In this report, we propose eight incremental reforms that would expand upon the Affordable Care Act. For each of the eight steps, we introduce policies that would increase insurance coverage, improve affordability, and contain health care costs. These steps would be politically challenging, as most would raise budgetary concerns or face resistance from insurers, providers, or other stakeholders. However, in total, the policies proposed here are less extensive and would cost less than estimated for most approaches to universal coverage.

Why This Matters

Large numbers of Americans remain interested in expanding health insurance coverage and containing health care spending. Before the One Big Beautiful Bill Act (OBBBA), there were approximately 27 million uninsured US residents. Together with the expiration of enhanced Marketplace premium tax credits, the OBBBA would likely add another 16 million uninsured. Additionally, health care spending in the US is higher than in any other nation. The US spends almost 17 percent of its GDP on health, while most other advanced countries spend between 10 and 12 percent. 

What We Found

Starting from current law in 2025, the incremental reforms that we develop and analyze are: 

1. Enhancement of cost-sharing subsidies.
2. Other low-income reforms, including a national reinsurance program and removal of the current employer firewall for people with incomes below 300 percent of FPL.
3. Filling the Medicaid gap by extending Marketplace coverage to individuals below 100 percent of FPL. This would address the eligibility gap in the 10 states that have not expanded Medicaid to low-income individuals.
4. Automatic enrollment of low-income people who are eligible for coverage with zero premiums.
5. Capping provider payment rates in the nongroup and small-group insurance markets.
6. Capping provider payment rates in all private insurance markets.
7. Automatic enrollment of all lawfully present residents.
8. Adding coverage of undocumented residents to reach universal coverage.

We found that the number of uninsured would be reduced with the first seven policies from 26.6 million to 6.6 million, all of whom are undocumented immigrants. Eliminating uninsurance completely would require providing coverage to this population.

If all eight reforms were enacted, spending by the federal government would increase by $117.6 billion, assuming full implementation in 2025. Households would save $52.1 billion. Employer premium spending would fall by $133.2 billion. Total national health spending would fall by $93.6 billion.

Federal spending would increase with added coverage and improved affordability. Because the reduction in employer coverage would result in increased wages and higher tax payments, the impact on the federal deficit would be less than the increase in federal spending.

Households would save with the coverage and affordability provisions. They would also save from the caps on provider payments, particularly if they were extended to all private insurance. 

Employers would spend less on premiums because some provisions would result in people choosing to forgo employer coverage and move to the individual market. Employers would also spend less on premiums with capped rate policies, particularly when extended to all firms. We assume these savings will be passed on to employees through higher wages, which would be subject to income tax.

Overall, we find that national health spending would be reduced despite the significant expansion of coverage. Increased federal spending is more than offset by savings to households and lower employer premiums. The savings are primarily because of the caps on provider payment rates in private insurance plans. The capped provider payment rates are set below current rates in employer plans but above Medicare payment rates. This policy would likely generate opposition from providers, but is similar to rate setting in Medicare Advantage.

How We Did It

Our estimates were developed using the Health Insurance Policy Simulation Model and use a baseline of current law in 2025. For 2026 and beyond, the passage of the OBBBA, new Marketplace rules, and the scheduled expiration of enhanced premium tax credits are expected to decrease coverage and spending in future years. In those years, a first reform returning health policy to its 2025 state would be a precursor to the reforms shown.