Proposed 'More Affordable Care Act' Lets States Waive ACA Rules, Redirects Subsidies to New Health Accounts

This bill, creatively titled the “More Affordable Care Act,” is a massive shakeup to the current health insurance landscape. Starting in 2026, it sets up a Health Freedom Waiver program that lets states opt out of major parts of the Affordable Care Act (ACA)—think health insurance exchanges, the Basic Health Program, cost-sharing reductions, and even the premium tax credits and the individual mandate (Sec. 2).

The catch? States must maintain a high-risk insurance pool. If a state pulls the trigger on this waiver, it fundamentally changes how federal health dollars flow to its residents. Instead of receiving premium tax credits or cost-sharing reductions, eligible residents will have the equivalent federal funds deposited into a specialized “Trump Health Freedom Account” (THFA).

The Health Freedom Account: Your New HSA, With Rules

For folks in waiver states, this THFA is the core of the new system. It’s essentially a super-powered Health Savings Account (HSA) that receives the redirected federal subsidy money. Crucially, the bill makes two major changes to standard HSA rules (Sec. 3):

1. You can use the funds to pay for health insurance premiums. This is a big deal, as standard HSAs generally restrict premium payments.
2. It comes with strict spending restrictions. No money from this account—whether the federal subsidy portion or any personal contributions—can be used to pay for premiums or services related to gender transition procedures or abortion services. The bill includes highly specific, detailed definitions for what constitutes a prohibited procedure, effectively blocking the use of these federal funds for those specific medical needs.

If you currently have a standard HSA and live in a waiver state, you must roll over that balance into the THFA; you cannot have both accounts simultaneously (Sec. 3).

State Control and the Insurance Market

This bill hands states immense power over their insurance markets. Once a state gets a waiver, it can run its own exchange, or, more interestingly, allow private companies to run commercial platforms to sell state-approved health plans (Sec. 2). If the state does nothing, the federal government will still run an exchange, but it will follow the state’s new, waived rules.

Here’s a critical detail: The bill explicitly states that a state cannot waive certain core consumer protections, including those related to pre-existing conditions (Sec. 2701, 2704, 2705, etc., of the Public Health Service Act). This means that while the structure and financing of the market change dramatically, insurers still can’t deny you coverage because you were sick before.

However, the bill allows insurers in waiver states to offer “child-only” plans for individuals under age 21, which could create new options but also potentially segment the market.

A 100% Tax Break for Small Businesses

For small business owners in states that adopt the waiver, the bill offers a significant financial incentive (Sec. 4). It takes the existing small employer tax credit for providing employee health insurance and dials it up to 11. The credit increases from a maximum of 50% of the employer's contribution to 100%. Furthermore, it eliminates the phase-out rules, raises the maximum number of employees from 25 to 50, and removes the requirement that employees enroll through an exchange.

For a small business with 45 employees, this change means they could potentially cover the entire cost of their employees’ health insurance premiums and get a 100% tax credit for it, provided they are in a waiver state.

Transparency Requirements for All

Finally, the bill includes a section aimed at increasing healthcare transparency nationwide, regardless of a state’s waiver status (Sec. 5). It requires the Secretary of Health and Human Services to update regulations within 90 days to mandate the disclosure of actual prices (not just estimates) for services and require the public reporting of outcomes data by providers. If you’ve ever felt like you needed a decoder ring to figure out what a hospital stay cost, this provision aims to force providers to be clearer about their pricing and performance.