The Trump administration is working to create additional space for positive disruption in healthcare, which is laudable, although it may be doing so in some cases without due regard for what is allowable under current law. For instance, in the case of introducing so-called “non-network” insurance into the Affordable Care Act (ACA) markets, the potential rewards justify a test, but it should be conducted within the boundaries of what Congress has authorized.
Non-network plans break with convention by setting aside traditional network-centric insurance in favor of pre-set schedules of payments for services tied to existing benchmarks, such as Medicare’s rates. Plan enrollees can use the dollars made available by their insurers to offset the costs of receiving care from the hospitals, doctors, and other providers they select. In effect, these are plans that offer only “out-of-network” coverage. The administration announced in May that non-network insurance could be sold in the Affordable Care Act (ACA) marketplaces starting in 2028.
Traditional insurers build in-network provider listings with negotiated terms that, in tandem with favorable cost-sharing rules, undermine the incentive for many patients to seek out lower-priced services. Insurers claim they are securing the lowest rates possible in the current market, but price transparency rules are exposing unjustifiable pricing variations which are driving up premiums for consumers.
As John Goodman argued earlier this year in The Wall Street Journal, the introduction of non-network options is worth a test because of their potential to reward providers who lower their prices. With patients less tied to insurance-based networks, some suppliers might be able to maximize their revenue by charging less as way of reaching an expanded pool of price-sensitive patients.
Not everyone agrees with this assessment. In a comment letter filed in reaction to the administration’s initial proposal, five major industry associations criticized the move as harmful because consumers would lose the financial protection negotiated rates provide. They argue that unsuspecting patients will get charged much more than would have been the case with traditional network-based insurance.
Other critics argue these plans are administratively impractical and will destabilize the market by creating a misleading impression of lower overall costs. More traditional plans will be left with a pool of higher risk customers, which will push their premiums up even more rapidly in future years.
While these arguments should be taken seriously, they need to be considered in view of what to expect from maintaining the status quo. In 2026, the median premium increase for plans offered in the ACA marketplaces was 18 percent, and the average deductible for a silver plans (with no cost-sharing reduction subsidy) was $5,300. Rapid cost growth is expected to continue in 2027, with the average premium rising by an additional 15 percent.
Critics of the administration argue costs are rising because the enhanced premium credits enacted in 2021 were allowed to expire after 2025, but extension would have pushed more of the costs onto federal taxpayers rather than lowering the total bill. The ACA market, like the rest of the health sector, needs reforms that deliver across-the-board relief rather than more cost-shifting onto taxpayers.
The supply response to the introduction of non-network options will determine their effectiveness at controlling costs. As noted, some providers who are locked out of existing networks might be willing to charge non-network enrollees lower prices to gain market share. It is also possible that non-network insurers will be more innovative than traditional insurers by testing new payment models, such as per-month subscriptions for direct primary care.
Information technology will be critical too. Working with price transparency rules, non-network plans might be able to deploy improved consumer-facing applications that facilitate apples-to-apples price comparisons.
Beyond these substantive considerations, there are legitimate questions about the legality of the administration’s rule. 22 states have filed a lawsuit to block its implementation based on the argument that it violates multiple ACA statutory requirements, including the need for participating insurers to demonstrate “network adequacy.” Separately, a federal district court in Maryland has already put a stay on the implementation of several of the rule’s major changes and ultimately may block the introduction of non-network plans too after a parallel suit is argued later this year. If the courts agree with the plaintiffs in these cases, the administration would need Congress’s approval to open the door to non-network plans outside of a more controlled test, such as through state demonstration authority.
The partisan divide in healthcare is particularly striking in the divergent approaches the Biden and Trump administrations have taken to ACA oversight. The market is not working well, but there is no consensus on what to do next. A controlled test of non-network insurance, with a clear evaluation schedule, would seem to offer the best route to a fact-based assessment of their effects on total costs and market stability.