Donald Trump’s election and Republican control of both houses of Congress are likely to have substantial impacts on federal health policies and financing. Statements from the Trump administration and key regulatory appointees offer a glimpse into potential changes we may see. Companies should incorporate anticipated effects of these changes into their health benefit strategy.
Here are nine employer-sponsored healthcare issues impacted by the incoming government:
1. Exchange health plan enhanced subsidies may expire.
The Affordable Care Act (ACA) health insurance exchange enrollment increased from 11 million in 2019 to 21 million in 2021, in part due to increased subsidies that expire at the end of 2025. The Urban Institute estimates that about a third of those in exchange plans will not maintain coverage by 2030.
Those most likely to drop exchange plan coverage will be healthier than the average, so the smaller pool of membership could lead to larger future premiums due to adverse selection.
Employer implications: Higher exchange plan premiums could increase enrollment in employer-sponsored coverage and discourage employer adoption of Individual Coverage Health Reimbursement Arrangements (ICHRAs), which provide pre-tax payment for employees to privately purchase individual health plans.
2. Medicaid cutbacks are likely.
The ACA dramatically expanded Medicaid, which is administered by each state and funded by the federal government and the states. Medicaid currently covers 72 million Americans, including over 36 million children, and pays for 41% of births in the U.S. The new administration may decrease federal Medicaid funding, which will prompt many states to roll back their ACA Medicaid expansion. States may also gain latitude to impose work and other administrative requirements, which will decrease the number of Medicaid enrollees.
Employer implications: Some workers whose families have been covered by Medicaid could seek family plans from their employers, and other workers might have newly uninsured family members and be subject to financial insecurity and increased stress. Access to care might decrease in some geographies due to provider revenue loss. Employers can monitor plan enrollment and review medical plan premiums, especially for lower-paid employees seeking family coverage.
3. Access to short-term limited duration health insurance plans likely to increase.
The first Trump administration promoted and expanded short-term limited duration health insurance (STLDI) policies, which are far less expensive than traditional health plans but offer more limited benefits and attract healthier enrollees. Many of these plans exclude pre-existing conditions, maternity and mental healthcare. Biden administration regulations restricted short-term insurance plans to four months, but this change is expected to be reversed.
Employer implications: Employers could have access to a broader range of less expensive health plans, although they should review and communicate these carefully to be sure that they provide appropriate coverage to meet employer and employee needs.
4. Rules requiring increased price transparency could be expanded.
There is strong bipartisan support for price transparency in healthcare. Executive orders, laws and regulations increased price transparency during the first Trump administration, laying the groundwork for improved cost visibility in healthcare. Penalties for noncompliance were increased during the Biden administration. Data made available through transparency rules can help employer-sponsored health plans obtain lower prices, although this data could also help lower-priced providers obtain higher negotiated rates.
Employer implications: Employers should seek ways to leverage available price data to decrease health plan spending through direct negotiations, navigation to lower-cost sites of care or pursuit of narrow networks.
5. Medicare coverage and payment methodology changes could influence commercial health plans.
The Biden administration proposed a rule that would allow Medicare and require Medicaid to cover GLP-1 medications for obesity. The incoming administration has not signaled whether it will finalize this rule.
Nominees to lead Health and Human Services and the Centers for Medicare and Medicaid Services have advocated reconfiguring Medicare’s fee schedule to decrease payment for procedures and increase payment for cognitive services. This would likely require legislative action and be opposed by procedural specialists.
Employer implications: Medicare coverage of GLP-1 medications for obesity may drive similar coverage across commercially available health insurance policies. Commercial health insurance plans often adopt Medicare payment methodologies over time, so Medicare fee schedule changes could eventually promote higher-value fee schedules in employer-sponsored health plans.
6. Pharmacy benefit manager reform could change terms of pharmacy purchasing.
There has been widespread bipartisan support for reform of pharmacy benefit managers (PBMs), and PBM reform is likely to be reintroduced in the 2025 Congressional term. Elements of reform could include:
- transparency
- prohibition of “spread pricing,” where the PBM charges the employer more than its cost
- restricting or changing the use of rebates
- requiring that rebates be applied to member cost sharing
- regulating utilization management programs or
- requiring that PBMs divest retail or mail order pharmacies.
Employer implications: PBM reforms are needed to address inefficiencies in the market. PBM reform that prohibited spread pricing could lower employer costs, but other reforms are unlikely to immediately lower prices for employers. Decreasing prior authorizations could increase utilization. Point-of-sale rebates would decrease healthcare costs for members on expensive medications but employers would no longer receive rebate checks.
7. Federal approach to vaccinations and preventive care could change.
Many nominees to top health positions, including Robert F. Kennedy, Jr., and Dave Weldon, the nominee for Director of the Centers of Disease Control and Prevention, have a history of opposing childhood vaccinations or citing vaccination safety concerns not supported by scientific evidence. Decisions on vaccination mandates are up to local and state authorities, but lack of federal support could lower vaccination rates.
The Affordable Care Act’s mandate to provide preventive care without cost-sharing is in legal jeopardy, and the new administration will have to choose whether to oppose ongoing legal efforts to weaken preventive care mandates. The Employee Benefit Research Institute found that cost-sharing waivers represent a small, incremental premium cost (around 0.1%), so eliminating preventive care pre-deductible coverage would have little impact on health insurance premiums. Pediatric vaccinations and contraceptive care are among the very few medical services that directly lower medical claims costs.
Employer implications: Decreased uptake of cost-saving preventive care could raise healthcare costs and increase time away from work. Employers can continue to waive cost-sharing for evidence-based preventive services and encourage vaccinations.
8. Women are likely to have more difficulty accessing reproductive care in many states.
President-elect Trump has promised to veto any national abortion ban but could decrease access to abortion medications through enforcement of the Comstock Act or Food and Drug Administration rulemaking. The administration is unlikely to pursue court cases to mandate that hospitals provide abortion care when medically necessary to protect the life of the mother under the Emergency Medical Treatment and Active Labor Act (EMTALA). Therefore, doctors in some states will be restricted in the care they provide women with incomplete miscarriages or lethal fetal abnormalities.
Employer implications: Those with employer-sponsored health insurance in restrictive states are more likely to need to travel across state lines to receive reproductive care. Employers can review travel assistance benefits and check with counsel about potential liability for assisting or funding such travel.
9. Access to transgender care likely to diminish, especially for minors.
The Supreme Court oral arguments in United States v. Skrmetti suggest that states will be permitted to prohibit gender-affirming care to minors. The administration is also likely to block federal funding of any such care for minors and could restrict access to federal funds for providers or health systems that provide transgender care. Therefore, more transgender children and potentially adults will likely need to travel further for medical care.
There may be an increase in the need and use of mental healthcare services for transgender individuals and their family members who are affected by changes in state or federal policies.
Employer implications: Employers can review their coverage provisions in the context of federal policy changes.
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