CMS 2027 Marketplace Rule Rewrites the ACA Rulebook as Senate Subsidy Talks Crater

The week of February 9 will be remembered as the moment the federal government formally proposed dismantling much of the architecture the Biden administration spent four years building around the Affordable Care Act marketplace. On Monday, the Centers for Medicare & Medicaid Services released the proposed Notice of Benefit and Payment Parameters for the 2027 plan year — a sprawling regulatory package that, if finalized, would scrap standardized plan options, lift caps on non-standardized plan designs, and authorize an entirely new category of "non-network" qualified health plans that do not rely on contracted provider networks at all. Published in the Federal Register on February 11 with comments due March 13, the rule arrived in the same 72-hour window that Senate negotiations to restore expired ACA premium tax credits effectively collapsed, Humana and CVS Health delivered dispiriting earnings calls, Cigna pressed forward with 2,000 layoffs, and a bipartisan duo of senators introduced legislation that would force the country's largest health conglomerates to break themselves apart.

The cumulative effect is a marketplace whose ground rules, financial assumptions, and corporate structures are all shifting at once — and the implications run from individual subscribers facing higher premiums to self-funded employers watching their stop-loss carriers absorb the turbulence.

The 2027 NBPP: A philosophical reset for the exchanges

CMS's proposed rule, technically titled the HHS Notice of Benefit and Payment Parameters for 2027, marks the most significant philosophical departure from Biden-era marketplace policy since the change in administration. Under the proposal, CMS would discontinue the requirement that issuers on the federally facilitated exchanges offer standardized plan options at all, and it would simultaneously remove the current limit of two non-standardized plans per metal level. The agency frames the change as restoring plan-design flexibility and consumer choice; consumer advocates frame it as inviting back the proliferation of confusingly similar plans that drove the standardization push in the first place.

Far more consequential is a new pathway for what the rule calls "non-network" plans. Beginning in 2027, issuers could offer qualified health plans that do not maintain contracted networks. Instead, the plan would publish benefit payment amounts for covered services and demonstrate that "sufficient providers" — including essential community providers and clinicians specializing in mental health and substance use disorder care — are willing to accept those amounts as payment in full. CMS argues the design "would empower enrollees to utilize price transparency information to shop for lower prices and negotiate directly with providers, thus fostering increased competition," while "eliminating substantial administrative overhead associated with traditional network management."

In practice, non-network plans look like a regulatory cousin of reference-based pricing — a model long used in self-funded employer plans and one that has generated years of provider balance-billing disputes. Importing it into the individual marketplace, where enrollees historically rely on network adequacy as their primary protection against surprise costs, represents a meaningful experiment. Hospitals, in particular, have already begun signaling alarm; the American Hospital Association's preliminary comments warned that the design could leave patients exposed to balance billing and erode the network adequacy guardrails that anchor consumer protections in the exchanges.

The proposed rule also recalibrates the HHS risk adjustment models for 2027 using 2021 through 2023 enrollee-level EDGE data and adds a new scaling factor to the HHS-RADV error rate calculation beginning with the 2025 benefit year. Risk adjustment is the technical plumbing that redistributes premiums between plans with sicker and healthier members, and the recalibration arrives at a particularly sensitive moment for carriers already absorbing the financial consequences of the post-subsidy marketplace.

The subsidy cliff that nobody is climbing back up

The NBPP landed against a backdrop of accelerating bad news for marketplace consumers. By February 11, top Senate negotiators publicly conceded that the bipartisan effort to restore the enhanced premium tax credits — the subsidies that helped more than 22 million people afford marketplace coverage before they expired December 31 — had effectively collapsed. The talks, which had stretched on since the December votes that rejected both the Democratic three-year extension and a Republican alternative, foundered on disagreements over Hyde Amendment language and abortion provisions in any subsidy package. Senate Majority Leader John Thune had not endorsed any extension proposal and voted against the House-backed version in December, arguing that simply renewing the subsidies was "an attempt to disguise the real impact of Obamacare's spiraling health care costs." With negotiations dead, the practical result is locked in: average marketplace premium payments are estimated to rise approximately 114 percent — roughly $1,016 per year — for those who lost their enhanced credits, and the Urban Institute projects 4.8 million additional uninsured Americans as a direct consequence.

Final 2026 marketplace enrollment, reported earlier this month at 23.1 million — a 4.9 percent decline from 2025 — already reflected the early effects of the subsidy expiration and a shorter open-enrollment runway. The NBPP's proposed flexibility around plan design is, in part, an acknowledgment that the population now buying marketplace coverage is markedly different from the one that signed up under enhanced subsidies. With nearly five million older adults losing affordable coverage and millions more downgrading to thinner plans, CMS's rule reads as a regulatory response to a marketplace that has already partially unwound itself.

