Lower premiums, higher risk: The optics and reality of CMS’s latest marketplace proposal

CMS’s latest proposal to revise the Notice of Benefit and Payment Parameters arrives in a moment of policy drift, not momentum. The enhanced Marketplace subsidies have expired, and there is little indication that Congress is seriously engaged in bringing them back. Instead, lawmakers appear to be searching for alternative ways to claim progress on affordability — including highly visible hearings that summon the heads of the nation’s largest insurers to testify about rising health care costs. Performative? Probably. Productive? Doubtful.

In the absence of legislative action, CMS is attempting to fill the vacuum. By loosening standardized plan requirements and expanding access to lower-premium options, the agency can credibly point to reduced monthly costs for certain Marketplace plans. That headline matters. It allows policymakers to say they are addressing affordability without new federal spending or politically difficult tradeoffs.

But what’s being sold as affordability addresses only one narrow component of the total cost of care: the monthly premium. It does not meaningfully address deductibles, cost-sharing, allowable charges, balance-billing exposure, or the financial risk patients face once they actually use care. The proposal optimizes for the most visible number in the equation while leaving the rest — the part that does real financial damage — largely untouched.

That distinction is not academic. Total cost of care is what patients experience when they seek treatment, what providers absorb when patients can’t pay, and what ultimately determines whether coverage functions as protection or merely as a payment mechanism. Lowering premiums by shifting cost to the patient and provider simply changes who pays, when they pay, and how predictable that payment is.

To understand what this proposal really does — and why it appeals to some stakeholders far more than others — it’s necessary to separate the optics from the reality.

The optics: CMS is lowering premiums and expanding choice

From a communications standpoint, the proposal is clean. CMS can point to lower premiums and expanded plan “choice” at a time when Marketplace affordability is under pressure. With standardized plan requirements loosened, insurers are free to design products that price lower at enrollment and appear more flexible to consumers.

In a political environment where affordability debates are increasingly reduced to premium charts and headline numbers, this is an efficient move. It looks like progress. It photographs well.

The reality: This is cost shifting, not cost reduction

Premium relief under this proposal is achieved almost entirely by increasing financial exposure at the point of care. Deductibles rise. Cost-sharing rises. And in the case of catastrophic and indemnity-style arrangements, price risk is pushed directly onto the member.

The irony is hard to ignore: plans labeled “catastrophic” do very little to protect people from medically induced financial catastrophes.

These products lower premiums by design, but they do so by stripping away the very function insurance is meant to serve — insulating individuals from financially ruinous health events. When a hospitalization, surgery, cancer diagnosis, or chronic condition emerges, the coverage that was supposed to protect instead reveals itself as partial reimbursement with far thinner guardrails than most members understand.

That is not cost control. It is risk displacement. A “catastrophic” plan that fails when catastrophe strikes is not a safety net; it is a pricing strategy.

The optics: Payors gain flexibility and administrative relief

Insurers benefit meaningfully from the proposed changes — operationally, financially, and reputationally.

Marketplace plan filing is notoriously complex and resource-intensive. Standardized plan designs, actuarial constraints, network adequacy requirements, and certification processes add cost and rigidity. Removing or relaxing those rules reduces administrative burden and accelerates product development. That alone is a significant win for payors.

But there’s another, quieter benefit. By shifting toward indemnity-style and high cost-sharing products, payors also get to say they are no longer forcing consumers into the very narrow networks that have drawn growing scrutiny from regulators, providers, and the press. On the surface, the network problem appears solved — because, technically, there is no network at all.

The reality: Indemnity-style plans shift pricing risk to members

Indemnity-style plans do not have networks. They are cost-sharing arrangements in which the payor agrees to pay a percentage — for example, 70% or 80% — of an allowable amount it defines. The member pays the remainder of that allowable.

What many consumers assume is that the insurer is paying 70 or 80% of the bill. That is not how these plans work.

The allowable amount may be significantly lower than the provider’s billed charge. If the provider is not contracted — and in an indemnity model there is no contract — the provider can balance bill the difference. The member is responsible not only for their share of the allowable, but also for any amount above it.

There may be limited protections under the No Surprises Act in certain emergency or facility-based scenarios. But those protections are narrow, situational, and poorly understood. They do not change the fundamental reality: members bear far more price risk than they likely expect at enrollment.

The optics: Members get lower monthly costs

For consumers, especially those no longer benefiting from enhanced subsidies, a lower premium feels like relief. Monthly expenses are predictable. Coverage appears affordable. The plan fits the budget.

This is the most compelling part of the proposal — and the most misleading.

The reality: Members trade predictability for exposure

What members actually receive is weaker financial protection. Higher deductibles. Higher cost-sharing. In indemnity arrangements, unbounded price exposure.

When care is needed, these plans behave less like insurance and more like partial reimbursement. Members often discover this only after the fact — when the bill arrives and the math doesn’t align with what “80/20” implied.

Lower premiums do not help when care itself becomes unaffordable.

The providers no one is talking about

When patient cost-sharing rises without a corresponding increase in patients’ ability to pay, providers absorb the fallout. More balance-billing disputes. More bad debt. More write-offs. More time spent explaining insurance mechanics instead of delivering care.

This dynamic is not new. Providers have seen it before with reference-based pricing and employer indemnity products. Expanding it through the Marketplace does not make it better. It makes it systemic.

The uncomfortable conclusion

This proposal does not fix affordability. It redefines it downward.

Affordability is not a monthly premium. Affordability is access. Regardless of your insurance plan, your deductible, or your network size, if you cannot afford to use care when you need it, you effectively do not have access to care at all. That is a real disservice — to patients, to providers, and to the credibility of the system itself.

Providers should get their government affairs, finance, and marketing/communications teams in a room now and create a plan for combating this.They should make sure to repond in the commentary and start educating legislators on this now.

Kevin Thilborger is the Chief Revenue and Managed Care Officer at Unlock Health, where he leads the Managed Care Consulting practice and drives innovative revenue strategies that bridge technology, reimbursement, and care delivery for healthcare clients. With more than 25 years of experience spanning medical groups, insurance carriers, and consulting roles, Kevin has a strong track record in value-based care transformation and strategic growth across health plans and provider organizations.