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Key Takeaways
ARTICLE | 3 Questions That Will Determine How The 2024 Elections Impact Employer-Sponsored Healthcare
The 2024 elections are now in the books, and while votes are still being counted and will continue being counted for the next week or two at least, there are only a few handfuls of races at this point where there remains much uncertainty about the outcome.
As of this writing, control of the US House of Representatives has yet to be officially called, but in order to take the majority Democrats would essentially need to flip 6 of 8 swing districts that have yet to announce winners, all of which are seats held by Republicans currently, so it’s a tall order for Dems to say the least.
Given these odds and given that Donald Trump and a majority of Senate Republicans have already decisively won their respective elections, it is very likely the case that Republicans will soon control just about all the levers of power in the federal government, including a supermajority of Republican appointees on the Supreme Court.
Although the Senate majority will not be filibuster-proof, which is the one check on power that Democratic politicians in the federal government will maintain over the next 2 years, it’s fair to say that Republicans have a pretty clear path for the foreseeable future to enact whatever policies they choose.
With that in mind, we wanted to take a look at the 3 most significant open questions concerning how the incoming GOP majority will govern with respect to the US healthcare system - specifically in terms of how such changes may impact employer-sponsored health insurance - in order to shine some light on where we may be heading in the coming term.
One of the biggest unanswered questions at the moment with the greatest potential to impact employer-sponsored healthcare is whether or not the GOP will attempt again to repeal the Affordable Care Act, and if so, what if anything will they replace it with?
Of all the potential changes a future Trump administration and Republican Congress/Judiciary might make/allow, repealing the ACA may have the most far-reaching and significant implications from an employer’s perspective.
For employers, repeal of the ACA as-is would mean not only the elimination of penalties for failing to offer minimum-standard-meeting health insurance to employees (or possibly the reduction of those penalties in the event of repeal and replace), repeal of the ACA would also remove/reduce the minimum standards that those policies must meet in order to be brought to market in the first place.
From a practical standpoint, the elimination or reduced efficacy of the exchange system will likely have some major repercussions as well, as will ending coverage protection for people with pre-existing conditions, both of which will increase the perceived value of strong employer-sponsored benefit packages and can support talent attraction and retention efforts.
There are also a number of somewhat less significant potential outcomes that could be expected in the wake of ACA repeal and are still impactful enough to be worth noting, including reduced administrative requirements/costs and reduced or eliminated wellness program subsidies.
The downsides to eliminating everything from subsidies to preexisting condition coverage protections and the exchanges themselves will be substantial, however, given that the number of uninsured people would climb significantly in each case and the costs resulting from their lack of preventative care and emergency room dependence will ultimately make its way to commercial group plans and employer bottom lines.
To be clear, it is not at all a foregone conclusion that the GOP will use their control of government to repeal the ACA within the next couple of years.
For one, the ACA was only about 7 years old the last time that the GOP was in power and initially attempted to repeal it, and it’s been about 7 years since then during which time ACA provisions and expectations have become all the more entrenched within our healthcare system.
Further, while the outspoken calls for repeal of the ACA from both Republican leadership and Republican rank-and-file alike have never gone away entirely, they have become much quieter in recent years, perhaps partly in response to the pandemic and the attention it drew to both public and personal health matters.
There is certainly a degree of disagreement within the Republican party about the best path forward in terms of improving the US healthcare system, especially as it relates to the ACA, and in fact many individual Republican politicians have had different views on these matters at different times themselves, adding additional complication to the task of anticipating how it will play out when power transfers in the new year.
In a previous piece, we covered some of President-elect Donald Trump’s positions on various healthcare-related issues including the ACA as outlined by the actions he took during his previous administration as well as statements he made on the topic at the time and since.
Early in his first term, for example, Trump supported the attempted repeal of the ACA, but it is not at all certain that he will support doing so again given competing priorities and given that the healthcare exchanges and ACA infrastructure are further established and ingrained in our healthcare system now than when repeal last failed.
