Fair Care Act of 2026
- Sponsor
- Rep. Westerman, Bruce [R-AR-4]
- Committees
- Budget Committee (primary)
- Last action
- May 14, 2026
Bottom line
The Fair Care Act of 2026 aims to reduce healthcare costs and increase choice through market competition, deregulation, and a shift in federal healthcare program structures.
What it actually does
This bill proposes a sweeping overhaul of the U.S. healthcare system, focusing on market-based reforms, deregulation, and increased consumer choice. It modernizes Health Savings Accounts (HSAs), expands private insurance options, introduces significant competition and transparency measures for providers and drug manufacturers, reforms Medicare and Medicaid payment structures, and enacts comprehensive medical malpractice reforms. A key provision ties the effective date of certain ACA-related protections to a Supreme Court decision striking down the ACA.
Proponents argue
Proponents argue that the bill will lower healthcare costs by fostering competition among providers and insurers, empowering consumers with more control over their healthcare spending through expanded HSAs, and reducing regulatory burdens. They contend that reforms to drug pricing, medical malpractice, and federal programs like Medicare and Medicaid will lead to greater efficiency, innovation, and patient-centered care.
Opponents contend
Opponents contend that the bill could undermine existing consumer protections, particularly for those with pre-existing conditions, and lead to reduced coverage or higher out-of-pocket costs for vulnerable populations. They argue that deregulation and market-based approaches may exacerbate disparities, and that the proposed changes to Medicare and Medicaid could shift significant financial risk to states and beneficiaries.
The bill is 70 pages long and highly complex, requiring significant time for a thorough review. The estimated reading time of 3.5 hours is substantial, indicating that a quick assessment would miss critical details.
Title I, Subtitle A, Sec. 101
Modernization of Health Savings Accounts (HSAs)
This section significantly expands Health Savings Accounts (HSAs) by broadening eligibility to individuals covered under any health plan (including Medicare, Medicaid, and short-term plans), increasing annual contribution limits based on actuarial value of the health plan, and raising the lifetime accumulation limit to $50,000 (indexed for inflation). It also allows qualified medical expenses to include menstrual care products and permits direct primary care service arrangements to be paid from HSAs.
Supporters argue
Supporters argue that expanding HSAs empowers individuals to manage their healthcare spending, encourages price sensitivity, and provides a tax-advantaged savings vehicle for medical costs. The increased limits and broader eligibility make HSAs a more robust tool for healthcare financing.
Critics contend
Critics may argue that expanded HSAs primarily benefit wealthier individuals who can afford to contribute more, potentially shifting more financial burden onto individuals for healthcare costs and exacerbating health disparities if lower-income individuals cannot fully utilize the tax advantages.
Tradeoffs
The provision balances increased individual financial control and tax benefits with potential concerns about equitable access and the adequacy of coverage for those with limited financial resources.
Title I, Subtitle B, Sec. 114
Federal Employee Health Benefits and Health Savings Accounts
This section mandates that all health plans offered under the Federal Employee Health Benefits (FEHB) program be converted into Health Savings Account (HSA) deposits. These deposits would be funded at the level of the second-least expensive silver plan available through the Exchange where the federal employee resides. It also expands the requirement for the President, Vice President, Members of Congress, and Federal employees to obtain coverage through an Exchange.
Title II, Subtitle A, Sec. 201
Guaranteed Availability of Coverage; Prohibiting Discrimination (Conditional on ACA Repeal)
This section amends the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to establish guaranteed availability of coverage, fair health insurance premiums (with age variation up to 5:1 and tobacco use up to 1.5:1), and prohibitions against discrimination based on health status or pre-existing conditions. Crucially, these provisions only take effect if the Supreme Court strikes down the Patient Protection and Affordable Care Act (ACA) in its entirety.
Title II, Subtitle B, Sec. 211
Expansion of Association Health Plans (AHPs)
This section amends ERISA to broaden the definition of 'employer' to include groups or associations of employers that meet specific criteria, allowing them to sponsor group health plans. These criteria include having a substantial business purpose unrelated to health coverage, employer control, commonality of interest (e.g., same trade/industry or geographic region), and non-discrimination rules. It also clarifies that participation in such a plan does not establish an employer or joint employer relationship.
Title II, Subtitle C, Sec. 224
Inclusion in Income of Certain Costs of Employer-Provided Coverage Under Health Plans (Tax Cap)
This section amends the Internal Revenue Code to limit the tax exclusion for employer-provided health coverage. Employer contributions exceeding $10,200 for self-only coverage and $27,500 for all other coverage would be included in an employee's gross income. These dollar amounts are indexed annually for inflation, with an additional adjustment factor.
