September 17, 2025
KFF Health News: Team Trump’s Answer to Ballooning Obamacare Premiums: Less Generous Coverage
In response to the anticipated surge in insurance premiums affecting millions of Obamacare customers next year, officials from the Trump administration are advocating for plans that offer less generous benefits and higher deductibles. This shift aims to encourage more individuals to consider these options as a means of managing costs.
The agency overseeing the Affordable Care Act (ACA) announced earlier this month that it will broaden eligibility for “catastrophic” plans available in ACA online marketplaces. These plans require individuals to incur over $10,000 in annual deductibles before most medical costs are covered, but they feature lower monthly premiums compared to other Obamacare policies.
This decision reflects growing apprehension among Republicans regarding potential political fallout if Congress fails to extend the larger tax credits that were implemented during the COVID-19 public health emergency. These extra subsidies are set to expire at the end of the year, leading to an average 75% increase in premiums, according to KFF, a health information nonprofit that includes KFF Health News.
A small, bipartisan group of House lawmakers has introduced legislation to extend these enhanced subsidies for an additional year, which would keep them in place through the midterm congressional elections in fall 2026.
However, the fate of this legislation remains uncertain, as many Republicans oppose extending the extra tax credits, which would cost at least $335 billion over 10 years. Without an extension, tax credit amounts will revert to pre-pandemic levels.
“They spent the last 15 years against the ACA, so a lot will be steadfast, but others are worried about the effect of massively spiked premiums on their constituents,” noted a Democratic Senate staffer who requested anonymity due to restrictions on speaking to the media.
Currently, Republicans hold a slim majority in Congress, increasing the stakes for voters who may blame them for losing ACA tax credits.
Catastrophic plans, a lesser-known type of Obamacare policy, have primarily been available to individuals under 30. While they offer lower monthly premiums, they come with higher annual deductibles, set at the out-of-pocket maximum for the year: $10,600 for individuals in 2026 or $21,200 for families.
A deductible is the amount patients must pay for healthcare before insurance covers most services. Catastrophic plans do allow for three primary care visits per year without requiring full deductible payment, and, like other ACA policies, they cover preventive services such as certain cancer screenings and vaccines at no cost to policyholders.
These catastrophic plans will automatically appear on the federal marketplace, healthcare.gov, for consumers who lose tax credit coverage next year due to their household income. Additionally, individuals who still qualify for tax credits but not for subsidies that reduce out-of-pocket costs may also be eligible, although they will need to submit paperwork.
“By expanding access to catastrophic plans, we are ensuring that hardworking individuals facing unexpected hardships can obtain affordable coverage that protects them from devastating medical costs,” stated Centers for Medicare & Medicaid Services Administrator Mehmet Oz in a statement.
It remains unclear whether these policy changes will attract more consumers. Catastrophic plans are not available in all states, and the high deductibles can deter potential enrollees.
“It’s a ton of money,” remarked Louise Norris, a health insurance analyst and broker who frequently writes about the ACA. “A full-price catastrophic plan is still more expensive than some people can afford, but they’re doing this to offer a slightly more affordable option.”
Currently, only about 54,000 out of Obamacare’s 24 million enrollees have opted for catastrophic coverage, according to government data, indicating limited appeal.
“Uptake has always been quite low,” said Katie Keith, director of the O’Neill Institute’s Center for Health Policy and the Law at Georgetown University. “It’s not a bad option if it is the only option you have. I question whether consumers are looking for this kind of coverage.”
CMS plans to grant individuals a “hardship” designation to enroll in catastrophic plans if they lose eligibility for ACA tax credits next year. Those most likely to qualify are individuals earning more than four times the federal poverty rate ($62,600 for an individual this year, or $106,600 for a family of three), who will lose access to all premium subsidies if Congress does not extend the current enhanced tax credits. The exact premium costs remain uncertain, as insurers may adjust their rates based on anticipated enrollment changes.
AHIP, the insurance industry lobbying group, is advocating for the extension of larger tax credits. While they did not comment specifically on how the new guidance might affect catastrophic health plan premiums, AHIP spokesperson Chris Bond stated that “while catastrophic plans can provide important coverage for specific needs, they are not a replacement for affordable comprehensive coverage.”
Other challenges persist. Norris noted that insurers do not offer plans in 10 states: Alaska, Arkansas, Indiana, Louisiana, Mississippi, New Mexico, Oregon, Rhode Island, Utah, and Wyoming. Even where available, options can be limited. For instance, a 25-year-old in Orlando, Florida, had access to 61 “bronze” plans, the cheapest level of coverage available to all ACA shoppers, but only three catastrophic plans.
Policy experts emphasize the importance of considering all options when shopping for ACA coverage during the annual open enrollment period, which begins on November 1. In addition to catastrophic and bronze plans, there are also “silver” and “gold” plans, each with varying premiums and deductibles.
Bronze plans feature the lowest premiums but the highest deductibles; the average bronze deductible this year is $7,186, which is still lower than catastrophic plans, according to KFF.
While catastrophic plan deductibles are high, they are comparable to some bronze plans, Norris noted. However, individuals who choose catastrophic plans are not eligible for any ACA tax subsidies to help with monthly premiums.
A pending court battle may provide lawmakers concerned about voter backlash on Obamacare changes an unexpected reprieve. In late August, a federal judge in Maryland temporarily halted some changes mandated by the Trump administration for the upcoming year. These changes included additional verification paperwork requirements for some individuals enrolling in ACA plans, which were challenged by several cities due to concerns that they could result in up to 1.8 million people losing their insurance in 2026.
The court ruling stayed several provisions of the Trump administration rules, including income verification requirements affecting individuals below the poverty level and those without tax return information. The ruling also paused verification requirements for individuals applying outside the annual open enrollment period and blocked a $5 monthly charge for those automatically enrolled in plans where subsidies cover the entire premium unless they confirm their selection with the marketplace.
The Trump administration is appealing this decision, but the case may not be resolved until next year, according to Keith at Georgetown University.
This situation suggests that the pause on the new requirements will likely remain in effect for this year’s open enrollment season. Keith remarked that the ruling was a “bigger deal” than expanding eligibility for catastrophic plans. “Consumers all across the country won’t have to deal with red tape the Trump administration rushed to implement ahead of the new plan year,” and the ruling also “helps people keep their coverage.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
