By Ted Gotsch
Senior Analyst, Content and Publications
The 2024 election results bring anticipated shifts in policy and political direction, leaving many pundits and the average American asking “what happens next?” But what does it say about the issues the Academy cares about the most, such as health care, retirement security, climate change, cybersecurity, artificial intelligence, and others?
The Academy’s Senior Casualty Fellow Rich Gibson, Senior Retirement Fellow Linda K. Stone, and Senior Health Fellow Cori Uccello shared their thoughts with Contingencies about what policy issues might lie ahead with an incoming Trump administration and how the Academy and its volunteers might work over the next four years to educate and assist policymakers.
Please note that interviews for this article occurred in mid-November and early December, before many details on the incoming Trump administration and the GOP-majority Congress were settled. Answers have been lightly edited for clarity and brevity.
Health Q&A with Cori Uccello
As the Affordable Care Act turns 15, what are some of the top matters concerning this law that we should be keeping our eye on?
CU: Enhanced ACA premium subsidies that were enacted through the American Rescue Plan in 2021 and extended by the Inflation Reduction Act are set to expire at the end of 2025. With Republicans in power, it is unlikely that they will be extended. Some states may implement their own enhanced subsidies. Federally, I expect a return to some of the policies that were championed during the first Trump administration. That would include loosening ACA market rules to allow for a broader range of options to some consumers, including association health plans and short-term limited duration policies. They may also explore alternative risk pooling options for people with high expected health costs. In terms of Medicaid, I expect there will be a push to implement work requirements. In addition, there may be a push to shift more costs to the states, through reductions in the match rate, especially for the Medicaid expansion populations and/or through capping per capita federal Medicaid contributions.
What is some of the work the Academy has done in this area?
CU: One of the primary areas that the Academy’s Individual and Small Group Markets Committee has weighed in on is how different policy options would affect risk pooling in the health insurance markets, and how that would affect premiums, enrollment, and the effects on people with pre-existing health conditions. Although some options could help reduce premiums for those in good health, they could make it more difficult and expensive for people with pre-existing health conditions to obtain coverage. We’ll, of course, be keeping an eye on these and other ACA-related issues and will continue to provide input to policymakers and regulators.
There were few substantial conversations on the campaign trail about the need to address Medicare’s sustainability and options to do so. What will the next Administration or Congress do to tackle this challenge?
CU: It’s disappointing, but not necessarily surprising, that candidates don’t say a lot about Medicare’s solvency challenges and ways to address them. Because solutions often involve making tough choices. Perhaps another reason Medicare solvency hasn’t received a lot of attention is that the recent Medicare trustees report pushed back the hospital insurance trust fund depletion date from 2031 to 2036. So, the problem may seem less urgent.
The Academy’s Medicare Committee will continue to urge policymakers to act to ensure the program’s long-term solvency and sustainability. And that entails making sure the program is affordable to taxpayers and beneficiaries alike.
There are a few areas in which Congress and the new administration may act and some of these have bipartisan support. One likely area of action is updating physician payments. Part of this is aimed at increasing physician payment rates which haven’t been keeping pace with increases in costs. But there is also interest in realigning payments between primary care physicians and specialists, to help bolster the primary care workforce. Another is extending telehealth flexibilities.
Notably, such efforts would likely increase Medicare spending. One possible option for offsetting these costs is to implement site-neutral payments. That is, Medicare payments for health care services would be the same regardless of where they take place. Another is to reduce Medicare Advantage payments. With more than half of Medicare beneficiaries now enrolled in Medicare Advantage plans, there’s growing interest in ensuring that MA plans aren’t overpaid compared to what the cost would have been in traditional Medicare.
Financing long-term care needs has been a public policy issue for decades. Some individual states have or are exploring different types of financing models. Is there any interest on the federal side?
CU: There’s definitely bipartisan interest in better addressing the needs for long-term services and support. And part of that is an increasing recognition of the need for home-based services.
But bipartisan interest doesn’t mean that there is agreement regarding the potential solutions. Whereas Democrats are more likely to favor addressing needs through government or social insurance programs, Republicans are more likely to prefer private insurance solutions. Innovation may continue at the state level, with explorations of combined public and private approaches.
Notably, both President-elect Trump and Vice President Harris highlighted the needs of caregivers, with Trump proposing tax credits for family caregivers.
One thing to highlight, with respect to the need for services, is the shortage in the caregiving workforce. Immigrants fill many of these roles. More stringent immigration rules may worsen workforce shortages.
The high costs of prescription drugs continue to affect access to medications. What can we expect from the Trump administration and the next Congress in terms of addressing these high costs?
