Health CARE Act of 2026
- Sponsor
- Sen. Warner, Mark R. [D-VA]
- Committees
- Finance Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
The 'Health CARE Act of 2026' is a sweeping legislative proposal designed to significantly expand government involvement in health care coverage and pricing, while enhancing consumer protections and transparency across the health care system.
What it actually does
This bill, titled the 'Health CARE Act of 2026,' proposes a comprehensive overhaul of health care policy, aiming to expand access and lower costs. It repeals certain prior reconciliation health provisions, permanently extends enhanced Affordable Care Act (ACA) tax credits, establishes a new federal health plan, and strengthens Medicaid by increasing federal matching funds during economic downturns. Additionally, it expands Medicare drug price negotiation, applies prescription drug inflation rebates to the commercial market, establishes out-of-pocket limits for prescription drugs, mandates insulin cost-sharing, and introduces extensive price transparency requirements for hospitals, laboratories, imaging services, and ambulatory surgical centers. The bill also includes provisions for required exceptions processes for medication step therapy, establishes requirements for prior authorization under Medicare Advantage plans, expands Medicare coverage for hearing care, and reforms pharmacy benefit manager (PBM) practices in Medicaid.
Proponents argue
Supporters argue that this bill will make health care significantly more affordable and accessible for millions of Americans by lowering drug costs, expanding coverage options through a new public plan and enhanced tax credits, and strengthening Medicaid. They contend that increased price transparency will empower consumers and drive down costs, while reforms to PBMs and prior authorization processes will reduce administrative burdens and ensure patients receive timely, necessary care. Proponents emphasize that the bill addresses long-standing issues in the healthcare system, moving towards a more equitable and efficient model.
Opponents contend
Critics may argue that the bill represents an overreach of government into the private health care market, potentially disrupting existing insurance and provider networks. They might contend that expanding Medicare drug price negotiation and applying inflation rebates to the commercial market could stifle pharmaceutical innovation. Concerns could also be raised about the administrative burden imposed on health care providers and insurers by the extensive new transparency and reporting requirements, potentially leading to higher operational costs or reduced access to care if providers opt out of federal programs due to mandatory participation in the new health plan.
This is a lengthy and highly complex bill, requiring several hours of dedicated reading for an informed understanding. The sheer volume of interconnected policy changes makes a quick review insufficient for grasping its full implications.
Title I, Sec. 101
Repeal of Reconciliation Health Provisions
This section repeals most of the health-related provisions enacted under Subtitle B of Title VII of Public Law 119-21, an Act providing for reconciliation. It aims to undo previous legislative changes, with specific exceptions for sections 71202, 71306, and 71401 of that Act. Additionally, it rescinds unobligated appropriations related to the implementation of the repealed provisions and certain Title XIX (Medicaid) funding.
Supporters argue
Proponents argue that repealing these prior reconciliation provisions is necessary to align health policy with the current administration's goals, potentially removing measures deemed ineffective or contrary to public interest. Rescinding unobligated funds ensures that resources are not spent on programs that are no longer prioritized.
Critics contend
Opponents would argue that repealing these provisions disrupts continuity in health policy and wastes prior legislative effort. They might contend that the repealed provisions served important functions and their removal could negatively impact specific populations or healthcare initiatives.
Tradeoffs
The provision represents a political tension between different legislative priorities, reversing previous policy decisions. It trades the continuity of prior law for a new policy direction, potentially causing instability for affected programs and stakeholders.
Title I, Sec. 102
Permanent Extension of Enhanced ACA Tax Credit
This section permanently extends the enhanced premium tax credits established under the Affordable Care Act (ACA) by removing the 400% federal poverty level income cap for eligibility. It also modifies the 'applicable percentages' used to calculate premium contributions, ensuring that individuals pay a smaller percentage of their income towards health insurance premiums on a sliding scale, making coverage more affordable for a broader range of incomes.
Title II, Sec. 201-205
Establishment of Federal Health Plan (Public Option)
This title mandates the Secretary of Health and Human Services to establish a coordinated, low-cost federal health plan, often referred to as a 'public option.' This plan would be available in the individual market and through the Small Business Health Options Program (SHOP) Exchange starting in plan year 2028. Eligibility is for qualified individuals not eligible for Medicare or employer-sponsored coverage. The Secretary is directed to ensure affordability compared to other Exchange options, set competitive provider payment rates, and may require Medicare and Medicaid providers to participate in the new plan.
Title III, Sec. 301
Increased FMAP for Newly Eligible Medicaid Individuals (Retroactive)
This section amends the Social Security Act to retroactively increase the Federal Medical Assistance Percentage (FMAP) for states providing medical assistance to newly eligible individuals under Medicaid expansion. Instead of fixed dates (2014-2020), the increased FMAP (100% for the first three years, gradually decreasing to 90%) applies for the first seven consecutive 12-month periods in which a state provides such assistance, regardless of when they expanded. This change applies retroactively as if included in the original enactment of Public Law 111-148 (ACA).
