a small business owner or a farmer or an entrepreneur who didn't get coverage through their job but did have a fairly good income, but it just wasn't enough to afford full-price insurance.
Blase agrees that something should be done about the pre-ARPA subsidy cliff (my emphasis):
We should have unsubsidized options for upper/middle income people to choose. I do think if I was going to keep any portion of the enhanced subsidies, I would look at the area just above 400% of the poverty line, at least until there's some broader ACA reforms. Because in some parts of the country, premiums are really expensive and I think there would be an abrupt cut at 400% of the poverty line, and you could think about keeping a portion of those subsidies. That's not my preferred policy. My preferred policy is to eliminate the enhanced subsidies entirely and pursue regulatory changes to the ACA. But if Congress was looking to keep a portion of them, I think that is where they should focus.
So there you have it. Whether the Republican-controlled Congress does anything to improve the marketplace’s pre-ACA subsidy schedule depends on whether Republicans can pass any budget legislation without Democratic votes — and if not, how much leverage Democrats can muster and to what extent they’ll concentrate it on healthcare generally or the marketplace in particular. The other wildcard, as with anything related to the federal government now, is Musk, DOGE, Russell Vought, as the possibility of unconstitutional executive branch meddling with financing and programs currently in place or altered by the current Congress.
Revolutionary fascist interference of the DOGE variety aside, Blase, whose work is cited twice in the Project 2025 blueprint (and who appeared in this webinar sporting a 2025 sweatshirt or sweater), is a major ideological influence on Republican healthcare policy. His own blueprint for health coverage policy — leave the pre-ARPA ACA marketplace more or less in place, possibly provide some relief for some prospective enrollees with income above 400% FPL, stand up a medically-underwritten, lightly regulated parallel market, and defund the Medicaid expansion — probably represents mainstream Republican policy. It remains possible that Democrats will be able to salvage some or even all of the ARPA subsidy schedule, perhaps with a short-term extension, and — more importantly — fend off major Medicaid cuts. It’s also possible that DOGE will slash and burn the programs as established by law, or that the team assembled by RFK Jr. will catastrophically mismanage all programs. But the policy course outlined here is worth noting.
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Here is my TLDR re Blase’s attack on the post-ARPA marketplace (again, from this post on Vance’s October remarks about Trump’s ACA plans :
Republican opponents of ARPA subsidy expansion are leaning heavily on a paper by Brian Blase, formerly a special assistant to Trump’s National Economic Counsel, alleging rampant overpayment of subsidies in the ACA marketplace. Blase does have a legitimate complaint in the recent explosion of unauthorized enrollment and plan-switching by unscrupulous ACA brokers. That fraud was stimulated in part by ARPA’s zeroing out of premiums for benchmark coverage for enrollees with income under 150% FPL (currently $21,870 for an individual), in combination with an administrative rule enacted in early 2022 that allows not only year-round enrollment to people below that threshold, but also a monthly Special Enrollment Period (SEP), enabling endless plan-switching. While I agree with Blase that that monthly SEP should be eliminated, and that CMS needs to act aggressively to quell broker fraud (as it appears to be doing), Blase attacks the subsidy enhancements with more dubious claims fraud in ACA enrollees’ income estimates — that is, raising or lowering income estimates to maximize subsidies (or access them at all). To those claims, I responded in detail here. The TLDR:
1) Most of the Post-ARPA enrollment increase in the ACA marketplace, as well as most of the increase at incomes where Blase alleges fraud is concentrated, is in states that have refused to enact the ACA Medicaid expansion, where most adults who estimate their incomes below 100% FPL get no government help at all. If substantial numbers of enrollees do in fact have incomes below 100% FPL, the solution is to…enact the ACA Medicaid expansion. People with income below 100% FPL should not be left with no access to affordable coverage.
2) ACA subsidies are based on an estimate of future income, which is inherently uncertain, especially for people at low incomes, who often work uncertain hours, change jobs, are self-employed, or depend on tips. Mismatches between income reported to the IRS and income projected in ACA applications probably have as much to do with inaccuracies in tax reporting as with inaccurate income projections in the ACA application. As for mismatches between income data based on ACA enrollment and data from the Census Bureau’s consumer surveys, those, like mismatches between IRS data and survey data, are perpetual.
3) Blase misreads CMS figures regarding former Medicaid enrollees, disenrolled in the post-pandemic “Medicaid unwinding,” who enrolled in the ACA marketplace in 2024. In HealthCare.gov states, according to CMS tracking, about a third of Medicaid disenrollees enrolled in the marketplace — not 70%, as Blase claims.
CMS needs to stop the broker fraud; should probably end the monthly SEP (though not year-round first-time enrollment for those with income under 150% FPL); and perhaps ramp up income checks on enrollees who may be underestimating their income (as opposed to overestimating it to get over the 100 % FPL threshold). Killing the ARPA subsidies to quell broker fraud would be throwing the baby out with the bathwater. But of course that baby — affordable insurance for those who lack access to affordable employer-sponsored health insurance — is a perpetual target for Republicans. And killing the ARPA subsidy boosts would further another core Republican goal — undermining the ACA’s protections for people with pre-existing conditions.
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* In 2024, 6.9 million marketplace enrollees reported income in the 100-138% FPL range. In the broader 100-150% FPL category, 9,407,463 enrolled in 2024. The 100-138% FPL bracket was not reported in 2021, the last pre-ARPA year. From 2021 to 2024, enrollment in the 100-150% FPL bracket increased from 3.8 million to 9.4 million. That’s an increase of 5.5 million, more than half of the total increase of 9.4 million from 2021 to 2024. See the Marketplace OEP Public Use Files. To compare all-state totals at 100-150% FPL for 2021 and 2024 I excluded Idaho, which did not provide income breakouts to CMS in 2021.
** In 2024, 1.5 million on-exchange enrollees nationwide reported income above 400% FPL, which would have rendered them ineligible for subsidies pre-ARPA. Another 856,000 did not report income at all, most of whom probably knew they were ineligible for subsidies even with the post-ARPA 8.5%-of-income cap on the premium for a benchmark silver plan.
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