Title II, Subtitle C, Sec. 226
Premium Assistance Adjustment to Reflect Age and Expanded Eligibility
This section modifies the refundable premium tax credits under Section 36B of the Internal Revenue Code. It introduces a new sliding scale for applicable percentages that varies by age, making credits less generous for younger individuals and more generous for older individuals within certain income tiers. It also expands eligibility for these credits from 400% to 600% of the Federal Poverty Line (FPL).
Title III, Subtitle A, Sec. 301
Hospital Consolidation and Competition Reforms
This section aims to address hospital consolidation by authorizing $160 million for the FTC to investigate anti-competitive mergers and practices. It also mandates that hospitals in high-concentration counties (Herfindahl-Hirschman Index > 4,000) apply Medicare Advantage reimbursement rates for private patients, with a gradual phase-in. Additionally, it establishes a $1 billion annual grant program for states that adopt specific pro-competition laws, such as repealing certificate of need laws, expanding scope of practice for advanced providers, and banning anti-competitive contract terms.
Title III, Subtitle C, Sec. 346
Conditional Approval of New Human Drugs for Rare, Progressive, and Serious Diseases
This section establishes a new pathway for conditional approval of drugs intended to treat rapidly progressive, terminal, or rare diseases with substantial unmet medical needs. Conditional approval can be granted based on evidence of safety (Phase 1) and preliminary evidence of effectiveness (Phase 2 or animal studies for pediatric diseases). It mandates priority review, allows for rolling submissions, and permits the use of real-world evidence. Conditionally approved drugs must carry specific labeling and require patient enrollment in observational registries. Conditional approval is for 2 years, renewable up to 3 times (8 years total), and can be withdrawn if safety data no longer supports it or if the drug is not brought to market within 1 year. It also mandates coverage and prohibits cost-sharing for these drugs by private and federal health insurers.
Title III, Subtitle C, Sec. 348
Reduced Exclusivity Period for Brand Name Biological Products
This section amends the Public Health Service Act to reduce the data exclusivity period for brand name biological products from 12 years to 5 years. This change applies to biological products for which the reference product is licensed on or after the date of enactment of this Act.
Title III, Subtitle D, Sec. 364
Health Plan Oversight of Pharmacy Benefit Manager (PBM) Services
This section imposes significant transparency and oversight requirements on PBMs. It prohibits contracts that limit disclosure of information to plan sponsors, mandates semi-annual reports to plan sponsors detailing drug spending, rebates, and other remuneration from manufacturers. It limits 'spread pricing' by PBMs, requiring that the price charged to a plan or enrollee not exceed the price paid to the pharmacy (for independent pharmacies) or the acquisition cost/median price (for PBM-owned pharmacies). It also mandates a 100% pass-through of all rebates and other remuneration from manufacturers to the group health plan. Non-compliance incurs civil monetary penalties.
Title III, Subtitle F, Secs. 381-395
Medical Malpractice Reform
This subtitle enacts comprehensive medical malpractice reforms, including a 3-year statute of limitations (or 1 year after discovery, with a 3-year repose limit), a $250,000 cap on non-economic damages, and a 'fair share' rule for liability. It also caps contingent attorney fees, authorizes periodic payments for future damages, provides product liability protection for healthcare providers, and sets stringent expert witness qualifications. Additionally, it makes provider apologies inadmissible as evidence of liability and requires an affidavit of merit and 90-day notice before commencing a lawsuit. It also limits liability for volunteer healthcare professionals.
Title IV, Subtitle A, Sec. 401
Medicaid Payment Reform (Per-Beneficiary Payments)
This section establishes a reformed Medicaid payment system for states that elect to participate, replacing the current federal matching funds with a per-beneficiary payment model. States would receive an 'adjusted aggregate beneficiary-based amount' for different categories of Medicaid enrollees (elderly, blind/disabled, children, other adults), adjusted for risk factors and geography. Payments would increase annually based on nominal GDP plus 1 percentage point. States would also be eligible for 'chronic care quality bonus' payments. The provision limits federal payments for individuals with incomes exceeding 100% of the FPL, with some exceptions, and excludes certain payments (e.g., for territories, Medicare cost-sharing) from the new system.
Title IV, Subtitle B, Sec. 413
Elimination of Medicare Eligibility for Certain High-Income Individuals
This section amends the Social Security Act to eliminate eligibility for Medicare Part B and Part D for individuals who attain age 65 on or after January 1, 2032, and have earned $10,000,000 or more in lifetime wages. It also prohibits the sale of Medigap supplemental policies to these 'targeted newly eligible Medicare beneficiaries'.
