Employee Benefits Blog

How Trump's HHS Secretary Nominee Might Impact Employee Benefits

Written by David Rook | Jan 13, 2017

The first of two confirmation hearings for Georgia U.S. Rep. Tom Price for Health and Human Service Secretary will come just two days before Donald Trump is set to be sworn in as president.

The Senate Health, Education, Labor and Pensions Committee plans to hold a hearing on Price’s nomination on January 18, according to the office of the panel’s chairman, Tennessee’s Lamar Alexander. The Senate Finance Committee will also be holding its own confirmation hearing for Price. That’s also expected in the weeks ahead.

Majority Leader Mitch McConnell has expressed his desire for the Senate to confirm many of Trump’s Cabinet nominees on Jan. 20, the date of Trump’s inauguration, as has been custom in recent years. But the Kentucky Republican has not divulged his specific plans for Price.

Democrats are not happy about the Roswell Republican’s selection as Trump’s health chief, but they likely don’t have the votes to kill the nomination. They can, however, draw out the Senate’s consideration process for a day or two.

Dr. Price is an orthopedic surgeon representing a district north of Atlanta. He has been studying how to accomplish the goal of dismantling the Affordable Care Act for more than six years, according to the New York Times. The bills he has introduced into congress since 2009 have included detailed replacement plans, and much of what he advocates has involved removing the federal government from healthcare and other employee benefits programs.

Based on these previous submissions, here's how Trump's HHS Secretary nominee may impact healthcare and employee benefits.  

A Reduction of Federal Contributions and Regulation

Many feel that Tom Price will lift some of the weight of employee health care off the shoulders of employers, reducing onerous compliance regulations while lowering taxes and program costs. As part of Price's opposition to the Affordable Care Act (ACA), he opposes the employer mandate of the ACA, which serves as the primary catalyst that makes the widespread adoption of employee healthcare work for the ACA.

  • Price would remove the requirement that employers offer non-discriminatory health insurance to employees.
  • Price would remove the 40 percent excise tax on employers' high-valued health plans (the so-called Cadillac plans, whose premiums total $10,000 for individuals and $27,500 for families annually).
  • Price's proposals would cap the tax deductions that employers get on the cost of insurance that employers provide to employees (in exchange for dropping the 40 percent excise tax).

Dr. Price's "Empowering Patients First Act"

The healthcare law that Dr. Price has been proposing would allow employers to grant employees pre-tax dollars to select either an employer-sponsored plan or to purchase a policy on the individual market (not group plans). Price's plans lean toward the so-called "defined contribution health care" concept.

Currently, employers are barred from providing pre-tax funds to reimburse health care on a public exchange. However, Price may allow employers to simply give employees pre-tax money to supplement premiums on private exchanges. Similarly, employers may be able to give employees a fixed amount of money to pay for annual health care premiums.

The employer's cost for employee health care will be defined, and the employer will not have to worry about the actual cost of medical care that each worker may incur. This makes the defined contribution approach safer for a lot of employers. Organizations offering fully insured coverage would have more leeway to provide a flat-dollar subsidy to employees, rather than paying a percentage of plan premiums. This would give employers more control over their spending.

Under the Empowering Patients Act, small businesses would be allowed to band together across state lines to increase their buying power for group plans and free them from state-mandated benefits plans. These multistate small businesses that pool together would have to be regulated. Detailed regulations will probably be laid out by the Trump administration as the ACA is replaced. A new regulating body will likely have to be established.

The Impact on American Employers

Tom Price has been a loyal supporter of Donald Trump since the beginning of the campaign. He is also aligned with the health policies of Paul Ryan and has provided a bridge between Ryan and Trump. He is devoted to limiting the size of government, so look to him to restructure federally supported benefits and simplify federal programs to (at least ostensibly) reduce government spending.

Many fear that he will gut funding to women's programming like Planned Parenthood and free birth control programs. He wants to convert Medicaid into a state-run block grants program that would reduce requirements on the states as to eligibility and the range of services that must be provided to low-income citizens. For instance, his plan would require "able-bodied" applicants to meet work requirements to receive healthcare benefits.

Whatever happens, the repeal of the ACA (aka ObamaCare) is officially underway, as the Senate voted 51 to 48 early on Thursday to approve a budget resolution instructing House and Senate committees to begin work on legislation to repeal major portions of the ACA. The House is expected to take up the legislation Friday, although there were signs that disparate groups of House Republicans were concerned about it. Moderates said they may oppose the measure because they are nervous about starting the repeal without a replacement plan.