Legislative Summary: S. 3389, Lowering Health Care Costs for Americans Act
Summary: The bill makes a series of changes to insurance markets, including an revival and phase-out of now-expired enhanced Obamacare premium subsidies, while adding new price transparency requirements for the health care sector.
Insurance Market Changes
Minimum Premium Payments: Beginning in 2026, imposes minimum monthly payments for benchmark coverage (i.e., the second-lowest cost silver plan) of:
- $10 for households with incomes below 200% of poverty;
- $20 for households with incomes between 200%-300% of poverty;
- $30 for households with incomes between 300%-400% of poverty; and
- $40 for households with incomes above 400% of poverty.
In 2025, the federal poverty level was $15,650 for a single individual, and $32,150 for a family of four. (Federal poverty levels for 2026 have not yet been released.) Note also that enrollees can choose a lower-cost plan (e.g., the lowest cost silver plan or a bronze plan) for coverage with a lower, or no, monthly premium.
Identification: Creates new requirement that Exchange enrollees over age 18 submit government-issued photo identification, and “any other documentation as…the Centers for Medicare and Medicaid Services may require for purposes of enrollment verification.”
Health Care Affordability Accounts: Creates Health Care Affordability Accounts as a new type of Health Savings Account (HSA) through Section 223 of the Internal Revenue Code (which governs HSAs). Directs that, for plan years 2027 through 2031, all premium subsidies will be distributed via the monthly payments into enrollees’ Accounts. (Payments of cost-sharing reductions, discussed further below, will still be paid to insurers.)
The bill does NOT amend the current law restriction (Section 223(d)(2)(B) of the Internal Revenue Code) that generally prohibits individuals from using HSA dollars to purchase health insurance. Thus, while individuals receiving subsidy dollars into their accounts could use such funds to purchase care directly, they may not in most cases be able to use those funds to purchase an insurance plan, should they desire to do so.
Specifies that premium subsidies transferred into enrollees’ Accounts will not count against annual HSA contribution limits, and that, while enrollees may roll over an existing HSA balance into their new Account, such Account must be the only HSA of the individual. Prohibits any Account dollars from being used for any gender transition procedures (as specified in the bill), or for abortion, except in the cases of 1) treatment of ectopic or molar pregnancies, 2) treatment of miscarriages, 3) abortions “to prevent the mother’s death or immediate irreversible bodily harm,” and 4) services provided in pregnancies resulting from rape or incest.
Subsidy Revival: Revives for six years (i.e., through the end of 2031) the enhanced system of premium subsidies first enacted by Democrats as part of the American Rescue Plan Act (P.L. 117-2), and extended until the end of 2025 in the Inflation Reduction Act (P.L. 117-169). However, for the period 2027 through 2031, such payments would be transferred directly to individuals via the Health Care Affordability Accounts, as outlined above.
Modifies and ultimately phases out the enhanced subsidy regime in several ways:
- In 2026, revives the ARPA/IRA subsidy regime as was in effect from 2021 through 2025, while also imposing the minimum monthly payment for benchmark coverage of $10-40 discussed above.
- Beginning in 2027, imposes an income cap on eligibility of 700% of the federal poverty level.
- Beginning in 2028 and continuing through 2031, phases down the ARPA/IRA subsidy regime to reach the original (i.e., 2010) subsidy levels prescribed in Obamacare, with the enhanced subsidies declining by 20% per year for each of those four years (i.e., 80%, 60%, 40%, and 20%). The transition envisions reaching the original Obamacare subsidy levels beginning with the 2032 plan year.
The below table compares the subsidy regime of Obamacare as enacted (i.e., current law subsidy levels), the regime passed in ARPA and extended in the IRA, and the modified subsidy regime under the bill. All numbers are expressed as the maximum percentage of income a household would pay for benchmark coverage (i.e., the second-lowest cost silver plan), with the federal subsidy covering any difference.
