ICYMI: Economic Analysis Projects Higher Costs, Lost Coverage and Instability If Mandates and Red Tape Targeting the Individual Health Care Market Are Not Removed from Tax Bill

Study Finds Hardworking Americans Would Face 75 Percent Hike to Health Care Premiums and Millions Would Lose Health Coverage Entirely

June 25, 2025

In case you missed it, a new economic analysis underscores the disastrous consequences for hardworking Americans if excessive government mandates and bureaucratic red tape targeting the individual health insurance market in the current version of the Big Beautiful Bill (H.R. 1) are not removed from the final legislation, and if Congress fails to avert a looming health care tax hike if enhanced premium tax credits (PTCs) are allowed to expire.

The study’s authors, Ike Brannon, Ph.D., President of Capital Policy Analytics, and Tony Lo Sasso, Ph.D., professor and chair of the economics department at DePaul University, found these policies would hike health care costs, worsen the risk pool, destabilize the individual marketplace and lead to millions of hardworking Americans losing their health care coverage entirely.

“This white paper provides an analytical evaluation of these changes, focusing on their impact on premium affordability, continuity of coverage, insurer participation, and overall market stability,” said Lo Sasso and Brannon in the paper. “We show that the Marketplace provisions in the House-passed OBBBA would undo much of the recent progress on coverage and affordability. If enacted for the 2026 plan year, subsidy-eligible consumers would see sharply higher net premiums, and millions could lose coverage outright, either by dropping unaffordable plans or failing new paperwork hurdles.”

“Low-income enrollees would confront out-of-pocket premiums and the loss of the year-round enrollment option, while many middle-income working families would lose subsidies altogether,” the authors continue. “Insurers would be left with a smaller, sicker risk pool and heightened pricing uncertainty, making further premium increases and selective market exits likely. As a result, both affordability and coverage continuity would deteriorate, and the individual market’s recent stability would be placed at serious risk.” 

Key takeaways from the analysis, “Private Plans, Public Goals: Preserving an Individual Market that Offsets the Employer Tax Advantage and Avoids Medicaid,” include:

  • Premium Shock: Allowing enhanced credits and silver loading to lapse would raise net premiums roughly 75 percent for most subsidized households, a move that would deepen the employer-tax distortion already warping the market.
  • Fraud Control vs. Coverage Loss: Tighter verification can curb improper enrollments, but coupling new paperwork with higher premiums would push four to six million eligible people out of Marketplace plans, trading limited fraud savings for a surge in uninsurance or Medicaid crowd-in.
  • Risk Pool Erosion: The main impact of ending auto-reenrollment, shortening sign-up windows, and adding a five-dollar nominal monthly payment would be to deter healthier enrollees from enrolling, triggering predictable adverse selection yet still preferable to losing them entirely to the uninsured pool.
  • Fragile Equilibrium: Today’s individual market, while imperfect, has achieved record insurer choice with only modest premium growth. This market could unravel if abrupt subsidy cuts force carriers to reprice sharply or exit.
  • Most Market-Friendly Approach: Subsidized Marketplace coverage, especially if bolstered by Custom Health Option and Individual Care Expense (CHOICE) employer contributions, remains the most market-aligned way to offset the far larger Employer-Sponsored Insurance tax break while preserving consumer choice and provider access.

The authors conclude with a market-based defense of the individual health care marketplace, as “a vast improvement over the alternatives,” even if imperfect.

“Preserving and strengthening a subsidized individual market is a politically feasible and market-aligned strategy to achieve near-universal coverage,” Lo Sasso and Brannon write in their conclusion. “It acknowledges the practical need for subsidies to make insurance affordable, yet channels those subsidies in a way that harnesses competition and consumer choice, rather than expanding direct government insurance. This approach is the most market-friendly path forward, a policy equilibrium that, while born of compromise, better aligns with efficient, patient-centered care than the realistic alternatives.”

Congress should protect hardworking Americans from higher costs, lost coverage, and increased national debt by removing these onerous mandates from the Big Beautiful Bill, before it is finalized and passed into law — and acting to avert a health care tax hike by extending enhanced premium tax credits (PTCs).

Read the full Brannon-Lo Sassso white paper HERE.

Read more on the implications of excessive mandates and red tape targeting the individual health care marketplace, combined with the looming prospect of a massive health care tax hike, HERE.