How Will a Trump Administration Affect Your Health Insurance?

Changes Will Vary Depending on Where You Get Your Insurance

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Donald Trump campaigned on the promise that he would immediately repeal the Affordable Care Act (Obamacare), and replace it with "a series of reforms ready for implementation that follow free market principles and that will restore economic freedom and certainty to everyone in this country."

But what does that mean? If you're like a lot of Americans, you're probably wondering how your own coverage—and your future coverage options—will be impacted.

At this point, nobody can say for sure how the health care reform process will play out over the coming months and years. Although there is little doubt that the Trump Administration and the Republican majority in Congress are going to take steps to change the direction of our current healthcare reform path.

But the ACA is very much entrenched in our health care system at this point. President-elect Trump has said that he wants to keep some parts of the law, and indeed, some parts of it have strong bipartisan support. But eliminating parts of the law while keeping other parts will likely prove quite challenging.

With that said, let's take a look at how the Trump Administration is likely to impact your health insurance, depending on where you currently get your coverage. We'll look at the four main areas of coverage that include most Americans' source of health insurance:

  • Employer-sponsored plans (49 percent of Americans)
  • Individual market coverage (7 percent of Americans)
  • Medicare (14 percent of Americans)
  • Medicaid (20 percent of Americans)

Employer-Sponsored Health Insurance

In a nutshell:

  • If your employer offers coverage now, they will likely continue to do so.
  • You are less likely than other groups to see any major changes in how you get your coverage, or the overall services that are covered.

The details:

Roughly half of Americans get their health insurance from an employer. And while the ACA absolutely made some significant changes regarding employer-sponsored coverage, Trump's win is likely to have less impact on employer-sponsored insurance than on other types of coverage.

If Congress passes a bill similar to H.R.3762 (that bill passed the House and Senate in late 2015, but President Obama vetoed it), it would repeal numerous spending-related provisions of the ACA. It would not be a full repeal of the ACA however, as the Senate doesn't have enough votes to overcome a filibuster. If they rely on a spending bill (ie, a reconciliation bill), they can pass it with a simple majority, and it wouldn't be subject to filibuster.

So there's a widespread expectation that repeal legislation might end up being a reconciliation bill, and H.R.3762 is a good guess in terms of what it might contain.

Notably from an employer perspective, H.R.3762 would have eliminated the employer mandate penalty (employer shared responsibility provision).

It's reasonable to assume that the employer mandate would be eliminated under a new repeal bill. In that case, large employers would no longer be penalized if they stopped offering coverage to their full-time workers, or if they offered coverage that wasn't considered affordable or didn't provide minimum value.

But if your employer offers coverage now, that's likely to continue to be the case even if the employer mandate is eliminated. First, we have to keep in mind that the requirement for employers to offer coverage to full-time workers only applies to organizations that have 50 or more workers. Small businesses are not required to offer coverage, so eliminating the employer mandate wouldn't impact them. And almost all large employers already offered health benefits prior to the ACA. Kaiser Family Foundation data indicates that 96 percent of large employers (50+ workers) were offering health benefits in 2015. That was only slightly higher than the 95.7 percent of large employers who were offering health benefits in 2013, when the employer mandate wasn't yet in place.

Employers use health insurance—along with the rest of their benefits package—to attract and retain the best employees. And they get to use pre-tax funds to pay for the benefits they provide (as do the employees). Barring a substantial change in the tax code, it's likely that employers will continue to offer coverage going forward, at least in the near-term.

It's possible that there could be a change in the tax code that applies to employer-sponsored plans. House Republicans published a healthcare reform proposal in June 2016 that calls for a cap on the exclusion of health benefits from taxable income. The proposal explains the ways this would differ from the ACA's Cadillac Tax but from an employee perspective, the result would be somewhat similar: Employers would start to shy away from high-cost plans, since a portion of the premiums might end up being taxable.

If you work for a small employer and your employer obtained a small group plan since 2014, your plan includes coverage for the ACA's essential health benefits. If the ACA's essential health benefits were to be altered going forward, the specifics of your coverage could change. But there were various reforms—such as HIPAA and the Pregnancy Discrimination Act—that were already applicable to the employer-sponsored health insurance market prior to the ACA, and they won't be impacted by any changes that are made to the ACA.