In fact, in a statement from March of this year, Trump said that he was not running to ‘terminate’ the ACA and instead wanted to improve it and make it less expensive, although he did not supply further detail as to how these goals would be accomplished.
During his first term, Trump did implement some ACA cost-saving measures such as allowing enhanced ACA direct enrollment through online brokers and reducing funding for outreach and enrollment assistance, but he also weakened individual mandate enforcement, resulting in reduced revenue to offset the costs of the program.
If cost-cutting is the goal and if they revive the strategy of reshaping the ACA via relatively small changes as opposed to a one-fell-swoop overhaul/repeal, it’s a good bet that the premium tax credits through the exchanges will not be renewed when they expire in 2025, for one.
Exempting employers from ACA contraception coverage requirements is another action the previous Trump administration took and the future Trump administration is likely to revisit, as is reinstating short-term non-ACA-compliant insurance options, as well.
Of course, Trump isn’t the only Republican leader who has offered somewhat mixed messages with regard to the future of the ACA.
After declaring ‘no Obamacare’ at a rally in Pennsylvania, when reports interpreted this statement as an indication of his intent to repeal the ACA, Johnson clarified that is not what he said.
Trump’s running mate and soon-to-be Vice President JD Vance, on the other hand, has signaled more direct support for the ACA, even telling an anecdote at the vice presidential debate about how his mother bought health insurance via Obamacare.
That said, Vance has also floated proposals for plans that undermine and run counter to the ACA, like allowing health insurers to stratify their groups which would reduce premium expenses for younger and healthier people but would cause them to increase significantly for older people and people with pre-existing conditions.
Perhaps the biggest question mark about the future of the ACA involves the incoming Senate Majority leader. With Mitch McConnell set to step down as top Republican in the Senate, however, and with no obvious successor at the moment, there is no clear answer about how the ACA will be approached by the leader of the House of Congress that is likely to play the most significant role in determining the future of the ACA.
One fairly consistent theme across much of the ideology expressed by Republicans has been giving more power to states in making policy decisions in many situations.
In Trump’s first term, we saw this transfer of power manifest via Medicaid block grants and allowing states to mandate work requirements, for example, and has reemerged in Trump’s promises for his second term as well, exemplified by the stated plan to dismantle the Department of Education and allow each state to manage its internal public education without much federal assistance or oversight.
As laws and regulations become decentralized, however, keeping up with compliance can become more cumbersome, especially for large employers operating in multiple states, and that problem gets amplified as the variance in rules between states grows over time.
Furthermore, differences in policy from one state to another can have significant effects on attracting and retaining talent in some areas of the country, which can be a benefit to attraction and retention efforts in cases such as low/no income tax states, but state-level policy can be a detriment to talent attraction and attention when those policies are contentious and considered off-putting to various groups of potential candidates, especially when it comes to health issues.
There are more than a few such contentious state health-related policy considerations that can affect candidate perception of a potential relocation site including issues ranging from disability accommodations to gender-affirming care access and vaccine mandates, but there is no more contentious now-state-level healthcare issue than abortion, which has significant implications for employers not only with regard to talent recruitment but also family planning as it relates to business operational efficiency.
While some Republican leaders have called for a national abortion ban over the last couple of years after the Supreme Court overturned Roe v. Wade, Trump has repeatedly stated that he favors leaving abortion up to the states and that he will not sign a national abortion ban.
Speaker Johnson, however, appears less opposed to a national abortion ban, but he recently stated that he thinks it would be too soon to introduce such a ban within the next year without having first built political consensus for such a measure.
Perhaps the biggest question marks surrounding these statements for both supporters and opponents of abortion rights, however, is whether or not the statements refer exclusively to an outright ban or if they also encompass achieving the same or similar results via other means, such as banning abortion drug mifepristone, enacting fetal personhood, and/or legislating additional abortion restrictions that don’t constitute a total national ban.
