Any time there is a change in leadership, is it asked: What will this mean? What will a new administration mean for employment law? What about taxation? What about employee benefits?
One of the biggest questions right now for employers and individuals alike is, What might happen to the Affordable Care Act (ACA) now that our national leadership is about to change?
Obviously, we cannot predict with certainty what will happen to the ACA after Trump becomes president. But we can take a look at some of the potential outcomes and begin to prepare accordingly.
Possible Changes to the ACA
Top of mind is the fact that Trump has noted that a priority will be to repeal the ACA. A full repeal may or may not be in the cards, but even if not, there are still significant changes that could be made. Here are some possibilities (with varying degrees of complexity):
- The individual mandate could be removed, removing the penalty for individuals who choose to not have health insurance coverage. This may mean insurance costs will rise as insurers are left with a higher percentage of people who carry insurance because they must (i.e., they require frequent medical care).
- The employer mandate requiring large employers to provide health insurance for employees or pay a penalty could be removed. This might leave more employees without insurance, depending on what the insurance landscape is like at the time it happens (if it happens).
- The premium subsidies for those who purchase insurance on the exchange may be removed, which could make insurance unaffordable for millions of people. Most experts are saying that this is not something that would likely be implemented all at once, as it’s in no one’s best interest to have millions of people lose their insurance immediately without a new plan to replace it. But until we see the details of a new plan, it remains unclear what the long-term effect might be. That said, the subsidies would actually be a somewhat simple component of the legislation to “undo” because this component can be tackled by only focusing on the spending side. This could be done with a simple bill that repeals the tax credits. Such a bill has already been introduced, and it also repealed the Medicare expansion and more. President Obama vetoed it, but it’s already ready to go and could be reintroduced in the future. If that bill is reintroduced, it included a 2-year period of implementation.
- Notwithstanding the previous point, it’s also possible that the tax subsidies could be replaced by refundable tax credits. It’s far too early to speculate how the credits may compare to the current subsidy structure in terms of size and availability.
- The insurance marketplace could be opened up to allow more cross-state selling. Theoretically, this could help decrease premiums for everyone, depending on how it is implemented and how many insurance companies participate.
- The expansion (at the state level) of Medicaid could be undone, which could also leave millions without coverage.
- Healthcare plans that come with HSAs may become more common, as they’re often promoted in ACA replacement discussions. This could mean that higher deductible policies will become more common.
- It’s also possible that fewer changes will be made than anticipated.
With most of these possibilities, there is a range of direct and indirect effects that could accompany them. For example, if some of the mandates are removed, and healthier individuals decide to stop carrying health insurance, that could leave insurers with policy holders that are more likely to need more medical care (which is why they kept their insurance), and the end result could be even higher premiums for those who keep coverage (employers and individuals alike). But, if the insurance marketplace is opened up across state lines, that could mean a decrease in premiums. Everything is up in the air at this point.