Written by Perry S. Braun, Benefit Advisors Network’s Executive Director. Published in Employee Benefit Plan Review, March/April 2019 issue.

What Can Employer Sponsored Benefit Plans Expect from a Divided Federal Government?

While much of the focus in 2018 came down to the elections, we now have those results and can begin moving forward. But, with a divided Congress what will the impact be on the insurance marketplace, the healthcare delivery system, the advisors and employers that interact (plan, strategize, implement, and execute) and most importantly, the employees that participate in the employer sponsored benefit plan?

Policies: What to Expect
Following the Kavanaugh hearing Senator Jeff Flake commented that he would have voted differently regarding the Federal Bureau of Investigation inquiry if he was running for re-election. This comment paints a picture that our representatives to Congress are concerned with advancing policies that secure their re-election rather than the wellbeing of the constituents they represent. With that backdrop, the status quo will be the likely outcome with regard to the current state of the Affordable Care Act (ACA) and America’s Health Insurance Plans (AHIP) until the 2020 election.

Are there policies/regulations that the parties could agree on? There are two observations assuming any policy change will support two goals – re-election and benefit to their constituents.

One, if there is any change in policy, it could be in a bipartisan approach to address prescription drug cost and the impact of prescription drugs on the health and safety of the community. The national discussion around opioids, the increase in drug prices on certain medications, as well as the lack of generic equivalents are issues that both parties wish to address from a policy perspective.

However, this represents a change on the margins and not a repeal of the program offered through President Obama or the alternative program offered by President Trump. Further, an incremental approach will not have any true and meaningful impact on the cost of healthcare – which is supposed to be the focus. Rather, the focus will be on insurance or premium reform.

The second observation is that while the focus has been on health and healthcare policy – which is really a tremendous amount of energy and no action – there is not an equal amount of attention being given to regulations for employers and advisors to meet, which come with real economic consequences, for example, fines and penalties.

The Next Two Years
So, with no one party in control of Congress and the executive branch, what does the next two years look like? Likely, the parties will be eyeing the 2020 presidential election and one of the key topics will be what the social contract with America looks like.

For example, the “crushing” national debt, cost of healthcare cost, the cost of tuition and the educational debt, and income disparity and burden this has on the vast majority of individuals in this country will push political parties to renew calls to address this situation, 2 March/April 2019 Employee Benefit Plan Review however, their energy to tackle this and their solutions will greatly differ.

The debate may focus on one or more of the following strategies to win over the hearts and minds of the voting public – raise tax revenues, cut government costs, or a combination of both.

If raising tax revenues is chosen, the impact on the individual is important. It is certain that all taxpayers will need to contribute some amount of tax revenue to buy down the debt. But, with the median household income hovering right around $60,000 and the average American household carrying $137,000 in debt, the problem becomes pretty clear: most people are not… [read more]