From Medicare to flood coverage – What the 2024 elections could mean for insurance

By Michael Giusti

As voters head to the polls in 2024, their decisions have the potential to reverberate through various sectors of the insurance industry.

From the Affordable Care Act to the future of Medicare, and even the health of the property/casualty insurance markets, lawmakers have the potential to shape policies in the coming years with great impact. The decisions voters make now will help determine who those lawmakers are.

As it stands at the federal level, divided government means few, if any, major changes are likely to move through the legislative process - at least in the coming year. It is a different situation at the state level, with many legislatures enjoying one-party control, and even veto-proof majorities in many states.

As the dust settles on the election season, it will be telling which parties end up in control, and that might just telegraph how tomorrow’s decisions in the insurance market are likely to play out.

Affordable Care Act

As it approaches its 14^th birthday, the Affordable Care Act is more popular than it has ever been. According to KFF, nearly 60% of Americans have a favorable view of the Affordable Care Act, nearly double the favorability from 10 years ago.

In January, marketplace signups topped 20 million, 4 million more than last year’s high water mark.

Still, Republican front runner, Donald Trump, has signaled his intent to renew efforts to replace “Obamacare.” While that intent grabbed headlines, many lawmakers in leadership positions recoiled, saying there are no current legislative efforts to do any such thing.

State Medicaid expansion is the ACA-related issue most likely to see action.

Currently, 10 states have still not expanded Medicaid, with North Carolina being the latest to enact an expansion. Looking at the map of the remaining holdouts, traditional expansion through legislative action seems as though it would be an uphill climb. But that doesn’t mean it isn’t possible.

Some of the remaining states seem to be exploring some nontraditional ways to expand Medicaid to get more coverage to more people, particularly when it comes to finding non-legislative, and even regulatory, solutions.

For example, Alabama lawmakers have floated the idea of expanding Medicaid through a public-private partnership instead of a traditional approach. That could look similar to the Arkansas approach through their Arkansas Health and Opportunity for Me program, which replaced its previous expansion plan in January 2022. The ARHOME program directs Medicaid funding to private insurers, instead of to public Medicaid rolls.

With state legislatures in the remaining deep red states unlikely to acquiesce to a traditional marketplace approach, these seeming back-door approaches may be a more likely way to expand coverage to vulnerable populations.

Medicare’s future

Although it is controversial to say that Medicare is going bankrupt, the fact remains that if nothing changes, the health insurance program for seniors faces at least partial insolvency by 2028.

With the number of baby boomers who are retiring outpacing the number of younger workers who are entering the workforce, there is just a simple accounting problem looming of more being paid out than is being paid in. That reality leaves Medicare with a few stark options: lower spending or increase funding.

One of the ideas being floated to lower spending is to increase the eligibility age for people entering the program. Various formulas are suggested so that retirees about to enter the program won’t feel as though they are getting their security blanket pulled out from under them. One idea is a phased-in increase of age for younger workers, but not immediately affecting the people who are about to retire.

Another possible reality, especially if nothing is done, is that automatic spending cuts could be implemented. This would mean doctors and hospitals get smaller reimbursements and would likely result in fewer doctors accepting Medicare as a payment option.

In some circles, increasing the amount people pay toward Medicare is a dirty word — seen roundly as a tax increase. Still, increasing Medicare revenue in some way is another viable solution that will need to be considered.

Another possible solution would be to ignore the problem altogether and legislatively prevent cutting Medicare, effectively committing to indefinite deficit spending.

How this problem is ultimately solved will likely fall on the shoulders of many of those voted into office this year.

Property/casualty insurance

While the future of the ACA and Medicare are squarely federal issues, when it comes to property/casualty insurance, most of the regulation falls at the state level. And in many states, insurance markets are approaching a breaking point.

In Florida and Louisiana, for example, a wave of small insurer implosions, coupled with the large insurers’ lack appetite to offer many policies, has left near record numbers of homeowners relying on the states’ insurers of last resort. And with climate change appearing to increase claims costs for insurers, the problems will likely only get worse in the coming years.

For its part, Florida enacted some changes to the way homeowners can assign their benefits to contractors to stem a flood of lawsuits in hopes that it will attract more insurers back to the state. Louisiana is trying a subsidy model to entice new insurers.

California is also facing an insurance crisis, with major insurers refusing to cover wildfire risk in many communities, if they are writing policies in the state at all.

Continuing to address these insurance issues will keep many statehouses busy.

Yet another federal-level insurance issue is changes to the National Flood Insurance Policy, called Risk Rating 2.0. Those changes have caused massive rate increases for many communities.

The changes were implemented to help reduce the government exposure for risk-prone communities. But critics say the changes punish some of the most vulnerable communities in the nation, leaving some people with the only choice of selling their longtime family homes, or even going without flood insurance at all.

Some senators are pushing to mitigate those increases to some extent, but any major overhaul would require significant legislative action.

Michael Giusti, MBA, is senior writer and analyst for InsuranceQuotes.com. Contact him at [email protected].