New Health Options Act of 2025

Bill Number

H.R. 1776

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Health

Status

Introduced

Latest Action

2025-03-03: Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-01-22T09:06:05Z

AI-Generated Summary

Purpose of the Legislation

The New Health Options Act of 2025 aims to modify the Patient Protection and Affordable Care Act (ACA) and related public health laws to create more flexible health insurance options outside government exchanges. It focuses on reducing premiums for certain individual health plans, promoting cost-effective care, and increasing transparency in pricing to benefit consumers and insurers.

Key Provisions

• Reinsurance Program for Off-Exchange Plans (Section 2):
• Establishes a federal reinsurance program administered by the Secretary of Health and Human Services (HHS) to reimburse insurers for high-cost claims (above $110,000 per person in 2026) for individuals in "covered plans." These are individual health policies sold outside ACA exchanges that do not cover abortions (except in cases of rape, incest, or life endangerment).
• Provides 90% reimbursement up to a $300,000 cap per claim in 2026, with HHS able to adjust these thresholds to fit funding limits.
• Funding: $50 per member-month appropriated from general Treasury funds (up to $6 billion annually) for 2026–2030; unused funds can carry over but cannot fund prohibited services like abortions.
• Allows insurers to opt out of the ACA's "single risk pool" requirement (which mixes healthy and high-risk enrollees to stabilize rates) for these off-exchange plans, treating them as separate pools.
• Removes the ACA's 3:1 limit on age-based premium variations for these plans, allowing insurers to charge older adults actuarially justified higher rates (while keeping the limit for exchange plans).
• Ensures these opt-out plans can integrate with individual health reimbursement arrangements (tax-advantaged accounts that reimburse medical expenses).

• Promotion of High-Value Care (Section 3):
• Requires group and individual health plans to optionally apply out-of-network (non-contracted provider) costs toward in-network deductibles and out-of-pocket maximums if the service is covered and the charge is reasonable—either the lowest in-network rate in the area or the 25th percentile of statewide charges.
• Mandates plans to disclose these lowest rates and percentiles to enrollees.

• Disclosure of Lower Prices (Section 4):
• Starting in 2026, health providers and facilities must tell insured patients (under group plans, individual coverage, or federal programs like Medicare) if their out-of-pocket costs (deductibles, copays, coinsurance) exceed the cash price for uninsured patients.
• Adds enforcement: Patients harmed by violations can sue providers in federal court for injunctions (court orders to stop the violation) and damages under state law.

All provisions take effect for plan years beginning January 1, 2026, with initial reinsurance rules set within 120 days of enactment.

Significant Changes to Existing Law

• To the ACA: Adds a new reinsurance section (1344) targeted at off-exchange plans, unlike prior temporary programs that covered exchange plans. Introduces an opt-out from the single risk pool (previously mandatory for non-grandfathered plans) and relaxes age-rating limits for opt-out plans only. Prohibits opt-out for qualified exchange plans to preserve their protections.
• To the Public Health Service Act: Amends rules on premium variations to allow broader age-based pricing for opt-out plans. Adds requirements for applying out-of-network costs and mandating price disclosures, building on existing transparency rules but expanding to private lawsuits.
• These changes create a dual-track system: stricter rules for exchange plans and more flexibility for off-exchange ones, potentially diverging from the ACA's original goal of uniform market stability.

Potential Impacts

• On Government Agencies: HHS gains new administrative duties for running the reinsurance program, including setting parameters and processing claims, with up to $30 billion in total funding over five years drawn from Treasury. This could strain resources but reduce federal exchange subsidies indirectly by lowering off-exchange premiums.
• On Citizens: Individuals buying off-exchange insurance may see lower premiums due to reinsurance and flexible rating, but healthier people could face higher rates if risk pools separate. Out-of-network provisions and price disclosures empower patients to seek affordable care, potentially reducing surprise bills and costs. No direct impact on international relations.
• Broader Effects: Could shift enrollment from exchanges to off-exchange plans, fragmenting the individual market and increasing premiums for those remaining on exchanges (due to adverse selection, where sicker people stay). Promotes competition among providers by highlighting cash prices.

Main Stakeholders Affected

• Health Insurers: Benefit from reinsurance reimbursements and risk pool opt-outs, enabling tailored pricing, but must comply with new disclosures and cannot use funds for certain services.
• Individuals and Families: Off-exchange buyers gain premium relief and cost protections; exchange users may see indirect rate hikes. Patients overall get more pricing transparency.
• Health Providers and Facilities: Face disclosure mandates and potential lawsuits for non-compliance, which could pressure them to align insured and cash prices.
• Employers and Plans: Group plans must adopt out-of-network cost rules, affecting benefit design.
• Federal Government: Taxpayers fund the program; HHS and other agencies (Labor, Treasury) ensure integration with reimbursement accounts.

Notable Legal, Constitutional, or Political Implications

• Legal: Introduces a private right of action for price disclosure violations, potentially increasing litigation against providers (similar to consumer protection laws). Ensures opt-out plans remain eligible for tax benefits, avoiding conflicts with existing reimbursement rules. No explicit constitutional challenges, but changes to ACA risk pools could face lawsuits over market stability or equal protection if they disproportionately affect vulnerable groups.
• Political: Modifies the ACA without repealing it, appealing to those seeking deregulation while preserving core exchange protections—potentially bipartisan but controversial among ACA supporters for risking market segmentation. The abortion coverage exclusion aligns with ongoing debates on federal funding restrictions, and the funding cap limits fiscal exposure amid budget concerns.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Palmer, Gary J. [R-AL-6]

Cosponsors (3)

Rep. Westerman, Bruce [R-AR-4], Rep. Davidson, Warren [R-OH-8], Rep. Allen, Rick W. [R-GA-12]

Recent Actions

• 2025-03-03: Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-03-03: Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-03-03: Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-03-03: Introduced in House
• 2025-03-03: Introduced in House

Bill Versions

• New Health Options Act of 2025 — issued 2025-03-03 — PDF (12 pages)