Title IV, Subtitle B, Sec. 415
Repeal of Net Investment Income Tax
This section repeals Chapter 2A of Subtitle A of the Internal Revenue Code of 1986, which imposes a 3.8% tax on net investment income for high-income individuals. This repeal applies to taxable years beginning after December 31, 2026.
Title IV, Subtitle C, Sec. 421
Competitive Bidding and Premiums Under Unified Medicare
This section establishes a new 'Unified Medicare' system, requiring individuals to enroll through an online process that highlights options: Traditional Fee-for-Service (FFS), Provider-led Risk-Bearing Plans (ACOs), and Medicare Advantage (MA) plans. MA plans must have an actuarial value equal to traditional FFS. Market areas for bids and cost calculations will be metropolitan statistical regions. Beneficiaries will pay the difference between the Medicare payment benchmark and their chosen plan's premium, and receive 100% of savings if they choose a plan below the benchmark. A transition limit on premium increases is included for existing FFS beneficiaries. MA plans can offer multiyear contracts.
Title IV, Subtitle C, Sec. 422
New Unified Eligibility and Enrollment Rules for Medicare
This section introduces several major changes to Medicare eligibility and enrollment. It permits individuals to opt out of Part A coverage without losing Social Security benefits, with a late enrollment penalty upon re-enrollment. It creates a special open enrollment period for current Part A-only or Part B-only enrollees to unify their coverage without penalty. It mandates auto-enrollment of full-benefit dual-eligible individuals into MA-PD plans with premiums not exceeding available premium assistance, unless the state opts for an alternative. It also mandates auto-enrollment into Part D prescription drug plans for Medicare enrollees who fail to enroll or opt out, with late enrollment penalties. Finally, it limits Medicaid benefits for full-benefit dual-eligible individuals to only those items not covered by Medicare, unless the state chooses a maintenance of effort option.
Title IV, Subtitle D, Sec. 431
Expansion of Coverage of Telehealth Services
This section significantly expands Medicare coverage for telehealth services. It adds respiratory services, audiology services, and outpatient therapy services (physical, occupational, speech-language pathology) to the list of covered telehealth services. It also expands the types of providers who can furnish telehealth services to include certified diabetes educators and licensed respiratory therapists, audiologists, occupational therapists, physical therapists, and speech-language pathologists. Additionally, it covers home-based remote patient monitoring services for congestive heart failure and chronic obstructive pulmonary disease, with specific payment rules.
The amendments made by Section 201 (which re-establishes guaranteed availability, fair premiums, and pre-existing condition protections) shall take effect on the date on which the Supreme Court of the United States issues a decision striking down the Patient Protection and Affordable Care Act (Public Law 111-148) in its entirety.
Sec. 201(d) (Effective Date)
Why it matters:This is a highly unusual and politically charged effective date. It effectively makes the implementation of significant consumer protections contingent on a specific, hypothetical future judicial outcome, which is a political maneuver to frame the bill as a replacement for the ACA if it were to be fully overturned, rather than a direct repeal-and-replace measure.
Case for: Supporters might argue that this provision ensures that if the ACA is fully struck down, there is an immediate framework to prevent a gap in critical consumer protections like those for pre-existing conditions, demonstrating a commitment to patient safety regardless of judicial outcomes.
Case against: Critics would contend that this effective date is a political stunt, as it relies on a highly unlikely judicial outcome (a full repeal of the ACA). They would argue it creates uncertainty and is disingenuous, as it avoids taking a direct stance on repealing the ACA while simultaneously proposing a replacement framework.
Estimated impact: The impact is entirely contingent on a Supreme Court ruling that is not guaranteed and widely considered unlikely. If triggered, it would fundamentally reshape the individual and group health insurance markets.
Corporations incorporated after December 31, 2026, will not receive tax benefits for offering employees health insurance, except for contributions to Health Savings Accounts (HSAs).
Sec. 113 (New Corporations Required to Use Health Savings Accounts)
Why it matters:This is a significant policy shift for new businesses, effectively mandating an HSA-centric approach to health benefits for future corporations. It's buried because it's a fundamental change to corporate tax incentives for health benefits, rather than a simple 'assistance' measure.
Case for: Proponents would argue this encourages new businesses to adopt more efficient, market-driven health benefit structures from inception, promoting cost-consciousness and HSA utilization across the economy.
Case against: Opponents would contend this is an unfunded mandate on new businesses, limiting their flexibility in offering competitive health benefits and potentially disadvantaging them compared to older corporations that retain broader tax benefits for traditional insurance.
Estimated impact: This would fundamentally alter the health benefit landscape for all new corporations established after 2026, potentially shifting millions of future employees towards HSA-only health plans.
This section expands the definition of 'Corporation' under the Federal Trade Commission Act to include any organization described in section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of such Code.