Title III, Sec. 302
Supporting State Medicaid Programs Through Economic Downturns
This section establishes a mechanism to automatically increase the Federal Medical Assistance Percentage (FMAP) for states during economic downturns. If a state's quarterly unemployment rate exceeds a specified threshold (based on historical averages), its FMAP will increase on a sliding scale. This increased FMAP is capped at 95% and has specific rules for application, including exclusions for certain payments. It also includes provisions for advance payments, retrospective adjustments, and allows states to retroactively apply over-the-limit FMAP increases to prior quarters. States must maintain eligibility standards and not increase premiums to qualify.
Title IV, Sec. 401
Expanding Medicare Drug Price Negotiation to Commercial Market
This section significantly expands the Medicare Drug Price Negotiation Program. It increases the number of negotiation-eligible drugs from 20 to 30 for 2030, 40 for 2031, and 50 for 2032 and subsequent years. Crucially, it extends the application of these negotiated maximum fair prices beyond Medicare beneficiaries to participants, beneficiaries, and enrollees in group health plans and health insurance coverage offered in the group or individual market. Health plans and issuers are treated as having an agreement to participate unless they affirmatively opt out, and they must apply cost-sharing based on the negotiated price.
Title IV, Sec. 403
Establishing Out-of-Pocket Limits for Prescription Drugs
This section establishes new annual out-of-pocket limits for prescription drug expenditures under group health plans and group and individual health insurance coverage, starting in plan year 2028. For self-only coverage, the limit is $2,000 in 2028, adjusted annually for inflation. For other coverage, it's twice that amount. These limits are separate from the overall out-of-pocket maximums for all health services, which are also updated. The provision defines 'cost-sharing' to include deductibles, coinsurance, copayments, and other qualified medical expenses, but excludes premiums and balance billing.
Title IV, Sec. 404
Requirements for Insulin Cost-Sharing
This section mandates that for plan years beginning on or after January 1, 2028, group health plans and health insurance issuers offering group or individual coverage must provide coverage for 'selected insulin products' without applying any deductible. Furthermore, cost-sharing for these products is capped at the lesser of $35 per 30-day supply or 25% of the negotiated price, net of all price concessions. The bill defines 'selected insulin products' to include at least one of each dosage form and type of insulin available, as chosen by the plan or issuer. Cost-sharing payments for insulin count towards deductibles and out-of-pocket maximums.
Title V, Sec. 501
Required Exceptions Process for Medication Step Therapy Protocols
This section mandates that group health plans and health insurance issuers using medication step therapy protocols must implement a clear, prompt, and transparent process for participants or their prescribers to request exceptions. It outlines six specific circumstances under which an exception must be granted, including prior ineffectiveness of required treatments, risk of severe consequences from delay, contraindications, impact on functional ability, or stability on a previously approved drug. The process requires standard forms, electronic submission options, clear criteria, and expedited review for urgent cases. Approved exceptions must remain in effect for at least one year. Plans must also report data on step therapy exception requests and outcomes to the Secretary.
Title V, Sec. 502
Requirements for Prior Authorization Under Medicare Advantage Plans
This section establishes new requirements for Medicare Advantage (MA) plans regarding prior authorization, effective for plan years beginning on or after January 1, 2028 (transparency) and 2029 (electronic program and enrollee protection). MA plans must implement electronic prior authorization programs, meet enrollee protection standards (e.g., transparent programs, waiver based on provider performance, annual reviews), and comply with extensive transparency requirements. These transparency requirements include annual reporting to the Secretary on approval/denial rates, appeal outcomes, use of AI/technology in decisions, and average processing times. Plans must also provide providers and enrollees access to prior authorization criteria. The Secretary is granted authority to enforce timely responses for all prior authorization requests, including establishing specific timeframes (e.g., 24 hours).
Title V, Sec. 504
Providing Coverage for Hearing Care Under the Medicare Program
This section significantly expands Medicare coverage for hearing care, effective January 1, 2028. It includes audiology services (including aural rehabilitation and treatment) furnished by qualified audiologists and, for the first time, hearing assessment services furnished by qualified hearing aid professionals. Crucially, it adds hearing aids as a covered prosthetic device for individuals diagnosed with moderately severe, severe, or profound hearing loss, with limitations (once per ear every 5 years, for Secretary-approved types, with a written order). Payment for hearing aids will be on an assignment-related basis and subject to competitive acquisition. It also includes implementation funding and temporary payment rates for audiology services in rural health clinics and federally qualified health centers.
