With the GOP likely in control of everything in D.C., what happens may come down to how aggressive Trump and Republican lawmakers want to be.
While the weeks before the election certainly favored the election of Republican Donald Trump as president, the election outcome was in fact stunning. For the first time since George W. Bush in 2004, a Republican won the popular vote — by slightly less than 4 million votes and a majority of all voters. Leading up to the election, the electoral college looked like there were seven states that could swing either way – Nevada, Arizona, Georgia, North Carolina, Pennsylvania, Michigan, and Wisconsin. In the end, Trump beat Democrat Kamala Harris 312 to 226 in the electoral college, sweeping all seven of the battleground states.
While many often saw Trump as hurting down-ticket candidates, he clearly had major political coattails this election. The GOP was always favored to take back control of the Senate with 51 of 100 seats. But the huge win for Trump helped two additional GOP Senate candidates win, bringing the GOP majority to 53 seats.
The House was expected to be a tight contest. While control has not yet been established, the GOP is almost assured to stay in control. Right now, it has between 214 and 217 (RealClear Politics reports 217) out of 218 needed to have a majority, with about 15 to 20 seats yet to be called. At a minimum, the GOP will keep its 220 seats it has today.
So what does complete GOP control mean?
Many are sounding the alarm bells on the future of healthcare policy. Fair enough, but what exactly happens is not yet clear. Republicans do seem to want to prioritize refashioning healthcare with their policies, but earth-shattering reform is by no means certain. This is in part given what is expected to be the tight margin in the House, “relative” moderation in the Senate, and the 2026 elections looming (yes, D.C. is already looking at the next races).
Here are a few more details:
- The House GOP has always had a hard time keeping the caucus together. It has far-right members as well as more moderate to conservative members. The ideological split has been pronounced. We have seen high-profile failures to execute on the most ideological issues the past two years.
- The Senate as a body, especially due to the filibuster rule, tends to be more moderate in policy, although this is not always the case and we will see a more conservative GOP in the upper chamber now. The filibuster rule requires 60 votes on most legislation. Where budget reconciliation requires just a majority vote, two moderate senators, Alaska’s Lisa Murkowski and Maine’s Susan Collins could hold great sway (note my word could – see below).
- Related to the above, budget reconciliation can be used for policy changes, but it is by no means a clean process.
- Trump could be a wild card as well. If he is looking for a lasting legacy, that could militate against pursuing controversial healthcare initiatives.
- Previous failures play into the equation as well. Previous efforts to repeal and replace the Affordable Care Act (ACA) and restructure Medicaid went down in defeat.
- The 2026 election: the House is always thinking about keeping control. The Senate will be defending 20 of 33 seats in 2026 to keep its majority
So with more known now, what might happen?
Regulatory changes – While sweeping changes are not certain, it is fair to say that more conservative elements in a Trump government would push for traditional GOP policies on the Exchanges and Medicaid. A return to state-friendly Medicaid waivers, including work requirements, are sure to occur. On the Exchanges, less promotion and funding of enrollment seasons is certain. More generally, Trump’s desire to rein in the regulatory regime will mean a slowdown in healthcare reform and seismic changes.
Exchange premium subsidy enhancements – Many are projecting that the enhancements will sunset. The GOP may not prioritize spending here. While it would impact some GOP constituencies, the GOP may not see this as terribly impactful politically and could blame it on the previous administration when they lapse. There is some thinking, though, that the end-of-year vote could include a one- or two-year extension of enhancements through 2026 or that a master budget deal could include something similar in 2025. Some say that the deal could get done this year so as to allow the GOP to lay the blame for costs on the Biden administration and still get the political benefit of a year or two more of enhanced subsidies.
ACA repeal, including sweeping Medicaid changes – In truth Trump and his VP partner, JD Vance, sought to downplay talk of ACA repeal. But they did weigh in on possible changes during the campaign. GOP Speaker Mike Johnson sought to downplay repeal talk but spoke of the need for sweeping healthcare changes. But the 2017 failure to repeal and replace the ACA and the concomitant political implications are still in the GOP’s mind.
Trump, Johnson, and the rightist Freedom Caucus could seek to push a repeal and replace initiative again – including getting rid of the Exchanges, rolling back Medicaid to historic levels, and devolving healthcare coverage to states via block grant schemes for Medicaid and the uninsured. But GOP members from swing districts could seek to stop the repeal. It is important to note that Exchange enrollment tends to be greatest in red states as many did not expand Medicaid. My assessment is that over three-quarters of the 2024 enrollment of 21.4 million is in red states or states that were swing states in 2024 that Trump won.
The Senate could also come into play here. If the House caucus and the White House teamed up to repeal and replace the ACA, the Senate might have different thoughts. Murkowski and Collins would likely be against such a move. But with at least 53 votes, the caucus could lose their support and still force changes through budget reconciliation. At the same time, there are some other GOP senators that expressed reservations about going back at the ACA again.
We must remember too the popularity of the ACA as well as the fact that about 45 million have gained coverage either through the Medicaid expansion or the Exchanges, not counting the tens of millions more who benefit from Up to Age 26 coverage and protections for pre-existing conditions.