Note that in 2025, the federal poverty level was $15,650 for a single individual, and $32,150 for a family of four. (Federal poverty levels for 2026 have not yet been released.) The Obamacare premium assistance percentages are adjusted every year, per a formula laid out in statute. The 2026 premium assistance percentages were published in IRS Revenue Procedure 2025-25.
Abortion: Effective in 2027, amends Section 1303 of Obamacare (which established a sham segregation of funds mechanism to allow federal funding of plans that cover abortion) to direct that health insurers may not use cost-sharing reduction dollars to fund elective abortions. Requires notification of same to individuals upon enrollment via the Summary of Benefits and Coverage document.
With respect to premium subsidies, specifies that, beginning in 2027, “the portion of the premium for the [insurance] plan properly allocable” to elective abortion “shall not be taken into account in determining either the monthly premium or the adjusted monthly premium” via the subsidy formula. Also revises Internal Revenue Service information reporting requirements to mandate disclosure of “the amount of the plan premium attributable to” abortion coverage, beginning in 2027.
Gender Transition Procedures: Beginning in 2026, changes the definition of a “qualified health plan” to specify that such plans may not cover gender transition procedures (as defined in the bill).
Cost-Sharing Reductions: Contains a permanent appropriation for cost-sharing reduction payments (CSRs) to insurers offering Exchange coverage, effective January 1, 2026. (It is unclear whether or how this provision would apply to the current plan year, i.e., 2026.) Prohibits such payments from going to plans that cover abortion, except if such abortion is necessary to save the life of the mother, or the pregnancy is the result of rape or incest.
Conservatives would note that this provision, by appropriating funds not included in the 2010 health care law, technically implements Obamacare. However, some conservatives may support this provision, which will 1) lower premiums for Exchange coverage, 2) lower spending on federal subsidies for Exchange coverage, and 3) protect life, by ensuring that cost-sharing subsidies do not go to plans that cover elective abortion.
State Innovation Waivers: Amends Section 1332 of Obamacare, which created a program of state innovation waivers. Allows states to request a waiver via a gubernatorial certification of legal authority, rather than requiring enactment of a law. Clarifies that states can use waiver authority to request “pass-through” funding of dollars that otherwise would have gone towards a state’s basic health program (authorized by Section 1331 of Obamacare).
Appropriates $15.5 billion for funding of state “invisible high-risk pool[s] or reinsurance program[s]”—$500 million in administrative costs for fiscal year 2027, and $5 billion each or fiscal years 2028, 2029, and 2030 for establishing and maintaining such programs. Exempts invisible high-risk pools or reinsurance programs from the Section 1332 requirement that state waiver applications must be budget-neutral.
Directs the Department of Health and Human Services (HHS), in consultation with the National Association of Insurance Commissioners (NAIC), to develop an allocation methodology within 45 days of enactment. In cases where states do not request waivers to establish their own programs, directs HHS to establish such a program on a state’s behalf to make “market stabilization payments to issuers.” Directs states creating an invisible high-risk pool to specify the premiums paid to the pool, the applicable attachment points or coinsurance percentages, and the mechanism to designate high-risk individuals for cession into the pool (e.g., a list of high-cost health conditions). Also allows states to establish reinsurance pools “substantially similar” to the transitional reinsurance program that existed from 2014-2016, or a program already approved by HHS or one in effect as of September 1, 2025.
Amends the “guardrails” regarding state innovation waivers to state that coverage under such waivers must be “of comparable affordability, including for low-income individuals, individuals with serious health needs, and other vulnerable populations.” Adds a requirement that waivers may not increase the federal deficit over the term of the waiver, and over the term of the 10-year budget plan submitted under the waiver; however, permits HHS to “take into consideration the direct budgetary effect of” the waiver’s provisions “on sources of federal funding other than” those for which a state will receive “pass-through” dollars.