Carrier earnings: a Stars-shaped hole in Humana's 2026

If the policy backdrop is unsettled, the carrier earnings cycle that crested this week was actively unkind. Humana reported its fourth-quarter 2025 results on February 11, posting an adjusted loss of $3.96 per share for the quarter while still beating its full-year 2025 adjusted EPS guidance at $17.14. The shock came in the 2026 outlook: Humana guided to "at least $9.00" in adjusted EPS, dramatically below the roughly $12 consensus Wall Street had penciled in. The primary driver is a $3.5 billion headwind tied to the company's collapse in Medicare Advantage Star Ratings — the share of Humana members enrolled in plans rated four stars or higher fell from 94 percent for 2024 to just 25 percent for the 2025 rating year, after narrow misses on specific quality metrics and tightening CMS cut points.

Humana's growth ambitions, however, remain striking. After adding roughly one million net members in 2025 — a 20 percent jump that put it on track to overtake UnitedHealth as the country's largest individual MA carrier — Humana told analysts it expects approximately 25 percent membership growth in 2026, with more than 70 percent of new sales coming from competitors' switchers and a high concentration in plans still rated four stars or better. Management forecast that MA pretax margins, normalized for the Stars hit, would roughly double year over year, but reported margins are expected to land slightly below breakeven for 2026.

CVS Health reported the same day, posting fourth-quarter revenue of $105.69 billion — up 8.2 percent — and full-year 2025 revenue of $402.1 billion, a company record. CVS reaffirmed a 2026 adjusted EPS range of $7.00 to $7.20 and revenue guidance of at least $400 billion, but the Aetna segment continued to weigh on results, with management citing "a deterioration of our risk adjustment position in our Individual Exchange business and a provision for increased flu activity." Operating cash flow guidance for 2026 was reduced to at least $9 billion on payment timing, and analysts noted the Aetna exchange book remains the most exposed of any major insurer to the post-subsidy enrollment shake-out.

Cigna, which posted nearly $6 billion in 2025 profits when it reported on February 5, spent this week executing the workforce reduction it telegraphed alongside those results. The company is cutting approximately 2,000 positions globally — under 3 percent of headcount — by the end of February, with chief financial officer Brian Evanko telling analysts to "expect lower headcount in 2026 than what Cigna has today." A spokesperson confirmed the reductions reflect the company's drive for "greater efficiency across the business" amid rising medical costs and regulatory pressure, including the February 4 Federal Trade Commission settlement with Express Scripts over alleged inflation of insulin prices, which requires the Cigna-owned PBM to delink drug manufacturer compensation from list prices and reshore its group purchasing organization from Switzerland.

A small carrier's exit reveals a structural shift

The small-carrier news of the week was Molina Healthcare's confirmation, repeatedly amplified by analysts and trade press through February 10 and 11, that it will exit the standalone Medicare Advantage prescription drug market entirely in 2027. The announcement, originally disclosed alongside Molina's February 5 earnings release, took on new significance as the company's stock plunged roughly 33 percent on guidance that missed Wall Street EPS expectations by 63 percent. Molina's MAPD product carried about $1 billion in annual premiums against a roughly 99,100-member individual MA enrollment — a small footprint relative to UnitedHealthcare, Humana, and Aetna, but its retreat says something larger about who can profitably serve the standalone MA market when Stars Ratings, V28 risk adjustment, and the negotiated Part D drug prices are simultaneously squeezing margins.

Molina's decision to focus exclusively on its $5 billion dual-eligible business — Medicare-Medicaid integrated plans — is a strategic narrowing rather than a retreat. But coming after UnitedHealthcare's announcement that it is shedding 1.3 to 1.4 million MA members and Elevance's contraction of "high teens percent" in MA, the through-line is unmistakable: the standalone MA business has bifurcated into a small group of mega-scale survivors and a long tail of carriers redirecting capital elsewhere. With Humana banking on a 25 percent growth quarter while accepting near-zero margins, the consolidation logic that has defined Medicare Advantage for the past decade is intensifying, not slowing.

Bipartisan blast at the conglomerate model

Even as the carriers reorganize themselves, Washington moved on February 10 to challenge the very structure of the largest among them. Senators Elizabeth Warren and Josh Hawley introduced the Break Up Big Medicine Act, an unusual bipartisan pairing that builds on their earlier Patients Before Monopolies Act. The legislation would prohibit any parent company from owning both a medical provider or management services organization and either a pharmacy benefit manager, an insurer, or a prescription drug or medical device wholesaler. Enforcement would be vested concurrently in the Federal Trade Commission, the Department of Health and Human Services, the Department of Justice, state attorneys general, and private parties — an aggressive cocktail of enforcement vehicles by congressional standards.