Even in the event of additional national abortion restrictions of some kind, however, it’s important to keep in mind that those restrictions are likely to set a minimum standard that states can then go beyond in terms of implementing additional restrictions if they elect to do so.
As a result, both the perception and the reality of abortion access and the correlated access to other reproductive healthcare may continue to grow as factors influencing candidates’ willingness to work in certain locations.
Further, a piecemeal approach to abortion and reproductive healthcare access across states will make issues involving contraception access all the more relevant, especially in places with more limited abortion access.
As already noted, Trump exempted employers from complying with ACA contraception requirements based on moral and religious grounds, which is a policy that seems likely to be reinstated.
That policy, however, may make certain aspects of family planning considerably more complicated for a large number of employees, which in turn may negatively impact employers not only by shrinking the talent pool of labor willing to work for some employers in the first place but also by reducing the potential availability of the labor that is accessible to them as a result of employees having less control over if and when they have children.
In attempting to reform the healthcare system absent successfully repealing ACA, the first Trump administration turned much of its attention to addressing the rapidly rising costs of care.
Some of those cost-saving measures that were implemented were systemic reforms that share wide bi-partisan support such as efforts to lower prescription drug prices, increase cost transparency, and improve provider billing practices, all of which are goals that the Biden administration has pursued in the interim as well, so there shouldn’t be a much of a shift on these fronts when Trump retakes office.
The Biden administration, however, did not continue some other measures related to privatization and consolidation that the first Trump administration implemented with an aim to reduce healthcare expenses, for example promoting Medicare Advantage at the expense of Medicaid and showing a greater willingness to greenlight mergers and acquisitions across the healthcare business spectrum.
A second Trump administration is expected to continue its support for both Medicare Advantage and a robust M&A environment in the healthcare space, which will likely be a benefit to companies that are able to join forces and diversify via merger, but the ultimate impact on costs for employer-sponsored plans from these consolidations remains to be seen.
As healthcare and healthcare-adjacent companies consolidate, grow, and absorb accounts and market share over the next couple of years, employers would be wise to stay proactive in working with their insurance brokers and consultants to monitor how the shifting landscape may impact coverage going forward as policies change hands and terms and conditions evolve.
There are several reasons that there are still major questions about how the GOP will approach healthcare despite the fact that the president-elect has previously held office and just completed a years-long campaign that included major media interviews, two debates, and quite a few political rallies.
In terms of historical data, we of course know what Trump did the last time he was president when he also happened to start the term with majority support in both Houses of Congress and the Supreme Court, but that evidence of action is somewhat incomplete given how much time and resources the GOP invested in repealing the ACA only to come up a few votes short.
After unsuccessfully repealing and replacing the ACA, many of the other healthcare-related policy changes enacted in Trump’s first term felt more like afterthoughts than a fully formed representation of Republican healthcare goals at the time, and as noted above, full repeal of the ACA seems less likely now than it did then.
As for why we don’t have better information about Trump and the GOP’s healthcare plans going forward, the fault largely lies with the voters in a sense. Since election polling this cycle consistently revealed that healthcare was not one of the most pressing issues on voters’ minds, candidates up and down the ticket on both sides of the aisle largely neglected the topic on the campaign trail, and the media did the same for the same reason.
It’s most likely not the case, however, that healthcare became less of a priority to voters than it has been over the last 20 years, especially still living in the aftermath of a recent global pandemic. It’s probable that other issues like the economy, immigration, and abortion have become more urgent in recent years in a lot of voters’ minds and they simply jumped to the front of the line.
Regardless of why we know relatively little about the GOP’s healthcare priorities, assuming that Republicans do ultimately hold onto the House of Representatives when the final vote tally is complete, at this point it shouldn’t take long for those priorities to become clear.
Although their majorities will be slim in Congress, Republicans and Republicans alone are likely to be setting the agenda in a matter of months, and we’ll be back to weigh in with our take as those plans come into focus.
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