Healthcare in America has always been complicated, but the Trump presidency added more complexity, especially for group health insurance. Under Trump, policies shifted dramatically, impacting small business owners, workers, and their access to care, costs, and coverage options. This article explores how Trump’s administration reshaped the landscape of group health insurance.
Overview of Trump’s Healthcare Policy Changes
According to Taylor Benefits Insurance group health insurance coordinator Todd Taylor, one of the most significant changes during Trump’s presidency was his focus on dismantling the Affordable Care Act (ACA), attempting over 70 times to repeal it. A major result was the 2017 Tax Cuts and Jobs Act, which removed the ACA’s individual mandate penalty starting in 2019. This penalty required individuals to purchase health insurance or face a fine, which was eliminated under Trump’s administration.
The removal of the mandate had far-reaching effects. Without a penalty to encourage participation, many young, healthy individuals opted out of insurance, leading to an older, less healthy insurance pool. This raised premiums for those who remained insured and contradicted one of the ACA’s core goals: maintaining balanced risk. According to the Congressional Budget Office (CBO), the repeal could increase the number of uninsured Americans by 13 million by 2027.
Additionally, Trump expanded short-term health insurance plans, which last up to three years and typically offer limited coverage compared to ACA-compliant plans. This expansion allowed individuals to avoid ACA mandates and offered small businesses the chance to form Association Health Plans (AHPs) for potentially lower premiums. However, these changes resulted in a 1.3 million drop in ACA marketplace enrollments between 2016 and 2019, contributing to an increase in the uninsured rate from 7.9% in 2016 to 9.2% in 2019.
Repeal of the Individual Mandate Tax
The repeal of the individual mandate tax was a defining change. Previously, those without insurance were fined, with penalties reaching up to $695 per adult or 2.5% of income. After the Tax Cuts and Jobs Act of 2017, the penalty dropped to $0 in 2019.
While proponents argued the change allowed individuals more freedom over their healthcare decisions, critics warned it would lead to higher premiums and fewer healthy people in insurance pools. In fact, premiums in the individual market surged by about 7% in 2019, as the absence of healthy individuals increased costs for insurers, which passed these costs onto consumers.
The CBO projected that, by 2025, 13 million fewer Americans would have health insurance without the mandate. Additionally, the repeal weakened ACA protections for essential health benefits (EHBs), leading to higher out-of-pocket costs for consumers as insurance plans became more selective in their coverage.
Changes to Essential Health Benefits
Trump’s administration gave states greater discretion over which Essential Health Benefits (EHBs) to include in insurance plans. This allowed states to decide which services, such as maternity care or mental health services, were essential and which were not. As a result, coverage varied widely from state to state, impacting consumers’ access to critical services. Some states reduced coverage for services like mental health care, while others focused on services they considered more essential.
This flexibility created disparities in health plans, especially for individuals seeking health insurance across state lines. Employers also faced challenges, as they had to adjust their health insurance offerings to comply with state-specific regulations while ensuring that they met employee needs. As a result, group health insurance plans became less standardized, leading to confusion and potential gaps in coverage.
Effects on Group Health Insurance Plans
Trump’s healthcare policies also had a profound effect on employer-provided group health insurance. Employers had to adjust their benefit offerings in response to new regulations, including the removal of the mandate and changes in EHBs. These adjustments sometimes resulted in increased premiums, which were passed on to employees.
In particular, the repeal of the individual mandate led to higher premiums, as the number of insured individuals decreased and the risk pool became older and sicker. At the same time, many employers began offering more flexible plan options, such as Health Reimbursement Arrangements (HRAs), which allowed employees to use employer funds to purchase individual insurance plans instead of relying on traditional group coverage.
While employers had to contend with rising costs, they also had the opportunity to innovate. Some introduced tiered health plans, which allowed employees to choose from a range of coverage levels depending on their needs and budgets. This increased flexibility provided more personalized options but also added complexity for employees in understanding their health coverage choices.
Insurer Regulations and Market Dynamics
The regulatory changes under Trump reshaped the way insurance companies operated. One notable change was the removal of risk adjustment programs, which helped balance costs between insurers by compensating for differences in the health status of enrollees. Without these programs, insurers faced greater financial uncertainty, leading to higher premiums and fewer coverage options.
At the same time, insurance companies began offering short-term health plans as an alternative to ACA-compliant policies. These plans, which offer limited coverage, gained popularity among consumers seeking lower-cost options. From 2018 to 2021, enrollment in short-term plans surged by nearly 30%, reflecting both consumer demand and insurers’ efforts to adapt to a rapidly changing market.
Employers also had to adjust to these market dynamics. Many began offering more customized benefits packages, such as direct contracting with healthcare providers to reduce costs and improve care management. These efforts aimed to provide employees with more control over their healthcare decisions while helping employers manage the rising costs of health insurance.
Employer Responses to Policy Shifts
To cope with the shifting healthcare landscape, many employers adopted tiered health plans, offering employees a range of coverage options. This approach allowed workers to select plans based on their individual needs, such as whether they prioritized lower premiums or more comprehensive coverage.
Implementing tiered plans, however, required employers to clearly communicate the differences between the various options and ensure that employees understood their choices. A survey by the Society for Human Resource Management (SHRM) found that 42% of employers had made this shift since the repeal of the individual mandate.
In addition to tiered plans, employers introduced wellness programs and Health Savings Accounts (HSAs) to help employees manage rising out-of-pocket costs. By encouraging preventive care and offering financial incentives, employers sought to promote healthier lifestyles while also reducing healthcare costs.
Impacts on Employees and Their Families
The Trump administration’s healthcare policies had mixed results for employees and their families. On one hand, employees gained more flexibility in choosing health plans that suited their individual needs. On the other hand, rising premiums and higher out-of-pocket costs made it more difficult for many to afford adequate coverage.
The average annual premium for family coverage increased to $19,616 by 2019, forcing many families to carefully assess their health insurance options. Some turned to HSAs to mitigate the financial burden of higher deductibles, while others opted for lower-cost plans with fewer benefits.
While the increased variety of health plans allowed families to tailor coverage to their needs, it also introduced confusion for those unfamiliar with the complexities of health insurance. Employees needed to be proactive in understanding plan details, such as deductibles and copayments, in order to make informed decisions about their healthcare.
Conclusion
The Trump presidency reshaped the group health insurance landscape through policy changes that brought both opportunities and challenges. While some employees benefited from more flexible plans and lower premiums, others faced higher costs and reduced coverage options. As the healthcare system continues to evolve, employers and consumers will need to navigate these complexities to ensure access to affordable, high-quality care.
