A Policy Who Shall Not Be Named
Kate Morthland
If you give me even a sliver of downtime, I’m usually reading fantasy novels. The kind that transport you to another realm entirely. This probably began when my millennial, gel-pen-loving self first cracked open Harry Potter and entered a world where an entire community refused to speak the name of its greatest threat.
In the books, “He Who Must Not Be Named” is avoided because speaking his name makes his return feel real. But refusing to say Voldemort *cautiously checks behind back* does not make his mission any less powerful. Silence does not shrink consequences.
I can’t help but see that same dynamic playing out in health policy.
The federal government has been sending states through policy Portkeys at dizzying speed, forcing rapid regulatory pivots and leaving more than a few agencies feeling slightly green around the gills. Among the many complicated federal guardrails emerging, one stands out as the term that many don’t understand.
State Defrayal.
Defrayal is not dramatic. It does not make for a rousing speech. But it has become very real.
Under the Affordable Care Act (ACA), when a state enacts a benefit coverage mandate that goes beyond a federally defined Essential Health Benefit (EHB), the state must pay for the cost of that added coverage. Put simply, if a state requires additional benefits, it must defray the portion of the premium attributable to that mandate.
In February, CMS released its proposed 2027 Notice of Benefit and Payment Parameters. The annual Benefit and Payment Parameters rule sets the federal standards governing how health plans operate in the ACA marketplace. Under the proposed rule, any state coverage benefit enacted after December 31, 2011 is considered “in addition to EHB” and subject to defrayal.
Why would the federal government require states to pay?
Think of it like a complicated potions class. Every time a state adds a new coverage mandate, a little more gets poured into the premium cauldron. For subsidized enrollees, Federal Advanced Premium Tax Credits (APTCs) must rise along with those premiums. Over time, cumulative mandates can significantly increase federal spending.
The federal message for 2027 was stark- if a state adds to the potion, it must either remove the extra ingredients (repeal the mandates) or fund the additional cost itself.
Now state agencies are left performing a kind of Sorting Hat exercise, reviewing years of enacted benefit mandates and determining which fall within EHBs, which trigger fiscal responsibility, and what that price tag to the state will be. In Illinois, since 2021, the state has passed over 55 benefit coverage mandates.
In our muggle world, it is widely acknowledged that benefit mandates increase premiums. State agencies themselves often seek exemptions from mandates because “the state cannot afford that.” Yet under defrayal, affordability becomes more than a talking point. It becomes a budget line.
This year, for heavily mandated states, defrayal may not be the phrase anyone wants to say out loud. It complicates the narrative and demands fiscal accountability.
In 2027, when the Sorting Hat finishes its work and the numbers settle, the policy who shall not be named will still be there, quietly adding the cost of every added mandate.
And unlike fiction, this is not magic.
It is math.