Election 2024: Five things for employers to keep in mind 

Republican Donald Trump will be heading back to the White House in January, and Republicans have taken the Senate majority. Still unknown: Which party will control the House next year.

While President-elect Trump has not offered detailed healthcare policy proposals, controlling costs is a key theme in his platform that aligns with an ongoing bipartisan drive in Congress to address affordability for employers and consumers.

Trump’s campaign website states that he will “increase fairness through price transparency, and further reduce the cost of prescription drugs and health insurance premiums.” These themes likely align him with bipartisan legislation now pending in Congress on price transparency, site-neutrality, prescription drugs and provider billing reforms.

The future of the Affordable Care Act, however, remains a partisan flashpoint. Although Trump apparently has not ruled out the possibility of another ACA repeal-and-replace effort, he is unlikely to gain consensus from congressional Republicans. Nonetheless, his first term suggests that he would do little to promote ACA coverage, and he supports allowing the expanded and enhanced ACA public exchange subsidies to expire.

A second Trump administration may also reprise his first-term implementation of non-ACA coverage options for individuals and employers, such as short-term, limited-duration insurance and association health plans — reforms since rolled back by the Biden administration.

The first Trump administration also focused on drug costs and price transparency.  Trump signed several executive orders aimed at lowering prescription drug costs, including one on healthcare price and quality transparency that resulted in new price transparency rules for hospitals and insurers.

Trump’s drug pricing plans for a second term, however, are not clear. He has not stated a position on the Inflation Reduction Act’s drug price negotiation program in Medicare enacted by Democrats, though some conservative think tanks hope a potential Republican-led Congress will repeal the law and its drug price controls.

Congress will debate tax policy in 2025, and if Republicans control both chambers they plan to pursue much of their agenda (including extending virtually all the 2017 tax cuts set to expire at the end of 2025) through a budget “reconciliation” process that allows legislation to pass the Senate by a simple majority instead of the usual 60-vote threshold. That legislation could include a proposal from conservative House GOP members (with input from several think tanks) to limit the current uncapped employee tax exclusion and/or employer tax deduction for employer-provided healthcare coverage.

Trump has not weighed in on whether he would support capping the tax exclusion or deduction for employer-sponsored coverage. Mercer is working with employer advocacy groups and other key stakeholders to educate lawmakers on the impact such a change would have on plan members and sponsors.

Even if Republicans gain full control of government next year, fulfilling some aspects of their policy agenda could prove challenging. Their majorities in either chamber will be narrow, providing little room for defections. And in the event Democrats win control of the House, the next Trump administration would likely lean more heavily on its executive and regulatory authority to implement its agenda; however, a recent US Supreme Court decision could make it easier for successful legal challenges to that regulatory authority.

But sharp divisions between Republicans and Democrats on the future of the ACA and reproductive health issues can obscure the broad bipartisan consensus on proposals in Congress to address affordability. These include increasing health plan, provider and hospital transparency, fostering greater competition among providers and hospitals, extending pandemic-related telehealth flexibilities, and easing employers’ ACA reporting duties, among other things.

Plan sponsor groups and Mercer are urging lawmakers to add these proposals to possible lame-duck healthcare legislation this year, though the outlook is unclear. Divided government in 2025 could convince lawmakers to “clear the decks” – that is, attempt to pass as much legislation as possible in the lame-duck session – and start fresh next year, while a Republican sweep could cause GOP lawmakers to punt many issues, even bipartisan ones, to next year. Healthcare legislation that does not cross the finish line this year will need to be reintroduced for 2025.

After Trump takes office, litigation will likely continue to test prior Democrat administration regulatory efforts to implement and expand healthcare reforms. We may also see a shift in whether and how vigorously the Department of Justice will challenge or defend federal regulations and state laws in court such as a challenge to a Tennessee state law prohibiting gender-affirming care for minors (US v. Skrmetti), and on-going litigation regarding whether all group health plans and insurers would be allowed to exclude coverage of, or impose cost sharing on, many ACA-mandated preventive services, and allow employer plan sponsors with religious objections to exclude coverage of PrEP HIV medications (Braidwood Mgmt. Inc. v. Becerra). Skrmetti will be heard by the US Supreme Court in their 2024-2025 term. The Court has yet to decide whether it will hear Braidwood.

The election does not change employers’ top priorities for their health benefit programs: managing high-cost claimants, managing the cost of specialty drugs, enhancing benefits to improve attraction and retention, expanding behavioral health care access, and improving healthcare affordability. But you may need to adjust strategies in response to changes that the election results may bring. Here are five things to keep in mind:

1. What happens to the ACA public exchange subsidies matters to plan sponsors. If the reduced availability of subsidies causes large numbers of people to become uninsured, the result will be higher emergency room utilization and more financial pressure on hospitals. The burden of that additional cost will get shifted to group plans in the commercial market. In addition, individuals who lose access to the enhanced and expanded subsidies may end up (re)enrolling in employer group health plans.
2. More than two in three Americans (67%) are very or somewhat concerned that a major health event could lead to medical debt. Just as plan sponsors are aware that healthcare affordability is a big issue, so are lawmakers.
3. There is currently bipartisan legislation pending in Congress on health policy topics that are important to employers and workers alike – pharmacy, price transparency, and provider billing reforms. Congress may address these issues later this year during the lame-duck session or during the new administration/Congress.
4. Republicans tend to be more supportive of giving authority to states than of expanding federal programs. For large national employers, this autonomy can be challenging, as we have seen with myriad state and local paid leave requirements and recent state actions regarding pharmacy benefits. Employers will need to pay close attention to legislative activity in the state houses.
5. As mentioned above, tax and/or healthcare legislation could include a proposal to limit the current uncapped employee tax exclusion and/or employer tax deduction for employer-provided healthcare coverage. If it does, it will be important for employers to get involved in efforts to ensure lawmakers understand the potential consequences of making a significant change to the tax treatment of employer-sponsored health insurance.  

Working independently and with trade group partners, Mercer is deeply engaged in promoting sound health policy in Washington that supports plan sponsors and participants. But the direct voices of plan sponsors have the greatest power to move the needle on Capitol Hill. Please reach out if you or your company would like to be more involved with our advocacy efforts.