Medicare and Medicare Advantage – Trump has gone on record not to touch Medicare. Trump, other Republican lawmakers, and Republican policy groups have suggested that MA could become a default choice for Medicare beneficiaries. As much as I support MA, this could be a complex and controversial issue given recent benefit reductions, rural access concerns, and criticism from both sides of the aisle on prior authorization and other issues.
That said, a GOP Washington will be much friendlier to MA, which could further propel its growth. But that is not the same as thinking MA will go untouched. Indeed, many congressional Republicans and policy groups have singled out MA for needed reforms in the following areas:
- Quality bonuses
- Risk adjustment
- Rates generally
- Marketing
- Supplemental benefits
My prediction is that there will be bipartisan consensus for MA changes in many areas as lawmakers want to bring more accountability to the program. This also will come from the need for budget reductions as well as the anti-corporate welfare mentality that many GOP lawmakers have.
Medicare drug price reform – Many conservative GOP lawmakers and policy groups are arguing Medicare drug price negotiations should be repealed. They argue it is all about the free market and innovation but amounts largely to the fact that my party is in the hip pocket of Big Pharma. There is no drug free market.
Trump sponsored some drug price reform as president in his first term. He also does not have a great relationship with brand drug makers, but he recently seemed to back away from one of his proposals from his first term regarding international reference pricing. Congress could have a hard time getting the votes to repeal Medicare drug price negotiations given its popularity. Like with the ACA, the populist in Trump would also have to think long and hard about repealing the law.
Antitrust agenda for plans, pharmacy benefits managers (PBM), and providers – Trump and the GOP may be friendlier to health plans than perhaps the Democrats would have been, but that does not mean there will not be some scrutiny. There are many GOP lawmakers who view reining in massive consolidation, PBM reform, and examining vertical integration as critical. So, a good deal of this might be driven by Congress rather than the White House. At the same time, the populist streak in Trump could mean agencies that are more friendly to consumers and opposed to at least some consolidations. Future VP JD Vance is known to understand and be sympathetic to these competition issues. For example, many predict that the Federal Trade Commissions (FTC) lawsuit against PBMs will continue.
Employer healthcare deductibility — Some lawmakers and conservative healthcare policy groups are also calling for changes in the deductibility of employer healthcare costs. They argue that the broad provision drives healthcare costs. They do have a point, although trimming the scope of the law could have major impact on affordability, coverage, and business competitiveness. Trump and GOP leaders in Congress have yet to weigh in on the issue. Business lobbies would undoubtedly mount a huge effort on both sides of the aisle to stop the effort. Piercing the veil at all on this issue could have huge implications for business in the future. If it comes up, moderate lawmakers on each side of the aisle in each chamber likely would resist a broad reset on this issue.
Now, the bad news
Even if you assume Trump and GOP leaders shy away from massive healthcare changes due to a lack of votes or fear of voter retribution in 2026, it is quite likely that enough votes will be there to impact key healthcare coverage initiatives from a financial standpoint. Trump and the GOP are firmly committed to extending the Trump tax cuts set to expire at the end of 2025. With Social Security and Medicare pretty much off the table, Trump and the GOP will likely target healthcare, including the ACA, for savings. Republican or conservative healthcare policy groups do propose some radical changes, some of which are above. But others are more muted and are rooted in budget savings rather than sweeping policy changes. Here are a few examples that could be enacted.
- Conservatives think the 50% federal matching floor in Medicaid encourages liberal states such as New York and California to significantly augment coverage and benefits. As such, some want to eliminate the minimum 50% match to richer states.
- One proposal short of repealing the ACA Medicaid expansion would change the current 90% federal match for expansion populations and move it down over time to each state’s regular Medicaid match percentage.
- If Exchanges are not repealed, the enhanced premium subsidies would go away, benefits could be made less generous, and the current premium and cost-sharing rules played with.
- While this would take more moderate votes, the GOP could also execute on financial savings by adopting a block grant or per capita cap strategy just for Medicaid. This could be sold as retaining an entitlement but significantly diminishing its significance and shifting costs to states. Adding in work requirements would further scale back coverage and spending.
- Again, moderate votes could be needed, but some reform of Medicare could include making annual federal contributions more of a defined dollar amount each year that is inflated annually. This could be done for MA as well as the traditional program. Again, this could be pitched as keeping the entitlement but shifting costs in the future to beneficiaries.
- Notwithstanding the controversy over the so-called Cadillac tax when the ACA was passed (the tax was later repealed), the GOP might get comfortable with some sort of high cap on employer healthcare deductibility or a tax on employer policies that exceed certain benefit levels.
The bottom line
Sweeping healthcare changes are very dependent on whether Trump pushes such an agenda and whether a few lawmakers in each chamber balk at major changes. In the Senate, if you assume the two moderates would not support sweeping healthcare changes, you would need two other GOP senators to question the changes. In the House, the margin will be such that 3 to 5 GOPers could sink major healthcare changes.
But financial savings will be driven by the GOP caucuses to pay for tax cut extensions. This will likely include changes in healthcare program funding. So even if seismic changes do not occur in healthcare, the financial changes will pull back on various healthcare programs and coverage overall.
#election2024 #healthcare #healthcarereform #trump
— Marc S. Ryan
