Health insurers encounter new wrinkle in exchange pricing

Modern Healthcare – Thursday, September 4, 2025
By Nona Tepper

A federal court ruling could drive many exchange insurers to scrap their plans for 2026 — again.

Perhaps ironically, the latest complication facing health insurance exchange carriers is connected to a legal victory against a Centers for Medicare and Medicaid Services regulation that likely would suppress exchange membership.

Last month, the U.S. District Court for the District of Maryland granted a preliminary injunction suspending parts of the rule. CMS appealed the order last Friday and asked the U.S. Court of Appeals for the 4th Circuit to lift the injunction by this Friday.

The open enrollment period is just around the corner and runs Nov. 1-Dec. 31 in most states.

Yet health insurance companies have faced layers of uncertainty about how to price their products amid rising costs, the looming expiration of enhanced subsidies at the end of 2025 and the rollout of $1.1 trillion in cuts to federal health programs from President Donald Trump’s tax law.

The Democratic mayors of Baltimore, Chicago and Columbus, Ohio, and the left-leaning advocacy groups Doctors for America and the Main Street Alliance initiated the lawsuit in July. Twenty Democratic state attorneys general and Pennsylvania Gov. Josh Shapiro (D) brought a similar case before the U.S. District Court for the District of Massachusetts later that month.

The ruling and appeal create another challenge to rate-setting, and insurers are eagerly watching, said Michael Bagel, vice president of policy at the Alliance of Community Health Plans, a trade group for nonprofit insurers. The outcome will determine how insurers reprice their policies for next year.

“It would be a big deal, it would reopen the opportunity to refile bids in a very, very compressed time frame,” Bagel said. “That would be difficult in normal circumstances. But with everything else going on, that’d be even more difficult.”

The legal case touches on significant issues, such as whether CMS can change the threshold for how much insurers must spend on average enrollee costs at each metal level, or what’s known as the de minimis ranges for the actuarial value calculations that define Bronze, Silver, Gold and Platinum plans.

In June, CMS finalized a rule expanding the amount that insurers can require enrollees to pay out-of-pocket and reducing the generosity of coverage offered at each metal level. If the court rules the agency lacks that authority to make those changes, CMS said it would provide guidance about how to refile plans on the federal exchanges.

State-based marketplaces would need to do likewise and to rejigger their own open enrollment plans. “It crunches our timeline,” Hilary Schneider, director of the Maine Office of the Health Insurance Marketplace, said during a National Academy for State Health Policy news conference Wednesday.

Insurers have already retooled their plans several times for 2026. Many resubmitted bids to state regulators after CMS issued the exchanges rule and Trump enacted the “One Big Beautiful Bill.” A surprise jump in utilization then drove many to go back to their drawing boards in July.

“Health plans and exchanges need clarity on actuarial value requirements to assure the stability of benefits and rates for consumers,” the Blue Cross Blue Shield Association said in a statement Wednesday. ”We urge quick resolution of this issue in a manner that doesn’t require health plans to refile benefits and rates for 2026.”

Reverting to the previous actuarial value ranges would lead to higher medical spending and premiums, said Wesley Sanders, founder and principal consultant at the health insurance consulting firm Evensun Health.

If carriers make fundamental changes to their plan designs, such as altering their cost-sharing requirements, they would have to rerun actuarial analyses to ensure they are in compliance with network adequacy standards, Sanders said.

“That is a big operational nightmare. We’ve got a very short window between now and open enrollment,” Sanders said.

Eighty percent of carriers that use the federal enrollment platform would have to revise their plans, Jeffrey Wu, deputy director for policy at the CMS Center for Consumer Information and Insurance Oversight, wrote in a brief to the 4th Circuit on Friday. The short timeline for revision could lead more carriers to exit the marketplaces amid a ”higher than typical number of issuer withdrawals and contractions from the marketplace,” he wrote.

But CMS set the stage for this moment by redoing the exchanges rule after the new administration took office, said Sabrina Corlette, co-director of the Georgetown University Center on Health Insurance Reforms. CMS dictated actuarial value standards for 2026 in January, when President Joe Biden was still in office, then redid the regulation in June under Trump.

“If you want to talk about disruption, that was the source of the disruption,” Corlette said.

At a time where insurers are asking for the largest premium increases since the first Trump administration, consumers could win if the plaintiffs do, said David Anderson, a professor at the University of South Carolina Arnold School of Public Health.

For example, CMS imposed a minimum $5 monthly premium on people who are automatically renewed into fully subsidized plans and created tougher income verification requirements for tax credit applicants. Those provisions of the regulation are subject to the injunction.

Invalidating those policies would encourage enrollment, especially among healthier people who cost less to cover, which would help stabilize risk pools and could bring down premiums, particularly in competitive markets, Anderson said.

If insurers hike rates to make up for higher actuarial value standards, premium tax credits would rise to compensate and protect subsidized enrollees from the consequences, Corlette said.

Insurers, regulators and health systems are also holding out hope that Congress will at least partially extend the enhanced subsidies during a legislative push this month to prevent a government shutdown when fiscal 2025 ends Sept. 30.

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