Low-cost, high-performance proton exchange membrane fuel cells (PEMFCs) have been difficult to develop due to limited understanding of coupled processes in the cathode catalyst layer (CCL). Low Pt loaded PEMFCs suffer losses beyond those predicted solely due to reduced catalyst area. Although consensus links these losses to thin ionomer films in the CCL, a precise mechanistic explanation remains elusive. Here, we present a physically based model with novel structure-property relationships for thin film Nafion, validated against PEMFC data with low Pt loading. Results suggest that flooding exacerbates kinetic limitations in low loaded PEMFCs, shifting the Faradaic current distribution. As current density increases, protons travel further into the CCL, resulting in higher Ohmic overpotentials. We also present a parametric study of CCL design parameters. We find that graded Pt and ionomer loadings reduce Ohmic losses and flooding, but individually do not provide significant improvements. However, a dual graded CL (i.e., graded Pt and ionomer) is predicted to significantly improve the maximum power density and limiting current compared to uniformly loaded CLs. This work highlights the importance of accurate transport parameters for thin-film Nafion and provide a pathway to low-cost PEMFCs via precise control of CCL microstructures.