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Exchange warns federal rule changes and HR1 will require prioritization; staff outline phased project plan
Summary
General Counsel Leah Holmarshall told the board that proposed federal marketplace rules and HR1 changes will require phased implementation, costly audits and verification work, and could lead to meaningful enrollment declines; the Exchange described a cross‑program project structure to manage system, process and change‑management tasks.
General Counsel Leah Holmarshall told the board March 26 that a set of federal rule changes — including the marketplace rule and provisions in HR1 — will require the Exchange to prioritize implementation work and to deploy a coordinated project approach across marketplace, Medicaid and immigrant eligibility.
Leah outlined expected impacts: elevated carrier audit activity, additional verification and documentation requirements, curtailed use of conditional Advanced Premium Tax Credits (APTC) in coming years, and significant operational costs associated with compliance. She told the board the Exchange expects enrollment declines in the 7–10% range for plan year 2027 (higher than a typical 5–7% annual drop) and that hundreds of thousands of people may lose Medicaid coverage under new requirements.
"It's still estimated that about 30% of exchange customers will drop coverage over the next couple of years total," Leah said, adding that mitigations such as Cascade Care Savings, premium alignment and WA Health Pathways helped blunt losses in 2026. Leah emphasized that some federal changes are primarily process changes (not system changes) but that others will require substantial technical work and coordination with state agencies.
To manage the workload, staff reported they completed a four‑month planning phase and established a single coordinated project with four workstreams — marketplace, Medicaid/non‑MAGI, immigrant eligibility, and change management — plus an executive sponsorship structure and contracted technical support. Leah warned the board that because of the scale of required changes, the Exchange will not be able to implement everything at once and will prioritize work where customer harm would be greatest.
Communications staff described post‑open enrollment research and interviews used to understand why people leave coverage. Board members asked about exit data and urged staff to expand targeted surveys and research to inform prioritization.
Staff said the Exchange will distribute the final open enrollment report in mid‑April and continue interim work with partners (HCA, DSHS) to build verification hubs and shared processes. The board recognized the organizational difficulty and asked staff to keep the board informed of implementation milestones and risks.
