Donald Trump is set to return to the White House with a larger share of the popular vote but smaller majorities in Congress than his party won in 2016. Though Republicans back then campaigned for sweeping health-care reform, they failed to accomplish much of note. This year, the GOP seems less interested in health policy, but a combination of changed circumstances and more modest objectives may enable it to achieve more.
Trump’s first victory in 2016 owed much to a backlash against Obamacare, which had caused insurance premiums to more than double in four years. Yet, because Republicans lacked a filibuster-proof Senate majority, they were unable to “repeal and replace” the Affordable Care Act. Health-care reform in Trump’s first term was thus limited to eliminating the tax penalty for individuals who failed to purchase insurance, stabilizing the marketplace, and making minor regulatory adjustments to Obamacare to the extent permitted by the ACA.
This year, health-care policy was much less prominent in the presidential campaign than it had been for the four election cycles from 2008 to 2020. After securing the Democratic Party nomination, Kamala Harris hastily abandoned her earlier advocacy of Medicare for All in favor of extending Joe Biden’s expansion of subsidies for Obamacare plans.
The Biden administration’s response to Obamacare’s shortcomings was a duct-tape solution: provide additional federal aid to those on the individual market whose premiums had skyrocketed after the enactment of the ACA. But this funding is set to expire at the end of 2025.
Trump said little about health policy during the 2024 election. But since inflation was foremost among voters’ concerns, and since health care is largely responsible for the nation’s deteriorating fiscal situation, the growth of medical costs remains a major policy priority.
The slim Republican majorities in the incoming 119th Congress are unlikely to be substantial enough to allow for comprehensive health-care reform. But the budget reconciliation process allows the GOP to reform health-care entitlement expenditures, which will be necessary to offset the cost of renewing Trump’s 2017 tax cuts.
Out of fear of being blamed by voters, Republicans have never cut Medicare benefits when they have had unified control of the federal government. Trump was not eager to depart from that practice, though he did not disavow cuts to Medicaid.
From 2013 to 2023, federal Medicaid spending grew from $265 billion to $616 billion. This was partly due to a broadening of enrollment during the Covid-19 pandemic. It also owes much to the growing ability of states to inflate federal spending on the program by expanding eligibility, the scope of covered benefits, and payments to insurers.
Democrats had hoped to hold the Trump tax cuts hostage as a bargaining chip to force the renewal of Biden’s Obamacare subsidy expansion. But without control of either chamber of Congress, they will lack the ability to do so. That allows the GOP to tie the tax cuts to Medicaid reform—and later to demand their own prize in return for any renewal of expanded ACA subsidies.
ACA subsidies automatically rise in proportion to the cost of plans, which encourages insurers to raise premiums further. With federal taxpayers covering the full cost of premiums for nearly half of enrollees, tens of thousands of Americans were fraudulently enlisted without their consent. Subsidies have gone to households with incomes of up to $600,000.
Republicans in Congress are not eager to find money to renew the expansion of ACA subsidies. But if the duct tape of subsidies is not kept in place, Obamacare’s structural flaws will again cause problems for which the GOP will be blamed. Unlike in 2017, Republicans must therefore produce a workable plan for reform, which could appeal to middle America and moderate legislators.
During the election campaign, Trump’s running mate J. D. Vance offered an appealing proposal: to maintain the Affordable Care Act’s regulatory protections for enrollees with preexisting conditions along with the subsidies that make them viable, while allowing more affordable alternative sources of insurance coverage to be sold elsewhere. Such a reform would need enough bipartisan support to avoid a filibuster, but a legislative trade of some deregulation in return for some additional funding might suffice to achieve that objective.
In 2017, the political spotlight on health-care policy caused Republicans to freeze, and they failed to achieve significant reforms. This year, public attention will turn to health-care reform only if the GOP Congress fails to act. That might be just the incentive to get them to do so.
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