CU: The Inflation Reduction Act of 2022 included Medicare prescription drug provisions. These include Medicare drug negotiations for an increasing number of prescription drugs over time. The first round of maximum prices is scheduled to go into effect in 2026. In addition, the Act requires drug manufacturers to pay rebates if prices increase faster than inflation and made changes to the design of the Medicare Part D program, including a cap on out-of-pocket costs. There may be efforts in the next Congress to repeal these provisions, but it’s not clear they would be successful. President-elect Trump has indicated interest in drug reimportation and using international reference pricing to reduce prescription drug costs.
One area of bipartisan interest has been PBM reform. PBMs—pharmacy benefit managers—are third-party administrators of prescription drug programs. There have been proposals to change the way that PBMs are paid and to enact transparency requirements, with the goal of reducing patient out-of-pocket costs.
As the use of artificial intelligence continues to grow in all aspects of our lives, what does the future hold for the use of AI in health care?
CU: AI holds great promise. It can help health care providers diagnose conditions earlier and more correctly. It can help insurers perform administrative tasks more efficiently. It can help consumers and patients better track their health.
However, AI comes with risks. Incomplete data or biases in the data can result in AI inputs and outputs that lead to misdiagnoses, inappropriate care denials, or ineffective targeting of disease management programs.
On the health policy front, there’s a question regarding the appropriate degree of regulation and how to balance safety, security, equity, and privacy protections with innovation. Whereas President Biden issued a wide-ranging executive order on artificial intelligence, President-elect Trump has promised to repeal that order. That said, there has been bipartisan congressional interest in increasing oversight of the use of AI in prior authorization decisions. We’re also seeing state regulatory oversight of AI, with a few states enacting legislation regulating the use of AI in healthcare decision-making.
Retirement Q&A with Linda K. Stone
What is the Academy prioritizing with regards to pension and Social Security policy issues as we look ahead to a new Administration and new Congress? Are there any new solutions or considerations as we look at the evolving employment landscape and the continuing growth within the retirement-eligible population?
LKS: We certainly do expect some changes in administration priorities in the retirement area under the Trump administration. That said, we have seen two major pieces of retirement legislation in the past few years, the SECURE Act, which was passed during the first Trump administration, and SECURE 2.0, which passed under President Biden. There is a history of bipartisan cooperation and focus on the need to enhance retirement security for all Americans. These different pieces of legislation really focused on expanding access to employer-sponsored plans, savings for emergencies, and helping lower- income Americans who may not have access to any employer-sponsored plans through the Savers Match.
While there may be bipartisan agreement on a number of retirement issues, we do expect that the Biden retirement security rule, also known as the fiduciary rule, will not be supported by the new administration. With the expiration of tax cuts at the end of 2025, there is a possibility that the current structure and amount of retirement contributions that employees make into their 401(k) plans could be subject to “Rothification,” or becoming after-tax contributions. Many people may not know this, but tax expenditures for defined contribution plans are number one on the list of all U.S. tax expenditures. There will likely need to be a review of where legislators can get more tax revenue because there are a few places President-elect Trump has said he wants tax cuts, so these will need to be paid for.
You mentioned the evolving employer landscape. About half of all private sector employees don’t participate in any employer-sponsored retirement plan at all, and we know there are a lot more gig workers than there used to be. The Retirement Practice Council has been working on an issue brief that will be out soon that talks about gig workers and policy changes that could help with their retirement security. There is a current U.S. Department of Labor contractor rule that appears likely to be reversed under the new administration, so this is going to be an evolving area that will need close attention paid to it as we look at the difference between employees and requirements as they apply to some coverage issues and to gig workers. It is important to focus on the gig worker issue, as more employees do gig work in addition to their day jobs, while others are frankly crafting together three or four gig jobs for their employment.
There was little discussion on the 2024 Presidential campaign trail about a long-term solution to address Social Security sustainability. What should policymakers be thinking about and what do you think will be the top priorities in Congress and for the federal agencies in 2025?
LKS: This such an important issue. There was some discussion on the campaign trail about protecting Social Security, but there was no acknowledgment or discussion of the trust fund becoming depleted in about 10 years. In a decade, payroll taxes will pay about 80% of everyone’s benefits, so what does “protecting” Social Security really mean when people talk about it? President-elect Trump and the Republican Party platform specified there would be no cuts in Social Security benefits and no increases in Social Security’s normal retirement age, which now is age 67.
There was a Republican Party Study Commission that did advocate raising Social Security’s normal retirement age because people’s longevity has been increasing. President-elect Trump said very specifically that he would eliminate income taxes on Social Security benefits. He also said he would eliminate taxes on tips and on overtime, all of which would decrease the amount of money going into the Social Security trust fund. If people are not paying taxes on tips or overtime income, that’s going to decrease their actual benefits from Social Security, because benefits are based on pay.
One of President-elect Trump’s key promises was to deport illegal immigrants. Immigration has a positive impact on the Social Security system, and this has been getting a lot of attention. I recommend reading the recent Academy paper, Immigration and Social Security, published in September. It details the ways that immigration can positively impact the Social Security system, including the impact that bringing in additional workers into the system who are paying Social Security taxes.
