- New federal regulations aim to combat fraud and expand consumer choice in Affordable Care Act marketplaces.
- Proposed rules strengthen eligibility verification to prevent improper subsidy payments.
- Misleading marketing practices by insurance agents and brokers would be explicitly prohibited.
- The plan allows for more flexible, long-term catastrophic health insurance options.
- A House committee subpoenaed eight major insurers as part of a separate investigation into subsidy fraud.
In a significant move to reshape the health insurance landscape, federal regulators have proposed sweeping new rules designed to curb fraud within Affordable Care Act marketplaces while simultaneously expanding consumer options. The Centers for Medicare & Medicaid Services unveiled the proposed regulations on Feb. 9, aiming to lower costs, promote competition and strengthen program integrity. This administrative action coincides with a separate, aggressive congressional investigation, as House Republicans issued subpoenas to eight major insurance companies the following day, seeking documents related to alleged subsidy fraud. Together, these developments signal a renewed focus on the financial sustainability and operational integrity of the nation’s flagship health insurance exchanges.
Cracking down on fraud and misleading practices
The newly proposed regulations directly address long-standing criticisms of lax oversight within the ACA marketplaces. A central component mandates stronger eligibility and income verification for enrollees, a measure intended to correct a system that critics say allowed unscrupulous agents to enroll millions, sometimes without their knowledge, particularly in zero-premium plans. Data from the Paragon Health Institute think tank indicated that in 2024, 24 states had more enrollees in these $0 premium plans than they had residents who qualified for them, suggesting widespread improper enrollment.
The rule also seeks to clamp down on deceptive marketing by agents and brokers. It would explicitly prohibit practices such as offering cash or rebates to induce enrollment, falsely claiming customers qualify for no-cost plans, or misleading them about enrollment deadlines. These steps are designed to restore trust in the marketplace and ensure consumers make informed decisions based on accurate information.
The congressional subpoena push
Parallel to the regulatory push, the House Judiciary Committee escalated its own probe into ACA subsidy fraud. On Feb. 10, it subpoenaed eight major insurers—including Blue Shield of California, Centene, CVS Health and Kaiser Permanente—demanding documents related to enrollees who received subsidies but used no benefits, and details on payments to brokers. This investigation was prompted by a December 2025 Government Accountability Office audit that found the subsidy program “vulnerable to fraud,” with auditors successfully obtaining subsidized coverage for fictitious applicants.
The congressional letters also cited a federal judge’s August 2025 decision that blocked prior Trump administration rules aimed at tightening enrollment, a ruling the administration has appealed. Lawmakers are examining whether procedural reforms are needed to implement anti-fraud measures more swiftly.
Expanding consumer choice and plan flexibility
Beyond integrity measures, the CMS proposal seeks to fundamentally expand consumer options, a longtime goal of market-oriented reformers. A key change would allow insurers to offer catastrophic health plans with terms ranging from one to ten years, a significant departure from current rules that generally restrict these lower-premium, higher-deductible plans to people under 30 or those with hardship exemptions. The rule would also expand these hardship exemptions, making catastrophic coverage accessible to more people over 30.
Furthermore, the proposal would repeal standardized plan requirements, giving insurers greater flexibility to design plans with varying deductibles and cost-sharing structures. The goal is to foster innovation, increase competition and provide plans that are more closely tailored to diverse consumer needs and budgets.
Cost and integrity concerns
The focus on subsidy integrity and cost control is not new but has gained urgency. The ACA’s system of premium tax credits has always been a point of contention, with estimates of improper payments reaching billions annually. The enhanced subsidies expanded during the COVID-19 pandemic and under the Biden administration—which expired at the end of 2025—magnified both the benefit to consumers and the potential financial exposure from fraud. The current push for stricter verification and oversight reflects a desire to ensure the program’s long-term fiscal sustainability amid persistent concerns about rising premiums and the burden on taxpayers.
A path toward a more accountable marketplace
The simultaneous regulatory and congressional actions represent a multifaceted effort to recalibrate the ACA marketplaces. The proposed CMS rules attempt a delicate balance: imposing stricter controls to protect taxpayers and consumers from fraud while deregulating plan design to spur competition and choice. The aggressive House subpoenas underscore the political stakes and the demand for accountability from both regulators and the insurance industry. While the regulatory changes are subject to a 30-day public comment period, and the congressional investigation is ongoing, the combined momentum suggests a pivotal moment for the future of the health insurance exchanges. The ultimate outcome will hinge on the administration’s ability to finalize effective rules and Congress’s findings, which together will determine whether the marketplace can become more affordable, transparent and trustworthy for the Americans it serves.
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