Sec. 302 (Authority of Federal Trade Commission Over Certain Tax-Exempt Organizations)
Why it matters:This is a significant expansion of the FTC's antitrust authority, bringing tax-exempt non-profit organizations (including many hospitals and healthcare systems) under its direct purview. It's buried because it's a broad jurisdictional change that could be controversial if highlighted.
Case for: Proponents argue that many large tax-exempt organizations, particularly in healthcare, operate like for-profit entities and engage in anti-competitive practices. Expanding FTC authority ensures a level playing field and protects consumers from monopolistic behavior regardless of an entity's tax status.
Case against: Opponents would contend that tax-exempt organizations have different missions and operating structures than for-profit corporations and should not be subject to the same antitrust scrutiny. They might argue it could stifle charitable activities or create undue regulatory burdens for non-profits.
Estimated impact: This would subject thousands of non-profit organizations, including major hospital systems, universities, and other large charitable entities, to federal antitrust enforcement by the FTC, potentially leading to increased investigations and litigation.
Reduces the data exclusivity period for brand name biological products from 12 years to 5 years, applicable to products licensed on or after the date of enactment.
Sec. 348 (Exclusivity Period for Brand Name Biological Products)
Why it matters:This is a highly contentious issue in pharmaceutical policy, with significant financial implications for both brand-name and biosimilar manufacturers. Reducing exclusivity periods is a major policy change that would likely face intense lobbying and opposition if presented as standalone legislation.
Case for: Proponents argue that a shorter exclusivity period will accelerate the entry of biosimilar competition, driving down prices for biological drugs and increasing patient access to life-saving treatments sooner.
Case against: Opponents (brand-name manufacturers) contend that the 12-year exclusivity period is crucial for incentivizing the enormous investment and risk involved in developing complex biological products. A shorter period, they argue, would stifle innovation and reduce the availability of new treatments.
Estimated impact: This change could lead to billions of dollars in savings for healthcare payers and patients due to earlier biosimilar competition, but it could also reduce the profitability and R&D investment of brand-name biological drug companies.
Establishes a new Chapter 8a in Title 5, U.S. Code, specifically for congressional review of FDA rules, replacing the general Chapter 8. It mandates a 'regulatory cut-go' requirement (Sec. 818) where the FDA must identify and repeal or amend existing rules to offset the annual costs of any new rule to the U.S. economy. It also requires annual review of existing FDA rules, with a 10-year sunset if not re-approved by Congress.
Sec. 354 (Congressional Review of the Food and Drug Administration Rulemaking)
Why it matters:This is a significant procedural change that would dramatically alter the FDA's rulemaking authority and capacity. It's buried within a technical statutory amendment because it's a controversial attempt to rein in agency power and impose a deregulatory burden, which would face strong opposition if highlighted.
Case for: Proponents argue that this measure increases congressional oversight of unelected bureaucrats, reduces regulatory burdens on the pharmaceutical and medical device industries, and ensures that new regulations are offset by repealing old ones, promoting economic growth and innovation.
Case against: Critics would contend that this politicizes the scientific rulemaking process of the FDA, creates immense administrative burdens for the agency, and could delay or prevent the issuance of crucial public health and safety regulations, potentially endangering consumers.
Estimated impact: This would fundamentally alter the regulatory environment for all products overseen by the FDA, potentially slowing down new regulations, forcing the repeal of existing ones, and shifting power from the agency to Congress.
Individuals who attain age 65 on or after January 1, 2032, and have earned $10,000,000 or more in lifetime wages, will not be eligible to enroll in Medicare Part B or Part D. Additionally, Medigap policies cannot be sold or issued to these 'targeted newly eligible Medicare beneficiaries'.
Sec. 413 (Elimination of Medicare Eligibility for Certain Individuals)
Why it matters:This is a significant and politically sensitive change to Medicare's universal eligibility principle. Denying benefits based on lifetime income is a major policy shift that would likely face strong opposition if highlighted, as it challenges the concept of Medicare as an earned benefit.
Case for: Proponents argue that this measure targets Medicare benefits to those who genuinely need them, reducing federal outlays for high-income individuals who can afford private insurance, thereby improving Medicare's long-term fiscal sustainability.
Case against: Opponents would argue that Medicare is an earned benefit, funded by payroll taxes throughout one's working life, and denying eligibility based on lifetime income undermines this social contract. They would also raise concerns about the administrative complexity of tracking lifetime wages and the precedent it sets for means-testing other earned benefits.
Estimated impact: This would affect a small but wealthy segment of the future elderly population, potentially leading to modest federal savings in Medicare outlays over the long term. It would force these individuals to rely entirely on private insurance in retirement.