Warren and Hawley framed the bill around statistics designed to underscore the degree of market concentration: the three largest PBMs administer 80 percent of U.S. prescription drug claims, three drug wholesalers control 98 percent of distribution, nearly 4,000 independent pharmacies have closed since 2019, and roughly 80 percent of physicians now work for a corporate parent. The bill's language reaches conglomerates including UnitedHealth Group (with Optum, OptumRx, and a sprawling provider footprint), CVS Health (with Caremark and Aetna), Cigna (with Express Scripts and Evernorth), and Humana (with CenterWell). Whether the legislation advances in a divided Senate is uncertain, but its filing — paired with the FTC's Express Scripts settlement five days earlier — confirms that the legislative and regulatory pressure on vertical integration is no longer a single-party project.

Provider-payer disputes spill into the open

Two operational disputes underscored how fragile the provider-payer ecosystem remains. In Southern California, more than 3,000 pharmacy and laboratory employees represented by United Food and Commercial Workers locals walked off the job at Kaiser Permanente facilities on Monday, February 9, joining roughly 30,000 nurses and healthcare professionals already on strike since January under the United Nurses Association of California. The pharmacy and lab strike — covering 2,424 pharmacy employees and 929 clinical lab scientists across Los Angeles, Orange, San Diego, San Bernardino, Riverside, Ventura, and Kern counties — ran for three days, ending February 12, while the broader nursing strike continued into its third week. Kaiser was forced to close some pharmacies and labs and shift appointments online, and union representatives accused the system of having "ghosted" them at the bargaining table.

In New York, Mount Sinai Health System and Anthem Blue Cross Blue Shield remained locked in a contract dispute that had already pushed Mount Sinai's physicians out of network on January 1, with hospital and facility coverage scheduled to terminate March 1 absent a deal. The two sides traded escalating accusations through the week: Mount Sinai claims Anthem owes it more than $450 million in unpaid claims; Anthem counters that Mount Sinai is demanding rate increases of roughly 50 percent that would push insurance premiums sharply higher across its New York book. Approximately 200,000 patients carry Anthem coverage at Mount Sinai facilities, and the dispute has now spilled into broadcast media, regulatory filings, and a Mount Sinai-produced podcast. Both Kaiser and Mount Sinai-Anthem illustrate the harder economics underlying the carrier earnings calls: medical inflation, labor pressure, and post-pandemic capacity constraints are colliding at the contracting table.

What it means for employers, brokers, and individuals

For self-funded employers, the most immediate signal from the week is the trajectory of plan costs. Mercer's most recent data shows employer-sponsored health insurance costs projected to rise 6.7 percent in 2026 — the largest increase in 15 years — pushing average per-employee expense above $18,500. GLP-1 medications now account for roughly 20 percent of total prescription drug spend, with total GLP-1 spend up roughly 50 percent in 2025 alone and 43 percent of firms with 5,000 or more workers covering the drugs for weight loss, up from 28 percent in 2024. The compression of carrier margins on the fully insured side, combined with rising stop-loss pricing, is bleeding into self-funded plans through fee increases and tighter underwriting on renewal.

For brokers, the NBPP signals that 2027 will look meaningfully different on the exchange shelves. Standardized plan options may disappear, non-standardized plan counts could expand, and an entirely new "non-network" plan category will require explanation, comparison tools, and consumer education — particularly around balance-billing exposure and provider availability. The Mount Sinai-Anthem dispute is a reminder that even fully traditional network plans are vulnerable to mid-year disruption, and the Kaiser strike a reminder that capacity issues can interrupt member experience regardless of carrier.

For individuals, the message from this week is unambiguous: the higher 2026 marketplace premiums are not getting fixed by Congress, the corporate structures of their insurers are under simultaneous regulatory and legislative challenge, and the rules of plan design are about to loosen further. Anyone shopping the 2027 exchange is likely to encounter a wider, more variable, and harder-to-compare set of options than at any point since the marketplace's launch.

The week ahead

The 2027 NBPP comment period runs through March 13, and the early submissions from hospitals, consumer advocates, and broker associations will shape the contours of the final rule. Insurer first-quarter results begin in late April, and the next Senate test of any residual ACA subsidy package will likely come tied to a continuing resolution later in the spring. The Break Up Big Medicine Act will face committee referrals and the slow gravity of a divided chamber — but its bipartisan sponsorship guarantees it will not disappear quietly. For the moment, the structural questions raised this week — what an ACA plan looks like, what an integrated health company looks like, and who actually pays for either — are all formally on the table at the same time.