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State of the 2020 Election and Insurance Report

Election season is in the air again, and believe it or not, many of the decisions voters make in November will not only affect who controls the halls of government — they will also make a lasting impact on the insurance industry.

From health care to unemployment, to business interruption insurance and business liability — the choice for president, Congress, and even some down ballot races will drive how insurance will work for years to come. This report aims to detail exactly what is at stake, as well as lay out how some outcomes might influence different insurance verticals.

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How Your Health Insurance Could Change

The first major insurance question isn’t even directly on the November ballot, and that is the future of the Affordable Care Act. Passed in 2010, this Obama-era legislation governs how most major elements of health insurance operate. It established some very popular – though expensive – health insurance provisions.

Here are a few of the most important ones:

• mandating coverage for pre-existing conditions
• children remaining on their parents’ insurance until they are 26
• prohibiting annual and lifetime maximum caps on insurance benefits
• mandating no-cost-to-patients preventative screenings

The expansive law passed during President Barack Obama’s first term has reshaped much of how health care is delivered. Ever since it was passed, Republican politicians of all stripes have derided the law that they dubbed “Obamacare,” and vowed to dismantle it any way they could.

The Supreme Court upheld the law in a controversial 2012 decision when the Court, in a 5-4 majority decision backed by Chief Justice Roberts said the law could move forward as constitutional because it was, in a way, a tax. Still, Republican lawmakers for years have worked at passing what they hoped would be replacements, or to just outright repeal the law.

The most current attack against the law was launched following the passage of the Tax Cuts and Jobs Act of 2017. In that law, congress set the “tax” imposed on the individual mandate-portion of the law to $0. By doing that, they opened the door for Republican attorneys general, representing 18 states, to sue, claiming that without the tax justification for the law, it was now unconstitutional.

In 2018, a district court judge agreed with the attorneys’ general rationale and struck down the law in its entirety. In 2019, an appeals court upheld that ruling in part, but asked the lower court to reevaluate whether some of the law can stay in force, even if other parts may be unconstitutional.

A team of different states’ attorneys general challenged that decision and appealed the case. That case, known as Texas V. California, has wound its way to the Supreme Court – which agreed to hear the oral arguments Nov. 10 — a mere week after the presidential election.

While industry observers had already been anxiously awaiting the results of that case, the stakes jumped exponentially after liberal Supreme Court Justice Ruth Bader Ginsburg died Sept. 18.

Why that is important is that with a court now composed of five Republican-appointed justices and three Democratic appointees, even if Roberts switches sides again, that would merely result in a split decision, leaving the lower-court ruling in place. And that is before the Senate even considers confirming her replacement.

If there is a stalemate or an outright victory for the Republicans, then the lower court ruling would likely be left in place with the law struck down as unconstitutional.

Many court-watchers say that the Texas V. California case stands on shaky legal ground, and even if a portion of the law is struck down, that doesn’t mean the court has to gut the rest of the law as well. The outcome is far from certain.


An End to the Affordable Care Act?

One comforting thing to keep in mind for fans of the Affordable Care Act is that, even if the law does get repealed, that doesn’t mean that everyone will wake up the next morning without health insurance. Insurance contracts are written on a yearly basis, and by the time the decision comes down, the 2021 contracts will already be in place.

Even if the Affordable Care Act is torpedoed in its entirety, lawmakers will have at least until the 2022 policy year to patch together a replacement.

That doesn’t mean it won’t be without consequence if the law does get axed, because some elements of it could go away immediately, such as the federal subsidies given to lower-income people to help pay for their health insurance.

Without those payments, even though the policies were still in place, they may be so expensive that the policyholder would have no way of making payments.

All said, if the law were to go away and nothing were put in place to replace it, as many as 30 million people could be facing a world without health insurance.


How Different Election Races Will Impact Health Insurance

So, back to the ballot box — this is the point where voters’ decisions will begin to make a difference. The first, obvious race to look at is the presidential race. The president and his Democratic challenger approach health care from very different angles.

President Donald Trump says he has already created the replacement for the Affordable Care Act, and promises it will be less expensive, cover more people and healthcare concerns, as well as include protections for pre-existing conditions.

He has not released the plan publicly, though, so how he will accomplish those goals is still unclear.

Trump did sign an executive order on Sept. 24 stating that protecting pre-existing conditions is the policy of the United States government — but with the Affordable Care Act already protecting them, it is unclear what extra action that executive order will take.

Democratic nominee Joe Biden has published more details about his health care plans, and perhaps unsurprisingly, he supports a tune-up of the Affordable Care Act. Given that he was the vice president who oversaw the original passage of the law, it stands to reason that he isn’t looking to stray too far from where it landed.

That is not to say he isn’t suggesting any changes to it. His policies lay out some substantial “improvements,” including the introduction of a Medicare-like public option that would be available to anyone who wants it.

Regardless of who wins the seat behind the Resolute Desk in the Oval Office, that president is going to have to work with the newly installed Congress in order to make any lasting changes to health care.

If the Democrats keep control of the house, it is easy to see where their intentions are. In June the House passed the Patient Protection and Affordable Care Enhancement Act (HR 1425), a bill designed to strengthen and expand on the Affordable Care Act. If they retain control, it is unlikely they would suddenly change course with a new plan.

The GOP-controlled Senate, however, never took up the House bill. So, again, if the Republicans retain control of the Senate, it is not likely that retaining or expanding the Affordable Care Act policies would have a very welcome reception. But what if control were to flip in either chamber?

In the Senate there are eight toss-up races, six Republican and two Democrat. If five or six of the toss-up races go the Democrats’ way, it would flip the Senate, and the House efforts may be taken more seriously.

