When a federal agency says it has a plan to lower health care costs, people want to believe it. The Centers for Medicare and Medicaid Services (CMS) recently proposed new regulations that it says will “lower health care costs, expand consumer choice, and protect taxpayers.”
But the proposal does not lower the price of hospital stays, doctor visits, or prescription drugs. Instead, it changes the rules for plans purchased through the Marketplace and shifts more financial risk onto patients. That is not the same thing as lowering costs.
Expanding Catastrophic Plans Means Expanding Financial Exposure
One of the most significant parts of the proposal would expand access to catastrophic health plans.
Catastrophic plans typically have lower monthly premiums. That may sound like savings. But according to KFF reporting and analysis, these plans often come with extremely high out-of-pocket maximums. The CMS proposal would allow these plans to have out-of-pocket maximums of up to $15,600 for individuals and $27,600 for families. Out-of-pocket maximums, also known as MOOPs, represent the most that those insured under the policy can be required to pay for covered services within a plan year. Add premium costs to that, and the total annual exposure for families could reach $30,000 or more before insurance pays in a meaningful way.
This means a person could pay lower monthly premiums all year but still face a bill of tens of thousands of dollars after a serious accident, surgery, or new diagnosis. For someone who breaks a bone, develops appendicitis, or is diagnosed with cancer, the “cheap” plan suddenly becomes very expensive.
The less expensive premiums of catastrophic plans do not lower the cost of health care, nor do they cover much (or any) more than preventive care and three primary care visits per year until the plan’s out-of-pocket maximum is met. They simply shift the costs from predictable monthly premiums to unpredictable out-of-pocket expenses.
Loosening ACA Standards Weakens Protections
Affordable Care Act standards were designed to improve the use of preventive care and ensure coverage for essential benefits, such as hospitalization, emergency services, and prescription medication. The ACA also sets limits on out-of-pocket expenses to prevent financial disaster.
The Commonwealth Fund warns that coverage that does not fully comply with ACA standards can exclude key services, impose higher cost-sharing, and decline to cover people with pre-existing conditions. Plans and programs that are not ACA-compliant can decide not to renew coverage for those who get sick. Plans that appear affordable at enrollment may not cover needed prescriptions, specialty care, or ongoing treatment for chronic conditions.
Catastrophic coverage is not comprehensive protection. It is incomplete coverage with significant gaps.
“More Choice” Can Mean More Complexity
CMS describes its 2026 proposal as expanding consumer choice. However, health insurance is already complex. Different deductibles, co-pays, coinsurance rates, formularies, and networks make plan comparisons difficult. Adding more plan variation increases the burden on individuals to predict their future health needs, which is hard no matter what, and makes unknowable decisions even more complicated, without demonstrating true value.
According to KFF, catastrophic plans often attract younger or healthier enrollees because of lower premiums. But when healthier individuals leave more comprehensive plans, it drives up the costs for those who remain. This means the expansion of certain “cheap” options does not just affect those who enroll in them; it affects everyone covered by that insurer, including those with regular Marketplace plans or employer-sponsored coverage.
Administrative Changes Could Increase Coverage Loss
The CMS proposal also includes stricter verification rules intended to reduce improper payments. Safeguarding public funds matters. But administrative barriers often have unintended consequences.
When enrollment systems become more cumbersome, eligible individuals can lose coverage due to paperwork delays or technical errors. Shortened enrollment windows provide fewer opportunities for people to sign up for coverage. Increasing barriers to enrollment increases the chance that people will fall through the cracks, thereby losing coverage and access to care.
Lower Premiums Are Not the Same as Lower Health Care Costs
If someone pays $200 less per month for a premium but faces a $12,000 deductible, the financial risk has not disappeared. It has simply shifted to the moment they need care.
There is a critical difference between lowering premiums and lowering overall health care spending for families. Lowering health care costs is an understandable goal. But health care services require funding. When savings come from restricting access to care, the impact will show up elsewhere – in delayed treatment, worsening health conditions, higher long-term expenses, and loss of life.
The CMS proposal does not regulate hospital pricing. It does not cap prescription drug costs. It does not reduce what providers charge. It simply alters the amount insurers pay versus the amount patients pay.
That shift may reduce federal spending in some areas, but it does not decrease the cost of care. In fact, the proposed changes are estimated to cause two million people to lose Marketplace coverage in 2027, while costing the government $1.34 billion annually in administrative expenses.
The Real Test of Health Care Coverage
Health care coverage is supposed to provide protection when something goes wrong and to provide peace of mind when health is good.
If new regulations make it easier to sell plans with weaker benefits, higher deductibles and out-of-pocket costs, and more administrative hurdles, then the promise of “lower costs” needs careful examination.
Lower premiums can look like relief. But if the trade-off is fewer or no benefits when people need care the most, the savings are a mirage.
The question is not whether the proposal creates more choice. It does. The real question is whether those options leave individuals and families better off.
Based on the details outlined by independent, nonpartisan experts at KFF, the Commonwealth Fund, and Health Affairs, the likely effect is more bureaucratic hassles and less coverage instead.
And for patients, that difference is everything.
CMS is accepting public comments through March 13th. Click here if you would like to submit your comments or concerns.
To review the proposed rule fact sheet, click here.