Shortens time for HHS’ consideration of waiver applications from 180 to 120 days. Provides for an expedited 45-day approval in cases where areas “are at risk for excessive premium increases or having no health plans offered,” where a waiver application is “the same or substantially similar” to a previously approved waiver, and for invisible high-risk pool or reinsurance programs. Specifies that such urgent approvals shall be in effect for three years, with a determination of full approval to be made within one year of the urgent waiver’s expiration. Requires a Government Accountability Office (GAO) study on urgent waiver approvals within five years of enactment.
Specifies that waivers shall be approved for six years, unless the state requests a shorter duration (or in the case of urgent waivers described above), may be renewed for unlimited six-year periods “upon application by the state,” and “may not be suspended or terminated, in whole or in part” prior to the date of expiration “unless the Secretary [of HHS] determines that the state materially failed to comply with the terms and conditions of the waiver.”
Directs HHS to issue guidance within 60 days of enactment, and update such guidance, including model state waiver plans that meet the requirements for approval, periodically. Nullifies prior regulations and guidance issued under Section 1332 prior to the bill’s enactment. Specifies that the bill’s changes will not affect any waiver process or terms and conditions in effect at the time of enactment, although states may request that HHS recalculate the amount of “pass-through” funding provided under their waivers.
Transparency Provisions
Title II of the bill incorporates verbatim the text of S. 2355, the Patients Deserve Price Tags Act, sponsored by Sens. Roger Marshall (R-KS) and John Hickenlooper (D-CO).
Hospital Transparency: Amends portions of the Patient Protection and Affordable Care Act (P.L. 111-148, aka Obamacare) to expand hospital transparency reporting requirements, beginning January 1, 2026. Requires hospitals to release on a monthly basis all standard charges “for each item and service furnished,” and release charges for shoppable services (starting with a list of 300 shoppable services in 2026) in a consumer-friendly format. Requires hospitals to publish gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified maximum and minimum negotiated charges for both inpatient and outpatient services. Permits HHS to require release of additional information, and requires HHS to develop a standardized format for charges’ release, and monitor each hospital’s compliance at least annually. Prohibits hospitals from using price estimator tools to comply with the disclosure requirements, and requires “a senior official from each hospital” (e.g., CEO or Chief Financial Officer) to certify the accuracy and completeness of disclosures.
For violations not cured within 45 days, imposes per-day penalties of $300 per day for hospitals with under 30 beds, rising to $25 per bed per day for hospitals with over 500 beds. Increases penalties for violations lasting longer than one year. Permits HHS to increase penalties further for violations occurring in 2027 or later via rulemaking, and to impose additional penalties on hospitals for persistent violations (i.e., more than one per year). Prohibits HHS from waiving or otherwise mitigating any penalty due. Retains the applicability of federal regulations issued in previous years, and the applicability of any other state law regarding price transparency.
Clinical Lab Transparency: Beginning July 1, 2027, imposes new disclosure requirements on clinical laboratories. Requires labs to publish monthly online gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified maximum and minimum negotiated charges for each test it offers, including any ancillary services. Permits HHS to require release of additional information, and requires HHS to develop a standardized format for charges’ release.
For violations not cured within 90 days, permits per-day penalties of up to $300 per day. Permits HHS to increase penalties further for violations occurring in 2028 or later via rulemaking.
Imaging Transparency: Beginning July 1, 2027, imposes new disclosure requirements on non-hospital imaging facilities that provide specified imaging services (as defined by the Centers for Medicare and Medicaid Services as being shoppable services). Requires facilities to publish annually online gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified maximum and minimum negotiated charges for each service. Permits HHS to require release of additional information, and requires HHS to develop a standardized format for charges’ release.
For violations not cured within 90 days, permits per-day penalties of up to $300 per day. Prohibits HHS from waiving or mitigating penalties due, and permits HHS to increase penalties further for violations occurring in 2027 or later via rulemaking.
