Under Trump, Affordable Care Act and Job Benefits Are on Thin Ice

Under Trump, Affordable Care Act and Job Benefits Are on Thin Ice

Donald Trump’s second administration will likely disrupt health-care access, costs, and employee benefits such as protections for transgender care. The repeal of Affordable Care Act provisions—a rallying cry and push from conservative legislators—is also a possibility.

A full repeal of the 15-year-old ACA would be a hard-fought battle, considering its increasing public favorability and uncertain vote tallies. More likely is a slow strangulation through a multi-front attack on certain provisions.

Like his signature move during his first term, Trump could revive short-term insurance plans, known as skinny plans, with less coverage and benefits, as alternatives to full ACA coverage for individuals and employers.

Legislative changes. A likely first step is for Congress to allow Biden-era enhanced ACA subsidies to expire in 2025. If successful, it could force the ACA to self-implode. Without subsidies, ACA premiums will rise, as high as 80%, according to the Center on Budget and Policy Priorities, based on which could result in massive de-enrollment.

If huge swaths of participants leave ACA coverage, the result is a pool of ACA enrollees who are the sickest or least able to obtain other coverage. Providers, which set rates by relying on pools of healthy, low-cost participants, will increase premiums, causing those who rely on subsidies to drop coverage.

Also likely is a push to reformat ACA into block grants whereby Congress authorizes individual blocks of state funding. States can bypass federal marketplace protections and create another end-run around ACA coverage.

Outside of the ACA arena, continued Medicaid and Medicare funding is uncertain. The newly uninsured could face additional coverage hurdles such as work requirements or time-limited Medicaid benefits funding.

Transgender health care. Trump’s self-stated day-one agenda includes an order removing federal funds and agency promotion of ideas related to gender-affirming surgeries or care to transgender minors.

Some likely actions include an executive order pulling federal funding from hospitals and health-care providers if they provide gender-affirming care or surgeries to minors. Also de-funding public schools that advise or counsel minors on gender issues is possible, as the incoming administration sees such services promoting gender transitioning.

The fate of adult patients seeking similar services, while probably not a day-one item, is unclear. The potential for additional executive or legislative actions could include the removal of transgender care provisions under Medicare, Medicaid, and Veterans Affairs programs.

Insulin. After an election season with competing claims by both parties on capping monthly insulin costs, the cap appears safe from intervention by the incoming administration. Biden’s cap is part of the Inflation Reduction Act, and Trump has often claimed credit—making it difficult for him to reverse it.

Abortion. Since the US Supreme Court overruled Roe v. Wade, nearly half of US states have restricted or banned abortion, although seven states approved abortion protection measures in the 2024 election. Whether the current administration or new Congress will seek a national ban isn’t clear.

ESG. The Biden administration’s ESG Fiduciary Investment Rule, which applies to private retirement plans governed by the Employee Retirement Income Security Act, allows plan fiduciaries to consider environmental, social, and governance matters as one factor when comparing two substantially similar plan investments if it complies with ERISA’s fiduciary requirements.

However, the current ESG rule is under review by the US Court of Appeals for the Fifth Circuit in a lawsuit brought by 27 attorney generals in Utah v. Su. After the Supreme Court’s Loper Bright decision ending Chevron deference to agency interpretations of unclear laws, the justices remanded the case for a limited review, removing the agency deference that had been provided to the government.

Based on his first term, the Trump administration is expected to rewrite or replace Biden’s ESG rule. It might look to a Department of Labor rule under the prior Trump administrationFinancial Factors in Selecting Plan Investments—which required fiduciaries of private pensions subject to ERISA to consider only financial facts in making investment decisions and not non-pecuniary facts, which would include ESG factors.

Trump could issue a new order similar to his prior executive order, Promoting Energy Infrastructure and Economic Growth, which sought to eliminate ESG from investment considerations in retirement plans as that process could lead to fiduciaries investing in renewable energy instead of investing in coal, oil, and natural gas.

Either way, the new Trump administration is expected to eliminate ESG from consideration by fiduciaries when selecting investments in private retirement plans subject to ERISA, even if two investments are substantially similar.

Crypto. The Department of Labor has expressed significant concerns about adding cryptocurrencies as an investment option in 401(k) plans. Guidance issued in 2022 cautioned plan fiduciaries to use care before adding crypto to a 401(k)-plan due to its speculative and volatile nature. The DOL reminded fiduciaries that they could be personally liable for financial losses, and, as if to finalize the intended deterrent effect, stated it has “serious concerns” about the prudence of fiduciaries who expose plan participants to cryptocurrencies.

Shortly after the DOL’s guidance, Fidelity Investments became one of the first plan provider to offer crypto as an option in 401(k) accounts. The final decision on whether to include crypto in a 401(k) plan rests with fiduciaries, who likely became dissuaded after the DOL’s harsh warning.

With Trump as a vocal crypto supporter, the DOL may revise its stance on cryptocurrencies in 2025. If so, fiduciaries may be more willing to include them in their 401(k) plan’s menu, and other providers may join Fidelity in offering crypto as a 401(k)-investment option.

The stage is set for pivotal policy shifts in health care, energy, and financial regulation. There is little doubt the second Trump administration will re-evaluate existing policies and restructure them quickly while moving to ripen legal cases for review in more friendly courts. The details of the coming changes remain an open question for 2025 and will require close monitoring.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Candace Quinn is an executive compensation and employee benefits shareholder at Buchanan, Ingersoll & Rooney.

Barbara Sanchez-Salazar is a senior attorney at Buchanan, Ingersoll & Rooney focused on employee benefits.

Victor Silva is an associate at Buchanan, Ingersoll & Rooney and helps clients in commercial litigation and all facets of employment law.

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