DHHS Slices Navigator Funding 90% – From $100M to $10M – Biggest Cut in Program’s History

Last year, the Arizona Alliance of Community Health Centers, including sub-awardees, the University of Arizona Center for Rural Health and Adelante Healthcare, were among the organizations in Arizona that received $3.5 million in CMS navigator funding to educate underserved and vulnerable populations about affordable health insurance options in their communities.

During the first Trump administration, funding was cut by 84%, leading to staff layoffs, reduced outreach, and limits on the time assisters could spend with individuals. The Biden administration restored funding in 2021 and last year committed up to $500 million over five years, including $100 million for the 2025 plan year—the program’s largest grant since its inception.

The Centers for Medicare and Medicaid Services justified the reduction arguing the savings will allow states using HealthCare.gov to focus on more effective strategies that improve Marketplace outcomes and to reduce the user fee in future years, which would translate into a reduction in premium to “reduce the burden on hardworking American taxpayers who fund the premium subsidies.”  The funding reduction is expected to save $360 million over the next four years.

The agency clarified the rule’s impact,

 This change will directly benefit people enrolled without subsidies who pay the full premium for their health insurance.

The division of the Marketplace between those receiving subsidies, versus those that don’t is echoed in the Heritage Foundation’s Project 2025 an influential GOP playbook on the Affordable Care Act and Private Health Insurance. The authors write,

To make health insurance coverage more affordable for those who are without government subsidies, CMS should develop a plan to separate the non-subsidized insurance market from the subsidized market, giving the non-subsidized market regulatory relief from the costly ACA regulatory mandates.

The agency’s basic argument is that after receiving $98 million for the 2024 plan year, navigators enrolled just 92,000 consumers—0.6% of plan selections during open enrollment on HealthCare.gov —at a cost of $1,061 per enrollment. For 12 of the 56 Navigator grantees, the average cost per enrollment exceeded $3,000, the agency contends.

This week KFF  and The Hill also reminded readers that navigators not only help low-income individuals understand and enroll in ACA plans, but also Medicaid, and employer coverage, recognizing that many transition between these options. Experts also noted federal data showing navigators were more effective in enrolling people in Medicaid and CHIP last year, likely due to their stronger ties to lower-income communities. They assisted in enrolling about 290,000 individuals in these programs.

CMS reports that 24.2 million consumers selected plan year 2025 coverage through the Marketplaces during the 2025 Marketplace Open Enrollment Period (OEP), including 3.9 million new consumers. That represents more than double the number of enrollees compared to the 2021 Open Enrollment Period.

Arizona consumers eligible for subsidies have turbocharged Marketplace plan selections in the state with nearly 410,000 choosing a 2025 ACA plan, making it another record year for Marketplace enrollment in the state. KFF estimates 88% of Arizona consumers who selected coverage received advanced premium tax credits averaging $453 a month totaling an estimated $1.7 billion annually. Enrollment in Arizona has increased by 150% since 2020.

The press release from earlier this year that detailed last year’s navigator funding grant recipients in Arizona is no longer available on the CMS website, but is available on the Internet Archives and The Hertel Report.