Title VI, Sec. 601-604
Strengthening Price Transparency for Hospitals, Labs, Imaging, and ASCs
These sections mandate extensive price transparency requirements for hospitals, clinical diagnostic laboratories, imaging service providers, and ambulatory surgical centers (ASCs), effective January 1 of the year following one year after enactment. These providers must publicly disclose, on an internet website, all standard charges (gross charge, discounted cash price, payer-specific negotiated charges, de-identified maximum/minimum negotiated charges, facility fees) for all items and services, in both machine-readable and consumer-friendly formats. They also require disclosure of ownership and investment interests. The Secretary is tasked with establishing uniform methods and formats, monitoring compliance, and imposing significant civil monetary penalties for non-compliance, with no authority to waive or reduce penalties except in cases of severe patient care disruption. Hospitals are also prohibited from extraordinary collection actions against patients when non-compliant.
Title VI, Sec. 605
Strengthening Health Coverage Transparency Requirements
This section significantly expands transparency requirements for group health plans and health insurance issuers. It mandates that at enrollment, individuals receive specific information about in-network rates, out-of-network allowed amounts, cost-sharing liability, accumulated deductibles/out-of-pocket maximums, and utilization management requirements. This information must be provided via a real-time, internet-based self-service tool. Additionally, plans and issuers must publicly disclose detailed rate and payment information (in-network rates by provider, drug rates by pharmacy, and out-of-network allowed amounts) in machine-readable files quarterly. Ownership information must also be disclosed. The Secretary is required to audit compliance and can impose civil monetary penalties for violations.
Title VI, Sec. 606-607
Increasing Group Health Plan Access to Health Data and Oversight of Administrative Service Providers
These sections enhance the ability of specified large group health plans and employers to access detailed health data from their administrative service providers (including health care providers, networks, TPAs, and PBMs). Contracts with these providers are deemed 'unreasonable' (and void as against public policy) if they limit or delay access to claims, encounter, and payment information, or restrict disclosure of pricing terms, overpayments, fees, or ownership interests. Providers must supply this data in specific electronic formats (HIPAA transaction standards) at no cost. The Secretary of Labor can assess civil penalties of up to $10,000 per day for violations. Additionally, health plan service providers must quarterly disclose detailed contractual and subcontractual calculation methodologies, all remuneration received (rebates, fees, discounts), and all payment data related to alternative compensation arrangements to group health plans or electing health insurance issuers. The Secretary of HHS can impose penalties of $100,000 per day for violations.
Title VI, Sec. 609-610
Requirement for Explanation of Benefits and Transparency in Billing
These sections strengthen consumer protections related to billing. Section 609 amends the Public Health Service Act to require an 'Advanced Explanation of Benefits' (AEOB) to include a good faith estimate of the amount the plan is responsible for paying, with a plain language description and billing codes. Crucially, if the AEOB estimate is 'substantially in excess' of the actual billed amount, the patient is held harmless for the excess. Section 610 mandates that healthcare providers and facilities include a written notice of an individual's right to an itemized bill with any payment request. It prohibits billing or collection actions if the provider hasn't complied with this notice requirement or if the billed amount substantially exceeds the good faith estimate provided to the plan, unless unforeseen circumstances are documented. Penalties of up to $10,000 per instance can be imposed for non-compliance.
Title VII, Sec. 701
Ensuring Accurate Payments to Pharmacies Under Medicaid
This section reforms how pharmacy acquisition costs are determined and how pharmacies are paid under Medicaid. It mandates the Secretary to conduct monthly surveys of retail and applicable non-retail pharmacy drug prices to determine national average drug acquisition cost benchmarks, net of all discounts and rebates. The survey must differentiate between pharmacy types (retail, non-retail, affiliates) and make information publicly available. States must require all pharmacies receiving Medicaid payments (directly or via PBMs) to respond to these surveys, with civil monetary penalties up to $100,000 per violation for non-compliance or false information. The Inspector General is also appropriated $5 million to study how internal transfer prices and related party transactions influence costs reported by affiliated pharmacies.
Title VII, Sec. 702
Preventing the Use of Abusive Spread Pricing in Medicaid
This section mandates transparent prescription drug pass-through pricing models for contracts between states and Pharmacy Benefit Managers (PBMs) or managed care entities in Medicaid. It requires that any payment for covered outpatient drugs be limited to ingredient cost and a professional dispensing fee (not less than the state's direct payment rate), and that this payment is passed through in its entirety to the dispensing pharmacy. Payment to PBMs for administrative services must be limited to a fair market value administrative fee. Any form of 'spread pricing' (where the PBM charges the state more than it pays the pharmacy, after administrative fees) is prohibited for federal matching payments. PBMs and entities must provide states and the Secretary with all costs and payments related to drugs and administrative services, broken down by drug. It also requires annual reporting on excess payments for 340B drugs.