Ambulatory Surgical Center Transparency: Beginning July 1, 2027, imposes new disclosure requirements on specified ambulatory surgical centers (those sharing common ownership with a hospital). Requires ASCs to release annually all standard charges “for each item and service furnished,” and release charges for up to 300 shoppable services in a consumer-friendly format. Requires ASCs to publish gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified maximum and minimum negotiated charges for both inpatient and outpatient services. Permits HHS to require release of additional information, and requires HHS to develop a standardized format for charges’ release, and monitor compliance at least annually. Prohibits ASCs from using price estimator tools to comply with the disclosure requirements.
For violations not cured within 90 days, imposes penalties of $300 per day. Permits HHS to increase penalties further for violations occurring in 2027 or later via rulemaking. Prohibits HHS from waiving or otherwise mitigating any penalty due.
Transparency in Coverage: Amends language of Obamacare to ensure that Exchanges require plans to develop online self-service tools regarding pricing information, effective January 1, 2026. Requires plans to delineate the in-network rate for services, maximum allowed dollar amount, amount of patient cost-sharing, the amount the individual has already paid towards any deductible or out-of-pocket maximum, and information about any frequency or volume limitations, or prior authorization requirements. The self-service tool must provide for real-time responses, and must hold members harmless for any difference between the quote generated by the tool and the amount ultimately billed or charged to the individual.
Beginning January 1, 2027, imposes new requirements on individual AND group health plans to make rate and payment information available (to Exchanges, HHS, and state insurance commissioners) on a monthly basis. Requires disclosure of in-network rates for services, in-network rates for prescription drugs, and the amount billed by providers and allowed by the plans, in three separate machine-readable files. Requires “an officer or executive of competent authority” to certify the accuracy and completeness of the files.
Requires HHS to audit the files of at least 20 group plans or health insurers, and the Department of Labor to audit the files of at least 200 third-party administrators overseeing group health plans, with public reporting to Congress each year on “findings, conclusions, and enforcement actions taken” based on the audits. Imposes penalties of up to $300 per member per day or $10 million (whichever is less) for plans that remain out of compliance 90 days after receiving a request for a corrective action plan.
Group Health Plan Access to Data: Amends the Employee Retirement Income Security Act (ERISA) to provide that, beginning in plan years one year after enactment, no contract between a group health plan and a provider or providers will be considered “reasonable” unless such contract “allows the responsible plan fiduciary…access to all claims and encounter information or data.” The provider may not “unreasonably limit or delay access” (defined as longer than 15 days), limit the volume of claims reviewed during an audit, limit disclosure of pricing terms regarding value-based payment arrangements, limit the disclosure of overpayments, limit the right of the plan (or its sponsor or administrator) to select an auditor, limit access to claims and encounter information in daily batches, limit the disclosure of fees charged to the plan regarding administration and claims processing, restrict the right of the plan to request action on suspect claims, or “limit public disclosure of de-identified or aggregate information.”
Provides that disclosures must be made in a manner consistent with Health Insurance Portability and Accountability Act (HIPAA) privacy requirements, and specifies standards for such disclosures. Provides for new penalties against providers of up to $10,000 per day for violations. Requires new annual attestation by a group health plan or health insurance issuer that it is in compliance with the disclosure requirements.
Administrative Service Providers: Amends the Employee Retirement Income Security Act (ERISA) to provide that, beginning in plan years two years after enactment, no contract between a group health plan, the plan administrator, and a third-party administrator, pharmaceutical benefit manager, or other third party is permissible if it limits access to the information described in Group Health Plan Access to Data above. A health plan service provider must also provide to the group health plan formulae used to determine reimbursement methodologies, the total amount of rebates received or expected to be received, the total amount paid or expected to be paid in fees and remuneration for administrative services, and all payment data and reconciliation arrangements for alternative compensation arrangements (e.g., value-based payment, etc.)
Provides that disclosures must be made in a manner consistent with Health Insurance Portability and Accountability Act (HIPAA) privacy requirements, and specifies standards for such disclosures. Provides for new penalties against health plan service providers of $100,000 per day for violations. Specifies that any contractual provision limiting access to the information described above “shall be deemed void as against public policy.”
