How might Tom Price impact employer health coverage?

Employers should carefully watch how President-elect Trump and his administration affect health care.

When President-elect Donald Trump is sworn in on Jan. 20, 2017, he will bring a new administration with him.

Businesses are eagerly trying to figure out how Trump and his appointees are going to affect their operations, and how the new administration will affect employer health coverage is one of the biggest questions for companies right now. To get a better understanding of what might happen under a Trump presidency, it's time to examine Tom Price – Trump's pick for secretary of Health and Human Services – and his previous policy positions.

Tom Price and the Affordable Care Act
Unsurprisingly, Price is a staunch ACA opponent just like Trump. In particular, Price is vehemently opposed to the employer mandate provision embedded in the legislation, and as a Congressman he has repeatedly attempted to introduce legislation that would serve as an ACA alternative since 2009, according to The New York Times. With that in mind, there is a good chance Price and Trump will work together to repeal and replace President Obama's signature health care law.

But what would Price want to replace the Affordable Care Act with? His proposed legislation – called the Empowering Patients First Act – might give employers a clue as to what's next if an ACA repeal is successful.

The Empowering Patients First Act
For the past seven years, Price has tried to introduce this legislation into the House of Representatives, but it has failed to get enough traction with fellow lawmakers to go anywhere. If passed, the legislation would have laid the framework to repeal the ACA and replace it with several new provisions, according to the Society for Human Resource Management:

  • Encouraging people to contribute to health savings accounts and increasing the allowable contribution level to match the maximum IRA contribution level.
  • Providing age-adjusted tax credits to help purchase individual or family health coverage if none is available through an employer.
  • Setting up high-risk pools to help individuals with pre-existing conditions get coverage.
  • Establishing rules to allow insurers to sell across state lines.

To balance out the new tax credits, Price's plan would cap employer deductions for health care premiums at $8,000 for individuals and $20,000 for family plans. Price's measure would likely reintroduce a concept known as defined contribution health care, which was outlawed in most instances under the ACA, according to the Society for Human Resource Management. Under this model, employers would be able to provide pretax reimbursement dollars to employees who buy their health insurance on the private market.

"Many employers were upset when the Obama administration shut down the ability for employers to just provide money on a pretax basis for employees to purchase their own health insurance on the open market – a trend that many saw as the wave of the future," Brian Pinheiro, chairman of the employee benefits group at law firm Ballard Spahr, told SHRM.

Although this plan would be a stark departure from current ACA regulations and would likely lead to a full repeal of the ACA, it does not completely dismantle the law in its current form. Nothing is certain until Trump and the new Congress begin to enact changes in January.