Down to the Wire: 2024 Elections Impacting Employee Benefits
The upcoming election results will have a significant impact on healthcare and employee benefit policies for at least the next four years.
As former news anchor Dan Rather once remarked on election night, “This race is hotter than a Times Square Rolex.” This observation applies not only to the current presidential race between Kamala Harris and Donald Trump, but also to the contest for control of both houses of Congress.
“It is very close,” says David Kelly, Ph.D., chief global strategist for J.P. Morgan Asset Management. “We have to think about five possible outcomes: divided government, a narrow Democratic sweep, a narrow Republican sweep, a landslide Democratic sweep, or a landslide Republican sweep. Of those, I would say a divided government is the most likely outcome.”
The upcoming election results will have a significant impact on employee benefit policies for at least the next four years.
“Healthcare costs and regulatory policies are a major concern for employers, especially with the constant changes in the political landscape,” says Matthew Kim, CEO of SureCo, a leading administrator of individual coverage health reimbursement arrangements (ICHRAs). “The outcome of this election will significantly impact policymaking in areas such as the Affordable Care Act (ACA), Medicare, Medicaid, and drug pricing. There are also a few areas that could help address rising healthcare costs, such as price transparency, further negotiation of prescription drug prices, and enhancements to the ACA that would allow Americans to have more healthcare options to choose from.”
Joel Kopperud, senior vice president of government affairs for the Council of Insurance Agents & Brokers (CIAB), is tracking several key issues that will directly affect the industry.
“First, we’re focused on tax policy,” he says. “The expiration of the Tax Cuts & Jobs Act will bring about large-scale tax reform discussions, no matter who takes the White House or who controls each chamber of Congress. Preserving the 199A provision in the TCJA is a top priority for our members. Removing or limiting the employer-sponsored health insurance premium tax exclusion is another issue of great concern to our members, their clients, and their employees. In our view, it can’t be overstated that messing with the employer-sponsored tax exclusion would have severe negative effects on the U.S. healthcare system.”
Prescription drug costs represent another top priority for CIAB, Kopperud says. “More transparency is needed if we want to truly understand a very opaque pharmacy delivery chain,” he says. “Right now, employers are operating virtually in the dark when it comes to pharmacy benefit managers, how they are compensated, how formularies are created, and how patients are steered toward certain pharmacies.”
Transparency requirements included in the Consolidated Appropriations Act in 2021 barred group health plan fiduciaries from contracting with service providers unless those providers fully disclose any revenue they receive that relates to the health plan. “The language clearly included employee benefits agents and brokers, as well as PBMs [pharmacy benefit managers] and TPAs [third-party administrators], but the largest PBMs have taken the position that they are not subject to these requirements and are not complying with the provision,” Kopperud says. “There are currently bills in both the Senate (S. 1339) and House (H.R. 5378) that would solve this problem by explicitly clarifying that the provisions apply to PBMs and TPAs that service the plan.”
Joe Boyle, president of regulatory solutions for Penstock Group, sees both challenges and opportunities in the election outcome. “Newly elected officials are likely to enact federally and state-mandated benefit changes, which will result in cost implications on members and potential off-cycle shifts and midyear changes affecting internal business processes,” he says. “Despite the complexities this will cause, I am excited for the opportunity to create and support new insurance products that may emerge as a result of alternative healthcare options provided by insurers in response to new policies.”
However, in a race that has been dominated by discussion of issues like inflation and border security, neither presidential candidate has yet offered detailed proposals on issues affecting the benefits industry.
“The current presidential race has been rather unique compared to prior years because of the lack of major policy proposals—or explicit detailing of future plans—from either of the main contenders,” Kim says. “Historically, topics like healthcare can dominate political debate due to their potential for sweeping reforms, but healthcare has not been a central theme in this election. Some of the key issues that need to continue to be addressed include the sunsetting of expanded ACA subsidies in 2025, drug pricing, and cost transparency.”
Despite the lack of specifics, both candidates vocalized their positions on healthcare during the Presidential Debate.
.
Harris said:
- “The value I bring to this is that access to healthcare should be a right and not just a privilege of those who can afford it. The plan has to be to strengthen the Affordable Care Act, not get rid of it.”