The bill permanently eliminates the 400% federal poverty level income cap for eligibility for Affordable Care Act (ACA) premium tax credits and adjusts the applicable percentages to ensure lower premium contributions across all income levels. This is achieved by striking specific phrases in the Internal Revenue Code.
Sec. 102(a) and (b)
Why it matters:The technical nature of tax code amendments often leads to complex phrasing. The 'table tool error' in the provided text further obscures the full scope of the change to applicable percentages, which is critical for understanding the financial impact.
Case for: Proponents argue this ensures that no individual faces a 'subsidy cliff' where their income slightly exceeds a threshold, leading to a sudden, dramatic increase in premium costs. It makes health insurance more affordable and accessible for a broader range of middle-income individuals and families.
Case against: Critics contend that permanently expanding these subsidies without an income cap represents a significant and potentially unsustainable increase in federal spending, further entrenching government subsidies in the health insurance market.
Estimated impact: This provision will significantly increase federal outlays for premium tax credits, potentially by hundreds of billions of dollars over a decade, and will lower out-of-pocket premium costs for millions of Americans.
The Secretary of Health and Human Services is granted the authority to require health care providers enrolled under the Medicare program or participating in a State Medicaid plan to also be participating providers under the newly established federal health plan, starting January 1, 2028.
Sec. 204(a) and (b)
Why it matters:This provision grants significant power to the Secretary to ensure network adequacy for the new public option, which is a critical operational detail. Its placement might be to avoid drawing immediate attention to the potentially controversial mandatory aspect of provider participation.
Case for: Proponents argue that mandatory participation is essential to ensure the federal health plan has a robust and comprehensive network of providers, making it a viable and attractive option for enrollees. Without it, the plan might struggle to compete with private insurers.
Case against: Opponents, particularly provider groups, would argue that this constitutes an undue burden and government overreach, forcing them to participate in a plan with potentially unfavorable payment rates. This could lead to providers opting out of Medicare/Medicaid entirely or reducing their participation, potentially harming access to care.
Estimated impact: This provision could significantly shape the competitive landscape for the new federal health plan and impact provider participation in federal programs, potentially affecting access to care and provider revenue.
These subsections, repeated across the hospital, laboratory, imaging, and ambulatory surgical center price transparency sections, state that the Secretary 'shall not grant or extend any waiver, delay, tolling, or other mitigation of a civil monetary penalty for failing to comply with the requirements of this subsection except where the Secretary determines that imposing the maximum civil monetary penalty, including penalties for persistent noncompliance, will disrupt hospital operations in a manner that impacts patient care.'
Sec. 601(b)(7)(C), 602(c)(7)(iv), 603(d)(6)(iv), 604(e)(6)(iv)
Why it matters:This clause significantly limits the Secretary's discretion in enforcing the transparency requirements, signaling a strong legislative intent for strict compliance. It's a powerful statement about the seriousness of the transparency mandates, placed within the technical enforcement details.
Case for: Proponents argue that this strict language is necessary to ensure robust compliance with price transparency rules, preventing providers from seeking waivers or delays that would undermine the policy's effectiveness. It demonstrates a commitment to holding providers accountable.
Case against: Opponents might argue that this provision is overly rigid and could lead to disproportionate penalties for providers, especially smaller ones, who face legitimate challenges in implementing complex new reporting systems. They may contend that it removes necessary flexibility for the Secretary to apply penalties judiciously.
Estimated impact: This clause increases the likelihood of strict enforcement and significant financial penalties for non-compliant providers, potentially forcing rapid and costly changes to their administrative systems.
This subsection places strict limitations on how a group health plan receiving claims and encounter information from its service providers can use and disclose that data. It states that the plan 'may use such information or data only for purposes of plan administration and may not sell, license, or otherwise commercially exploit such information or data or provide such information or data to any third party that may take such action.'
Sec. 606(a)(1)(C)
Why it matters:This provision is crucial for addressing privacy concerns related to the vast amounts of data that group health plans will now access. It's designed to prevent the commercialization of sensitive health data, a politically sensitive issue, by explicitly limiting its use.
Case for: Proponents argue that this limitation is essential to protect patient privacy and prevent the misuse of sensitive health information. It ensures that increased data access for plan administration does not inadvertently create new avenues for commercial exploitation of personal health data.
Case against: Opponents might argue that such strict limitations could hinder legitimate data analytics and research that could lead to improved health outcomes or more efficient plan designs, even if de-identified. They may contend it creates an overly restrictive environment for data utilization.
Estimated impact: This provision establishes a strong legal barrier against the commercial sale or licensing of health data obtained by group health plans, potentially impacting the data analytics market and reinforcing patient privacy.