Texas Gov. Greg Abbott is proposing a new health insurance option for employers that aims to lower premiums by removing certain state-mandated benefits while maintaining federal coverage requirements.
The proposal, called the Essential Benefits Health Insurance Plan, would allow insurers to offer employer group plans that satisfy all federal requirements but drop some benefits required under Texas state law, according to the Dallas Express. Texas ranks among the states with the most health insurance mandates exceeding federal requirements, according to the Texas Association of Business, which endorsed the proposal. Employers would not be required to switch and could still choose fully mandated plans.
According to July 30 projections from Gov. Abbott’s office, the option could reduce premiums by nearly 20%, saving a family roughly $1,145 per year and small businesses more than $3,400 per employee annually. The governor’s office also said the plan could help more than 1 million additional individuals obtain coverage. As of 2024, Texas had the highest uninsured rate in the nation at 19.2%.
The initiative would require action from the Texas Legislature, which reconvenes in January. A similar effort in 2025, House Bill 139, passed through committee but ultimately died without a floor vote. That bill would have required plans to cover all 10 federal essential health benefit categories and barred preexisting-condition exclusions.
The Texas Medical Association and more than 30 medical, pharmacy and patient organizations opposed the bill, arguing it could weaken patient protections and create coverage gaps without guaranteeing premium reductions.
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