The Republican majority in Congress aims to deliver the One Big Beautiful Bill Act (OBBBA) to President Trump’s desk that cuts taxes, spurs economic growth, and empowers American families with greater healthcare flexibility. However, specific provisions targeting the individual insurance marketplace risk introducing counterproductive regulatory burdens that could unintentionally undermine consumer choice, driving up costs and destabilizing a market that has recently made meaningful progress toward affordability and competition.
Although procedural maneuvers in the Senate resulting from the Byrd rule may block some of these provisions, policymakers should fundamentally rethink these measures--not just because they risk procedural defeat but because they contradict the pro-growth, pro-competition principles that should guide healthcare reforms.
Specifically, the House-passed OBBBA imposes several burdensome changes: it would eliminate automatic re-enrollment, reinstate direct federal payments for cost-sharing reductions--thus ending the “silver loading” strategy--and introduce new paperwork and payment requirements.
Equally concerning, the bill fails to renew the enhanced premium tax credits (PTCs) introduced in 2021, subsidies critical to maintaining affordability and consumer choice in the marketplace.
Our research demonstrates the unintended consequences of these changes. Removing the enhanced PTCs alone would increase premiums by an average of 75 percent for subsidized marketplace participants. Over 90 percent of enrollees receiving subsidies today in the insurance marketplace created by the Affordable Care Act would face higher costs, and approximately 1.6 million middle-income Americans would lose financial assistance entirely. According to the Congressional Budget Office, roughly 4.2 million Americans—disproportionately younger, healthier enrollees—would lose coverage, weakening the risk pool and fueling premium volatility.
In recent years, the individual marketplace has achieved record levels of insurer participation, driven by improved affordability and predictable enrollment processes. Disrupting this delicate balance with subsidy withdrawals and complex administrative hurdles risks market destabilization, insurer exits, and fewer affordable private coverage options.
These marketplace disruptions also threaten to widen the gap between employer-sponsored insurance and individual coverage, intensifying “job lock.” When affordable private insurance outside traditional employment weakens, Americans become less likely to pursue entrepreneurship or self-employment, thus diminishing overall economic dynamism.
Maintaining a robust individual market is important because it promotes transparency, consumer engagement, and competition among insurers, which holds down costs and improves healthcare quality. Unlike employer-sponsored insurance, which often hides the true cost of coverage behind generous but opaque subsidies, the individual market makes premiums and subsidies explicit, encouraging informed consumer decision-making.
And if members of Congress object that the Individual Marketplace subsidies are too big they should remember that by far the largest health insurance subsidy today, totaling roughly $316 billion annually, is in the hidden, uncapped tax exclusion benefiting employer-sponsored insurance. This exclusion disproportionately rewards higher-income households and distorts market incentives by encouraging excessively costly health plans. By contrast, targeted, means-tested subsidies in the individual market help mitigate these distortions, making the overall system more transparent and equitable.
We recognize the importance of reducing enrollment fraud and ensuring proper subsidy targeting, but our analysis suggests that introducing burdensome verification and payment requirements alongside subsidy rollbacks would drive between four to six million eligible Americans out of private marketplace coverage. The modest savings achieved from tighter controls would pale in comparison to the economic and social costs associated with higher uninsured rates or increased reliance on public programs such as Medicaid.
A subsidized individual marketplace provides a crucial solution to ensure near-universal insurance coverage within existing political exigencies. Congress should refine the OBBBA by preserving its current subsidies and limiting provisions that risk market stability, which would help support a robust healthcare system that would boost the economy and ultimately save taxpayer dollars.