Pre-Emption: With respect to transparency requirements on hospitals, clinical labs, imaging centers, and ASCs, pre-empts state transparency laws only “to the extent that such requirement or prohibition prevents the application” of the new federal requirements.
Explanation of Benefits: For plan years beginning after January 1, 2026, requires individual and group insurance plans to provide an itemized explanation of benefits within 45 days of receiving any request for payment. Specifies that such explanation shall include the item or service, all applicable billing codes, the amount the plan is paying, the amount the beneficiary is responsible for, the amount the beneficiary has incurred towards deductible and out-of-pocket limits, and the site of each item or service. Provides for rulemaking to implement the requirement.
Itemized Bills by Providers: Requires providers seeking payment from patients to include written, itemized bills within 30 days after receiving payment from a third party (i.e., an insurer). Specifies that such bills shall include the item or service, all applicable billing codes, the price and billed amount “of each distinct health care item or service,” payments made to the provider by an insurer, information about language-assistance service, the name and contact information of an office that can discuss the bill, and information about the provider’s charity care policies.
Prohibits providers from engaging in collection actions against an individual unless the provider has sent an itemized bill complying with the new requirements, and documents that any costs or charges in excess of the good faith estimate provided prior to the procedure “were medically necessary due to unforeseen complications or a patient-initiated discharge, and could not reasonably have been anticipated.” Places the burden of proof on the provider, and states that absent documentation of unforeseen complications, “the good faith estimate shall be binding.” If a health care provider fails to comply with the itemized bill requirements, states that “the presumption shall be that charges were substantially in excess of the good faith estimate…for the purpose of any patient-provider dispute.” Imposes penalties of up to $10,000 “for each instance of failure to comply.”
Background on Cost-Sharing Reductions: Section 1402 of the Patient Protection and Affordable Care Act (also known as Obamacare, P.L. 111-148) requires insurers to reduce cost-sharing (i.e., co-payments, co-insurance, and deductibles) for certain individuals enrolled in qualified health plans. Such reductions would convert the value of a silver plan, which ordinarily covers 70% of an average enrollee’s health expenses (i.e., the plan’s actuarial value), to a 94% actuarial value for households with incomes from 100-150% of the federal poverty level, an 87% actuarial value for households with incomes from 150-200% of poverty, and a 73% actuarial value for households with incomes from 200-250% of poverty. (In 2025, the federal poverty level stands at $15,650 for a single individual, and $32,150 for a family of four, in the continental U.S.)
However, the law as enacted included no appropriation of funds to reimburse insurers for reducing the cost-sharing as required by law. Notwithstanding the lack of an explicit appropriation, the Obama Administration paid cost-sharing reductions to insurers, citing authority provided by the Exchange premium subsidies. However, the premium subsidies (which DO have an explicit appropriation in law) are contained in a different section of law than the cost-sharing reductions (the Internal Revenue Code vs. the Public Health Service Act), under the jurisdiction of an entirely different Cabinet Department (Treasury vs. HHS).
In July 2014, the House of Representatives authorized a suit, filed that November, to among other things block the CSR payments. In September 2015, Judge Rosemary Collyer of the District Court for the District of Columbia ruled that the House did not have standing to question the Obama Administration’s implementation of statutory text, but did have standing on constitutional grounds to challenge the spending of monies (i.e., CSR payments) not authorized by law. Subsequently, in May 2016 Judge Collyer rejected the Obama Administration’s justification for making the CSR payments absent an explicit appropriation, granting summary judgment for the House, although she stayed her ruling pending appeal.
While the Court of Appeals for the D.C. Circuit was still considering the appeal the Obama Administration had filed, the Trump Administration, following the collapse of efforts to “repeal-and-replace” Obamacare, in October 2017 ended the CSR payments. (The House’s lawsuit was subsequently settled in December 2017.) As a result, beginning with the 2018 plan year, insurers in most states built the cost of their CSR requirements into silver plan premiums, a practice known as “silver loading.”
