Healthcare in 2023

US election: its impact on healthcare

  • Healthcare will once again become high profile in the run-up to US presidential elections in November, when EIU expects current president Joe Biden to compete against the former Republican president Donald Trump.
  • The biggest debate will be over the future of the 2010 Affordable Care Act (ACA), more popularly known as Obamacare. Mr Trump has once again promised to repeal and replace the legislation.
  • Both candidates will also promise to bring down medical and pharmaceutical inflation, with Mr Biden pushing through federal price negotiations and Mr Trump relying on greater transparency.
  • The bitter debate over abortion will divide along party lines, with Mr Biden vowing to protect abortion rights. Both candidates, however, will be forced to leave decisions to individual states and courts.

Until late 2023, healthcare had not been a major talking point for either frontrunner for this year’s US presidential election. That changed during the US midterm elections, which showed that the politics of healthcare will continue to be an election issue. The debate is likely to focus on three highly contentious areas. The biggest is the future of the 2010 ACA, which Mr Biden has pledged to reinforce and Mr Trump has again promised to repeal and replace. Related to this are efforts to reduce the pace of medical inflation, particularly for pharmaceuticals. The final bone of contention is abortion, after the US Supreme Court in June 2022 overturned the precedent set in the 1973 landmark case, Roe v Wade, which gave federal abortion rights to all women in the country.

On all three fronts, the dividing lines are clear, based on the guiding principles of the two likely candidates. In the event of a victory for Mr Biden (EIU’s core forecast), healthcare policy would still be aimed at risk-pooling and redistribution initiatives for expanding access to healthcare, supported by increasing centralisation of the system. For Mr Trump, the priority would be choice and transparency, with many decisions left to individual states, courts and providers.

If Joe Biden is reelected

The ACA – During his current term of office, Mr Biden has worked hard to repair the damage done to Obamacare during Mr Trump’s presidency in 2017-21. One key Trump victory, in 2019, was to remove the tax penalty that used to be imposed on individuals who failed to buy insurance under the individual mandate. Even so, the 2024 enrollment period saw more than 21m Americans sign up for health insurance coverage through ACA marketplaces—the highest-ever total. Having raised and expanded federal subsidies for ACA policy-holders in the 2025 budget, Mr Biden’s government is now pushing Congress to make those subsidies more permanent. These policies are likely to be more central to the Biden campaign as the elections near.

Medical inflation – If re-elected, we expect Mr Biden to continue implementing his plans to reduce or contain healthcare costs, including efforts to regulate the pharmaceutical industry. A new Biden administration would continue to push through measures introduced under the Inflation Reduction Act (IRA) of 2021 that allow Medicare, a federal health fund primarily for the elderly, to negotiate prices for drugs. The first negotiations began in August 2023, with ten drugs selected for conditions such as for heart failure, blood clots, diabetes and arthritis. The resulting prices will come into effect in 2026, with negotiations set to cover 60 medicines over the next four years. Such policies—which include an IRA cap on insulin prices that has already been implemented—are likely to play well in the run-up to the election.

In December 2023 the Biden-Harris administration also announced new plans to boost competition in the pharmaceutical sector, while ensuring lower prescription drug costs. The proposed framework will include provisions for march-in rights on taxpayer-funded drugs and other inventions (where the accessibility of a drug will be factored in while making pricing decisions). The current administration has also tried to control consolidation in the health insurance and hospital sectors, including banning several planned mergers and reviewing smaller acquisitions by private-equity firms.

Abortion – A new Biden administration would strive to restore nationwide access to abortion and provide broader reproductive rights. Mr Biden has promised to enforce existing legislation that supports abortion rights, including pursuing cases against individual states. However, even if the Democrats win control of both the House and Senate (not our core forecast), reinstating a federal constitutional right to abortion is going to be extremely difficult unless the conservative majority at the Supreme Court is altered.

If Donald Trump is elected

The ACA – Mr Trump has once again vowed to repeal and replace the ACA within the first 100 days in office, if he is re-elected. In his previous term as president, however, he oversaw a long series of failed efforts to overturn the legislation and replace it with the Republicans’ own version, the American Health Care Act. Mr Trump did manage to weaken Obamacare by removing the tax penalties under the individual mandate, by introducing limited low-cost policies and by leaving some decisions on coverage and subsidies to the state level. Although we would not expect a full repeal of Obamacare, therefore, we would expect a Trump administration to cut subsidies for ACA policy-holders and to reduce federal funding to Medicaid, a public health insurance programme for low-income individuals.

Medical inflation – A Trump administration is likely to cancel or delay the price negotiations at Medicare that were introduced under the IRA, which are unpopular with many pharmaceutical companies. Instead the administration will try to introduce industry-wide legislation on pricing transparency, similar to the No Surprises Act that came into effect in January 2022 to protect patients against unexpected medical bills. Mr Trump will also push ahead with efforts to introduce international pricing comparisons for medicines, as he did in 2020. Such measures are likely to be introduced via executive orders, rather than legislation.

Abortion – While Mr Trump’s stance on abortion rights in the 2024 campaign has so far been unclear, his role in undermining abortion rights cannot be forgotten. It was his appointment of three conservative justices to the Supreme Court that led to its decision to strike down Roe v. Wade. Following that decision, 21 states now either have a complete ban on abortion or stringent limitations to prohibit the procedure earlier than the standard set by the 1973 judgement. Mr Trump’s previous administration also introduced curbs on federal funding for abortion clinics in the US (which have since been overturned under Mr Biden). During a second Trump term, we would expect further crackdowns on abortion and reproductive rights, although most of the decisions will be left to individual states and courts.

Despite these policy differences, we would expect US healthcare spending to continue rising strongly under both a Biden and a Trump administration. Even though both candidates are focused on bringing down medical inflation, total spending will be driven upwards by patient demand, population ageing and the cost of medical innovation.

Our current forecast, based on a Biden win, is for total healthcare expenditure to reach 16.9% of US GDP by 2028, higher than before the pandemic. This implies spending growth of around 5% a year, with public spending outpacing private. Although Mr Trump will move to reduce federal subsidies and funding for several health programmes, including Obamacare policies, some of his proposed reforms will also require one-off bumps in public health expenditure. However, in the event of a Trump victory, we would review our longer-term forecast for public and private health expenditure, with growth in the former likely to slow.

The analysis and forecasts featured in this video can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.