Individual Market Health Insurance

In a nutshell:

  • Changes are likely under a Trump Administration, but the bulk of them probably won't take effect until 2018 or 2019.
  • The individual mandate is still in place, and you still need coverage for 2017. Open enrollment is your chance to get coverage, so don't delay in anticipation of the "repeal and replace" scenario, since it's likely to have a delayed implementation.
  • It's possible that pre-existing conditions could once again be an obstacle to enrollment a few years down the road, but lawmakers are working on strategies to ensure that people can still get coverage.
  • Premium subsidies as they exist under the ACA might be eliminated by 2019, but lawmakers are working to devise a replacement for them, and are considering refundable, advanceable tax credits (the current subsidies are also refundable, advanceable tax credits, but the new proposal would alter how they're determined).
  • Health Savings Accounts (HSAs) and high-deductible health plans (HDHPs) are likely to be emphasized.

The details:

If you buy your own health insurance, either in the exchange or off-exchange, you already know that the ACA made drastic changes to the individual health insurance market. 

Trump's campaign promise to entirely repeal Obamacare isn't likely to be fulfilled, at least not anytime soon. It's much more likely that a reconciliation bill (similar to H.R.3762) would be used to repeal spending-related aspects of the ACA. H.R.3762 would have eliminated premium subsidies and Medicaid expansion, but in both cases, there would have been a two-year delay before the repeal took effect.

It makes sense that if Congress is going to move forward with replacing the ACA, they'll need to give themselves time to get the new system ready to go before eliminating what we have now. So if a reconciliation bill is introduced in 2017 to repeal portions of the ACA, it will likely have an effective date in 2018 or 2019.

There are some aspects of the ACA—like allowing young adults to remain on a parent's plan until age 26, and preventing insurers from denying coverage to people with pre-existing conditions—that have strong bipartisan support. Trump has said he'd like to keep both of those provisions in place, although the details are still unclear in terms of exactly how Congress plans to continue to have coverage be guaranteed issue, but without a mandate requiring people to buy health insurance (repealing the individual mandate is among the proposals that Congressional Republicans have proposed).

The House Republicans' health care reform proposal calls for expanded utilization of HSAs. It would allow for more flexibility, including the ability to use HSA funds to pay medical expenses that were incurred up to 60 days before the account was opened. It would also allow for higher contribution limits. 

Another possible template for ACA replacement is the Empowering Patients First Act, which was introduced by Representative Tom Price (R, Georgia) in 2015. That legislation also called for the expansion of HSAs and a heavier reliance on them as a mechanism for reforming health insurance.

Although HSAs do have several benefits, their utility as a healthcare reform solution for lower-income Americans is questionable, since people with limited income might not have the means to set money aside in an HSA. And the tax advantages (ie, deductible contributions and tax-free withdrawals if the money is used for medical expenses) might be minimal if the person doesn't have a significant tax liability in the first place.

Medicare

In a nutshell:

  • Nothing is changing soon; current reform proposals are very long-term.
  • House Speaker Paul Ryan has been pushing for Medicare reform, and his chances of making it happen are much higher given Trump's victory.
  • House Republicans' proposal would only apply to people who aren't yet 55, as the system would remain unchanged for those who are already 55 or older.

The details:

Medicare reform and privatization has long been a talking point in GOP healthcare reform proposals. Although House Speaker Paul Ryan has said that Medicare reform will be tackled alongside the legislation to amend or repeal/replace Obamacare, he hasn't said whether the 2017 legislation will closely resemble the proposal that House Republicans published in 2016.

But that proposal called for several changes to Medicare, including strengthening Medicare Advantage, the current private option for Medicare enrollees.

Starting in 2020, the House Repubicans' proposal would call for Medigap plans to be more restricted. Currently, there are some Medigap plans that cover all or nearly all of an enrollee's excess charges under Original Medicare. The new proposal would limit how much of the out-of-pocket charges Medigap plans could cover, in an effort to prevent overutilization (the idea being that if enrollees have no out-of-pocket costs at all, they're more likely to overutilize services, resulting in higher overall costs).