Because Obamacare ties premium subsidy amounts to the value of the second-lowest cost silver plan in a given rating area, “silver loading” increases both silver plan premiums and the value of federal Exchange subsidies that enrollees receive—including enrollees in households with incomes above 250% of poverty, who do not qualify for cost-sharing reductions. (Some states permit or require insurers to sell silver plans without “silver loading” off of the Exchanges, so people who do not qualify for subsidies can buy plans with the higher CSR costs left out of their premiums.) For this reason, including an explicit CSR appropriation would end the higher premiums, and higher federal spending on premium subsidies, caused by the “silver loading” scheme.
Cost: A formal Congressional Budget Office (CBO) cost estimate is not available. However, the six-year revival of enhanced subsidies would likely cost tens of billions of dollars.
On December 16, CBO released an estimate of other legislation (H.R. 6703) containing a permanent appropriation for cost-sharing reductions also included in the Marshall bill. Overall, CBO believes that the CSR appropriation included in H.R. 6703 would reduce the federal deficit by a net of $36.7 billion, with a modest increase (300,000) in the number of uninsured. As explained above, directly appropriating funds for CSRs would largely end the practice of “silver loading,” reducing benchmark plan premiums, and subsidy spending tied to the size of those benchmark premiums. The budget office however noted one caveat to this analysis:
CBO expects that enacting section 202 [i.e., an appropriation for CSR payments] would end silver loading in the states where roughly 75 percent of marketplace enrollees reside. Because some states mandate coverage of certain abortion services, and marketplace plans still must offer cost-sharing reductions, CBO projects that the other 25 percent of enrollees would live in states where silver loading would continue, consistent with current conditions.
Possible Conservative Concerns: Conservatives may have significant concerns with the bill’s revival of enhanced Obamacare subsidies, including but not limited to:
- No Impact on Gross Premiums in 2026: CBO has admitted that the bill would have no effect on gross premiums for the current plan year, “because those premiums have already been set.”
- Expands and Entrenches Obamacare: The bill would for the second time extend COVID-era enhanced subsidies that were designed to be temporary, amounting to a major entitlement expansion on the installment plan. While the bill would eventually eliminate the system of enhanced subsidies, it would not complete such a transition until the last year of the next President’s first term, allowing Democrats plenty of opportunities to short-circuit such a transition in the interim.
- Increases the Federal Deficit: With the federal government over $38 trillion in debt, many would question the wisdom of incurring tens of billions of dollars in deficit spending to subsidize health insurance companies.
- Undermines Employer-Provided Health Coverage: CBO noted that under a separate subsidy revival bill, 2.1 million fewer Americans would have employer-sponsored coverage. Expanding and entrenching Obamacare will only encourage more businesses to stop offering insurance and dump their workers on to the Exchanges.
- Increases Insurer Profits: The bill directs tens of billions in new taxpayer funds to insurance companies. Because Obamacare allows them to keep one-fifth of premium dollars for profit and administrative expenses, the bill could see insurance companies receiving billions of dollars in added profit—at taxpayer expense.
- Welfare for the Wealthy: The bill would for 2026 lift the income cap on eligibility that Obamacare placed on its subsidy regime, allowing households with incomes in excess of $500,000 to qualify for “low-income” insurance subsidies in some instances.
- Raises, Rather than Lowers, Underlying Health Costs: While the bill contains some modest transparency reforms designed to lower costs, it retains and expands Obamacare’s subsidy mechanism, under which every additional premium dollar is subsidized by federal taxpayers, encouraging health insurers to raise premiums.
In addition to these possible concerns regarding a revival/phase-out of the enhanced subsidies, some conservatives may be concerned that the bill’s mandatory reinsurance mechanism—under which the federal government will operate a reinsurance or invisible high-risk pool program in states that decline to do so themselves—echoes the coercive nature of Obamacare, and undermines federalism, to direct additional taxpayer funds towards insurance companies.