Will Donald Trump Repeal the Affordable Care Act?

Will Obamacare Be Trumped?

As President-elect Trump heads to the White House, the ACA could come out on the other side looking downright unrecognizable. The promise, though, remains the same: broaden health care access, make health care more affordable and improve the quality of the care available to all Americans. 

So what does the new administration mean for the employer-sponsored health care? Here are the key policies the Trump Administration is expected to pursue that would significantly impact how companies manage health care benefits:

Policy: Repeal and Replace the ACA

There are three components to this policy. First is to repeal the Cadillac tax, and replace it with some of limitation on the tax preference for employer-sponsored health coverage, also known as the exclusion. This will likely be in the form of a direct tax on employees who elect coverage that exceeds a specified threshold. The second is repeal of the employer mandate, which means employers would no longer face penalties for “non-compliant” health benefits offerings. And the third would be to repeal the individual mandate, removing the tax penalty for anyone who chooses not to enroll in health care.

Implication: The fear of calculating and assessing the Cadillac tax effectively goes away, but the cost control efforts will remain for employers – not only to minimize the impact on their own bottom lines, but also control the financial impact health care has on their employees. Health care’s undeniable value in attracting and retaining talent means employers will focus on providing the tools and resources that enable employees to make the most cost-effective benefit and health care decisions. 

Policy: Expand HSAs

President-elect Trump has often touted health savings accounts (HSAs) as the future of health care, and there will likely be attempts to expand what these investments can do for individuals under his administration. Increasing contribution limits and allowing HSAs to pay for premiums are a couple ways that have been proposed to make the combination of a high deductible health plan (HDHP) and HSA more attractive. President-elect Trump would also like to enable the Federal government to make annual HSA contributions to low-income individuals, which is somewhat similar to the ACA's cost-sharing reductions. 

Implication: According the 2016 Benefitfocus State of Employee Benefits research, more than half of large employers offer at least one HDHP. However, HDHP participants contributed only 40 percent of the annual maximum, leaving on the table thousands of tax-free dollars and taking on undue financial risk. With emphasis by the new administration on expanding HSAs to cover premiums, employees will naturally become curious and may look to their employer for guidance. This creates a greater opportunity for employers to engage and educate employees not only about HSAs, but also other voluntary benefits that provide income protection and reduce financial risk. 

Policy: Interstate Insurance

While Trump's proposal to bring full competition in the industry by allowing individuals to buy health insurance plan across state lines (as long as the plan complies with the regulations of the state) doesn't heavily impact employers, it's largely unappealing to insurers due mainly to risk pool size concerns. 

Implication: If there are efforts to unwind the employer-sponsored system to an individual-based system (see next policy) where individuals can purchase insurance from any insurance carrier anywhere in the country, it would certainly pose a challenge to the traditional employer-based health insurance system. It would also require a complex navigation of state-based insurance governing bodies and regulations.

Policy: New Tax Benefit for Individual Market

Under this policy, the Trump administration would extend a similar tax benefit that employer-sponsored health plans already receive to people with individual market health plans. This policy is seen largely as offsetting the repeal of government subsidies through Obamacare. This could mean employees could opt for the individual market without sacrificing tax benefits but in all likelihood, the policy would limit the eligibility for the tax benefit to those without access to employer-sponsored coverage. 

Implication: Employers will want to have tools to provide clear and effective communication to employees concerning their benefits eligibility and coverage options. If there are not limits on the eligibility for the individual tax benefits, employers would also need to consider how to leverage other offerings as a competitive advantage to attract and retain top talent.