Conversely, in the Democratic-controlled House, there are 31open races, 19 Democrat and 12 Republican. In order for the GOP to regain control of the House, a net of 28 of those seats need to go their way. A Republican House isn’t impossible, but it might be a stretch.

Not much has been released about what a Republican-backed health care plan would look like, so if both chambers go to Republican control, it is anybody’s guess what that would mean for the future of health care. Insurance decisions aren’t relegated to the federal ballots, though.

After federal law is settled, details and rules governing health care in each state are set by their state insurance commissioner. In a few states, insurance commissioners are elected, and four of them are up for election this year: Delaware, North Carolina, North Dakota, and Washington.

In the other states, governors appoint the commissioners, and there are 11 gubernatorial seats up for election in November — six of whom are Republicans and five of whom are Democrats.

And if voters were keeping track of the Texas V. California Supreme Court case, three attorneys general who have signed on to bring the case are up for reelection – Missouri, Utah and West Virginia, though none of those races have traditionally been very close.

On the other side of that case, four attorneys general who are defending the Affordable Care Act are up for reelection — North Carolina, Oregon, Vermont, and Washington. Really only the North Carolina race is close on that side.


Business Insurance and Elections: A Closer Look

When businesses were ordered to shut down at the beginning of the pandemic, many turned to their business interruption insurance for some relief. Most did not like the answers they heard from their insurers.

Just as it sounds, business interruption insurance is designed to help replace revenue if a business cannot operate, specifically because of a fire, natural disaster, or some other damage caused to their premises.

Because a pandemic doesn’t damage the physical location, most insurers denied business interruption insurance claims. And on top of that, many, if not most business interruption policies included language specifically excluding pandemics — language that was added following the 2003 SARS scare.

Businesses haven’t taken that answer lying down. Many have brought their insurers to court, claiming that the virus did indeed cause damage — to the very air that their customers could no longer safely breathe.

While those court cases will take years to move through the system, another approach that is being tested is to appeal to state and federal legislatures to intervene.

In the House of Representatives many members, including Mike Thompson from California and Carolyn Maloney of New York, among others, have introduced legislation to address the issue. In some cases, the proposed laws would force insurers to cover the losses, even though the policy language would suggest they are exempt.

Another approach has been to propose a federal pandemic insurance system that would treat pandemics like floods are treated. State-regulated insurance agents could write the policies, but if there were major losses, the federal government would step in to pay them.

Several big players in the insurance industry are also weighing in proposing some manner of federal backing for pandemic claims. All of these proposals have generally been driven by Democratic House members. Very little has been officially proposed from the Senate side or by House Republicans.

That is not to say Republicans haven’t weighed in on post-pandemic insurance issues. They have aggressively pushed for businesses to be allowed to reopen, and when they do, to be protected from liability suits.

The Republican fear seems to be that as businesses reopen, they would be inundated by a flood of lawsuits claiming that employees or customers contracted Coronavirus on their premises. Those lawsuits would be covered, and ultimately paid out by each business’ liability insurance.

To prevent this, Republican lawmakers have been insisting that any new stimulus bill include liability protections for businesses that reopen — a provision generally unpopular among Democrats, who argue that exempting businesses from liability would lead to them taking unnecessary risks with the health of their customers or employees.


And What About Unemployment Insurance?

In the opening months of the pandemic, as businesses were closing en masse, the bipartisan CARES Act extended state unemployment insurance benefits to more groups of people, including gig workers, and kicked in a $600 weekly supplement to help ease the economic shock of mass closings. By many accounts, federal action softened the initial economic blow, but that stimulus has since expired.

While the payments were popular, they were anything but uncontroversial. Many Republican lawmakers listened to complaints from businesses in their districts who said that with the $600 weekly supplement, many workers were being paid more to stay at home than they were to return to work, slowing economic recovery.

When they returned to the negotiating table to hash out a potential extension of the benefits in August, Republicans were keen to see that benefit reduced, while Democrats largely wanted them to stay at $600. This was part of the stalemate, along with the final price tag of the proposals, that kept lawmakers from passing any replacement bills.

Amid the stalemate, Trump signed an executive order repurposing money from the Federal Emergency Management Agency to temporarily allow states to increase their weekly payments by an additional $300, but that money has also since run out.

Many people, not the least of whom Federal Reserve Chairman Jerome Powell, have gone on record saying that unemployment subsidies need to be extended, but it looks like any extension may have to wait until after the election.

Another key issue for unemployment insurance is that with the crush of jobless claims, most state unemployment trust funds are nearly empty. In most cases, businesses pay into those funds based on how many employees they have on staff, among other factors.

As the funds dwindle, they often trigger automatic insurance rate hikes for those businesses already struggling due to the pandemic. To avoid those increases, many states will be looking to Congress for some sort of bailout, and it is not clear what form it would take, or how receptive lawmakers would be to one.


Key Insurance Takeaways for Election Season

While voters won’t be casting their ballots for anyone with “insurance” written on their forehead, there are plenty of ways the decisions of newly elected officials will be felt throughout the insurance industry.

At the risk of oversimplifying, a vote for Democratic control would tend to favor health care more akin to the Affordable Care Act, expanded unemployment benefits, and a heavier hand in regulating business insurance policies and federal backstops.

Republican candidates would tend to favor more market-based approaches and policies that tend to favor employers and business owners.

Regardless of which party gains control and where, industry watchers have openly questioned whether, absent Congressional action, this pandemic may cause insurers to introduce pandemic exclusions into many more types of insurance than what existed before Covid-19.

In 2020, as in other years, always make sure to assess your level of risk and read your policies carefully.

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