Trump’s upcoming presidency could have a range of potential knock-on effects for the insurance industry, although the impact on health insurance may be the most widely felt and immediate. The first question for US policyholders will centre around the expiring subsidies of the Affordable Care Act (ACA), which is set to end in 2025.
Trump previously backed Republican-driven efforts to repeal the ACA during his first term in power. He was unsuccessful at the time; however, following the 2024 US elections the Republican Party holds a majority in the House of Representatives and Congress, which puts him in a much stronger position. Yet it is worth noting that the ACA is particularly popular in southern (largely Republican-held) states, which would make letting the subsidies expire a risky move for a Republican president.
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GlobalData’s Local LoB Database shows that the US Medicare health insurance market was worth $761bn in 2023, up 9.4% from $696bn in 2022. Medicare is a social insurance programme that is funded by the federal government and primarily supports people over the age of 65 by paying for half of their medical expenses. The only social healthcare programme offered in the US is Medicaid, which offers free medical care to those who qualify, including low-income children, pregnant women, the elderly, and people with disabilities. Therefore, these premiums could come under threat as subsidies expire.
Letting the subsidies expire would lead to significant inflation of healthcare premiums. This would represent a challenge for insurers, meaning providers would likely struggle to retain customers. It would also present a substantial risk to many low- and medium-income consumers, who may face holding no or limited health insurance and would thus face huge medical bills in the event of any health issues. Much remains unknown at this stage, as Trump will not be inaugurated until January 2025. However, his past and his party’s attitude towards Medicare and the ACA suggest this could be one area of government cost-cutting his administration will focus on.
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