The 2016 proposal would combine Medicare Part A and Part B, with one unified deductible and coinsurance. It would also gradually increase the Medicare eligibility age to keep pace with the increasing Social Security retirement age.

The House Republicans' proposal also calls for a Medicare "premium support" program to be implemented roughly ten years down the road, and would essentially amount to a system that relies even more on Medicare Advantage-style coverage. Since there would be a ten-year delay, people who are 55 or older would still have Medicare the way it exists today. But younger Americans would have the option—once they reach Medicare eligibility—to enroll in a private plan instead, with a Medicare premium support payment made on their behalf to the insurer.

That payment would cover all or part of the premium, and would be adjusted upwards for sicker individuals who face higher premiums, and would be smaller for wealthier seniors who can afford to pay a larger share of their premiums. There would also be additional financial assistance for lower-income seniors who need help covering their out-of-pocket costs.

Medicaid

In a nutshell:

  • Nothing is changing in the immediate future.
  • If your state has expanded Medicaid under the ACA, those eligibility guidelines are still in effect.
  • If Congress follows a path similar to H.R.3762, Medicaid expansion wouldn't be eliminated until the end of 2018.
  • If Medicaid expansion is repealed, it would likely be replaced with a system of block grants or per capita allotments that states would be able to use as they choose.
  • People who were already eligible for Medicaid prior to the ACA (low-income children, pregnant women, and some parents, along with disabled residents) will likely continue to be eligible under new reforms, although specific benefits could change in the future.

The details:

Each state's Medicaid program is jointly funded with state and federal money. States with higher per capita income receive a smaller percentage of federal matching funds, while those with lower per capita incomes receive more federal matching funds.

States set their own guidelines on some aspects of Medicaid coverage and eligibility, but the federal government has minimum requirements that states must meet. For years, Republican lawmakers have advocated for more control to be turned over to the states, and for states to receive a set amount of federal Medicaid funding, rather than the current matching system for funding. 

The idea there is that states would have more incentive to curtail costs if they had a limited amount of federal funding. But critics warn that the result of limited federal funding could just be resources that are stretched too thin, and unable to meet the needs of state residents.

The reform proposal put forth by House Republicans calls for two options: Block grants (a set amount of Medicaid funding that the federal government would give a state), or per-capita allotments (a set amount of federal Medicaid funding per enrollee, that the federal government would give a state). States would be free to choose which option they prefer, and would be able to use the funding as they see fit, setting their own guidelines for eligibility and benefits.

States would also be free to use their own funding, as they do now, to supplement the federal funding. But since the goal of the reform proposal is to cut federal Medicaid spending, there are concerns that the cuts would result in fewer people with coverage, and lesser benefits. But advocates for reform point to waste and fraud, nothing that reducing those would result in cost-savings too. 

A Word From Verywell

Although the ACA has been in place for nearly seven years, it's never had unified bipartisan support, and continues to be a political lightning rod. A Trump Administration will likely move to make changes to the law, but there are numerous moving parts, and revamping it will be a challenging process.

For the time being, nothing has changed. You can still sign up for health insurance for 2017 on the exchange, directly through a health insurance carrier, or via your employer's open enrollment period. Subsidies are still available in the exchange, and there's still a requirement that you have health insurance for 2017 or face a tax penalty,

If and when there are changes, we'll keep you up-to-date with what's changing, and when. In all likelihood, you'll have plenty of warning; changes are likely to be enacted in the fairly near future, but with implementation dates that are pushed out to allow for a replacement to be fully developed.

Sources:

House of Representatives, GOP Healthcare Proposal. A Better Way, Our Vision for A Confident America. June 22, 2016.

Kaiser Family Foundation. Health Insurance Coverage of the Total Population. 2015.

Kaiser Family Foundation. Overview of Medicaid Per Capita Cap Proposals, June 22, 2016.

Kasier Family Foundation. Percent of Private-Sector Establishments That Offer Health Insurance to Employees, by Firm Size. 2012-2015.

Trump/Pence Campaign Website. Healthcare Reform to Make America Great Again. 2016

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