HHS Urged to Drop Plan to Shift ACA Mandate Costs to States

Patient advocacy groups are warning the Trump administration that proposed changes to Obamacare’s essential health benefits could undercut patient access to things such as fertility treatments, hearing aids, substance abuse care, and critical disease screenings.

The Centers for Medicare & Medicaid Services in February proposed significant changes to the Affordable Care Act marketplace, including a measure that would require states to shoulder the cost of certain benefits they deem essential under the law.

The move could threaten access to procedures meant for early detection of diseases such as cancer and Alzheimer’s, lobby groups said in comment letters to the agency. It could also limit supplies for managing conditions such as diabetes.

“While the proposal does not outright prohibit state mandates, it does create a financial incentive for states to repeal or invalidate state mandates,” the American Cancer Society’s Cancer Action Network wrote in its letter.

Essential health benefits are broad categories of care that must be covered by small group and individual market plans under the ACA. The provision highlights another potential political issue over the exchanges after Covid-era premium subsidies expired last year.

States are responsible for establishing specific details by identifying “benchmark” plans that define minimum coverage levels. The Trump administration permitted states to adopt another state’s benchmark plan beginning in 2020, and to update their benchmarks annually without incurring additional costs—subject to certain restrictions.

The CMS now is proposing to rescind 2025 guidance saying states need not defray the cost of the additional benefits even if they separately enacted coverage mandates into law.

If finalized, states would be responsible for the cost of most additional benefits not mandated by the law’s original 2012 cutoff date, the CMS said in a statement.

“The proposal does not remove coverage of specific services,” a spokesperson said. “It clarifies who is responsible for the cost when states choose to require benefits beyond EHB.”

Gray Area

The National Association of Insurance Commissioners urged the CMS to apply the change going forward, saying costs could be “triggered by decisions states made in the past, under previous regulatory regimes.”

Mental health advocacy organization Inseparable pointed to the fact that many state legislatures are either not in session in 2026 or will adjourn before the rule is finalized, making it “difficult or impossible for many states to avoid a new, unexpected defrayal obligation.”

What counts as a state benefit versus a federally covered benefit has always been a gray area, said Christina Cousart, director of commercial coverage for the National Association of State Health Policy.

“Since the rollout of Marketplace plans, there’s been some confusion from states about the circumstances under which state mandates would qualify as EHB,” she said in an email.

The CMS also is pausing review of states’ current applications to update benefits benchmarks.

“Those applications aren’t even moving forward even though they followed all the rules,” said Katie Keith, an adjunct law professor with Georgetown University’s Center on Health Insurance Reforms.

The CMS said the policy could be contributing to rising premiums and falling enrollment among unsubsidized consumers. That concern was echoed by Paragon Health Institute, led by former Trump official Brian Blase, which said removing the provision would “restore fiscal discipline.”

“This change would be particularly beneficial for unsubsidized enrollees, who bear the full cost of elevated gross premiums in states with expansive benefit requirements and limited plan competition,” the think tank wrote in its comment letter.

But California Insurance Commissioner Ricardo Lara dismissed those reasons in comments to the agency, noting that regulations around actuarial value meant the additional benefits did little to increase premiums.

“In fact, these impacts have been so small that insurers in some states haven’t found it to be cost-effective to even submit requests for reimbursement of defrayal amounts,” he wrote, adding that the provision would simply “cause chaos” for regulators.

State Mandates

Many states have passed mandates since 2012. Twenty-eight have laws regarding follow-up breast cancer screenings, according to ACS CAN. Twenty-one states have laws requiring coverage of biomarker blood testing for diseases such as cancer and Alzheimer’s.

“Early diagnosis can empower individuals to change behaviors and access treatments that slow cognitive decline,” the Alzheimer’s Association wrote in its comment letter. “However, these clinical benefits are limited if new barriers to diagnosis are introduced.”

Several ACA protections, like out-of-pocket spending caps, are limited to essential benefits. The American Diabetes Association noted the higher costs could trigger “increased risk that individuals cannot afford the supplies, equipment, and medicine needed to manage their diabetes.”

Some state mandates include pricier services such as fertility coverage—a hallmark of President Donald Trump’s agenda. Twenty-one states mandate coverage of fertility preservation services for cancer patients, according to the Association of Clinical Oncology. Fertility advocate RESOLVE said the measure could “counteract the intended objectives” of the administration.

Other states have adopted requirements for things such as hearing aids or “applied behavioral analysis” therapy for autism and other disorders. The American Society for Addiction Medicine urged the CMS to analyze whether benefits such as medication-assisted treatment could be undermined in consideration of mental health parity laws.

The move marks a return to the status quo for many states with longstanding benefit mandates, Cousart said. But it will likely hit states with newer mandates harder.

“These states may not have even considered the need to absorb the costs of recent mandates, unlike states with older mandates that defrayed those costs in years past,” she said.

More changes are likely on the horizon as the Trump administration looks ahead to future years. The administration noted in the proposed rule that it is reviewing essential benefits “standards more broadly.”