- “I absolutely support [Sen. Sanders’ ‘Medicare For All’ bill], and over the last four years, as vice president, I have supported private healthcare options. But what we need to do is maintain and grow the Affordable Care Act.”
- “When Donald Trump was president, 60 times he tried to get rid of the Affordable Care Act—60 times. I was a senator at the time. I will never forget the early morning hours when it was up for a vote in the United States Senate and the late, great John McCain … walked onto the Senate floor and said, ‘No, you don’t. No, you don’t. No, you don’t get rid of the Affordable Care Act.’”
Trump said:
- “[The ACA is] still never going to be great. And it’s too expensive for people. … If we can come up with a plan that’s going to cost our people, our population, less money and be better healthcare than Obamacare, then I would absolutely do it. But until then, I’d run it as good as it can be run.”
- “I would only change it if we come up with something better and less expensive. And there are concepts and options we have to do that. And you’ll be hearing about it in the not-too-distant future.”
- “But remember this: I inherited Obamacare because Democrats wouldn’t change it. They were unanimous. They wouldn’t vote to change it. If they would have done that, we would have had a much better plan than Obamacare.”
.
Kim offers his interpretation of the two positions: “Donald Trump, during his presidency, emphasized reducing federal regulations and promoting free-market solutions in healthcare,” he says. “His administration focused on repealing and replacing the ACA while expanding the use of Health Reimbursement Arrangements, including ICHRA.
“Kamala Harris, as part of the Biden administration, supports the ACA and its expansion. Harris advocated for universal healthcare and, during her 2020 presidential campaign, endorsed ‘Medicare For All’ before shifting to a more moderate position of supporting an expanded public option. She prioritizes government involvement in ensuring affordable healthcare for all Americans.”
The makeup of Congress will go a long way toward determining what the new president will be able to accomplish. Yet, like the presidential election itself, the races for control of the House and Senate remain too close to call.
“On the Senate side, it looks like Republicans have a slight edge,” Kelly says. “The most Democrats can reasonably hope for is 50 seats, and it’s going to be tough for them to get that 50th seat. On the other hand, Democrats may have a slight edge on the House side. Republicans have a very narrow majority, and you wouldn’t need much of a swing for Democrats to take over. But it’s very close, and the most likely outcome is that you don’t get all three going to one party.”
Kopperud agrees. “It’s really a mixed bag,” he says. “What we’re focused on is balance of power and how that will impact our members and their employer clients. Ultimately, a divided government may be the best outcome.”
Should Republicans gain control of both houses of Congress, one result could be an extension of the Tax Cuts & Jobs Act (TCJA). “The 199A provision for pass-through entities is particularly important to our members,” Kopperud says. “Without it, pass-throughs will face significantly higher tax rates, placing them at a competitive disadvantage in the marketplace and potentially preventing them from reinvesting in their employees and their business.
“However, if Republicans control both Congress and the White House, we’re preparing to defend the tax exclusion for employer- and employee-paid health insurance premiums. Unfortunately, eliminating this exclusion is always raised by Republicans, because it’s the largest tax expenditure. But for every $1 of tax expenditure, data show employers invest $5.36 in health benefits. Eliminating or reducing this exclusion would only shift costs onto employers, employees and their families.”
By contrast, “Democratic control will almost certainly guarantee the preservation of the tax exclusion,” Kopperud says. “They make it clear that they are not in the business of taxing health insurance, but they are committed to restructuring the TCJA, and with it, potentially the 199A provision.”
.
See also:
- How Employers Can Help Navigate Divisive Pre-election Period
- Election Stress Takes Heavy Toll on Worker Well-being, Productivity
.
In addition to high-profile national races, it’s important to remember that state and local elections also have significant impacts on employers across the country. Boyle’s company, which created a software-as-a-service platform called ClearFile, tracks every healthcare policy change across all 50 states and U.S. domestic territories.
“While it’s challenging to stay on top of each bill, it’s essential for the public to be aware of what’s happening locally,” he says. “I would always advise people to ‘know before you vote,’ because local lawmaking can sometimes be vague and open to interpretation. See what stakeholders in your local area are saying about a particular proposed policy.”
.
From: BenefitsPRO