One of the more interesting implications of the proposed policies that we have seen from the campaign trail, including tariffs since they affect future inflation, is that the Committee for a Responsible Federal Budget has estimated that the total impact of the policies would advance the Trust Fund depletion date by three years. That means there’s even less time to come up with a comprehensive reform plan that would make sure that promised Social Security benefits continue to get paid to the people who are receiving them, and that money is there for people who are continuing to contribute to the system and expect to receive benefits in the future. The Academy’s Social Security Committee has written about the trust fund, the proposed reforms, and other topics that could be considered in recent issue briefs. The Academy’s Social Security Challenge, most recently updated in February 2024, continues to allow everybody to look at the options available and the
impact they would have on Social Security solvency. As an interactive tool for elected officials, agency staff, media, and the general public, the Challenge is a great way to provide a lot of information and explore some of the challenges Congress has been facing, and will continue to face, as it looks toward a bipartisan solution. Any changes to Social Security need 60 votes in the Senate, so a bipartisan solution is necessary to solve the problem. The question is whether this administration will look to solve the issue or just push it down the road. Just as our issue brief title says, solving the problem is better sooner rather than later.
Coming off the 50th anniversary of the Employee Retirement Income Security Act (ERISA), what should employers be thinking about when it comes to pensions and the future of retirement security?
LKS: It was a fun year with ERISA at 50 and as a retirement actuary, it was great to look back at its history and listen to the stories being told by people who were there at the time. ERISA was so important for workers to make sure they got the benefits they were promised, and we’re now thinking ahead to see what changes would need to be made to keep ERISA strong in protecting retirement security. Very few private sector workers participate in a defined benefit plan. Currently it’s only 11%, and that skews toward higher-paid employees working in large companies. We have seen employers exiting plan sponsorship by closing their plans, freezing benefits, offering lump sums, and transferring benefits to insurance companies.
One reason this is happening is the level and structure of the premiums that employers have to pay to the Pension Benefit Guaranty Corporation (PBGC). It appears there is bipartisan consensus that changes should be made in the premium structure in order to keep employers sponsoring plans. Going forward, the activity surrounding PBGC premiums will hopefully continue.
Employers may also be interested in the Trump administration’s focus on relieving regulatory burdens. With retirement plans being highly regulated and compliance being mandated, there is a lot of anticipation within the employer world to see how the Administration’s prioritization could benefit employers and employees. One point of concern revolves around participant protections, as there is some thought that relieving the regulatory burden for employers may inadvertently deemphasize consumer protections.
More generally, many employees rely solely on defined contribution plans for their retirement benefits. President-elect Trump, in his previous administration, said he loves 401(k) plans, leading some to believe that these plans will be protected and even enhanced for employees going forward.
A policy challenge in 2025 revolves around lifetime income. Employers recognize the need for lifetime income options and some of the changes in SECURE and SECURE 2.0 make employers feel more comfortable offering defined contribution plans. However, employers are still evaluating the many options available and must decide how they want to go forward within their plans.
Retirement is not just about Social Security and the traditional pension—there are also a lot of questions around longevity, the gig economy, and the shifting demographics of the U.S. and the broader global population. As we think about the broader implications of long-term savings and the costs of aging, what should policymakers and the media be asking actuaries about when we think about the different policy levers we have?
LKS: One question I am often asked when I tell people I am an actuary is, “How long am I going to live?” Now, I don’t have a crystal ball, but I do have the Actuaries Longevity Illustrator, most recently updated in June 2024. I mention the Illustrator because one of the biggest mistakes people make in retirement planning is underestimating how long they will live. This is really important from a policy perspective, because it emphasizes the importance of Social Security and retirement security. Social Security benefits are increased every year with cost-of-living adjustments and are paid over the course of a person’s entire lifetime. Longevity is why adding a lifetime income option to a defined contribution plan is so important.
If we think about broad policy levers that should be addressed to enhance retirement security, Social Security is clearly at the top of the list because it is such an important component of retirement security. Sometimes it is the only component of retirement security for Americans and there is a lot of concern out there about what is happening with the program. There is a misconception about what it means when the trust fund runs out of money, does that mean there is no money at all? People don’t realize that no, there are still taxes coming in from workers—it’s more of a question of what portion of benefits will be paid out and how quickly we go from 100% of benefits to a lesser percentage. Addressing Social Security sooner rather than later is incredibly important.
I think another broad policy lever is to address the fact that a large percentage of Americans don’t have access to a retirement plan to save. In the private sector, half of all workers don’t have a plan available to them. Trying to save without having money come automatically out of your paycheck is incredibly challenging, particularly as many people are struggling, cobbling together several jobs and may not have money to save. Policymakers should be considering how to get more Americans access to retirement plans.
In the past, a national IRA plan has been proposed for scenarios when an employer does not sponsor a plan for employees. In this proposal, an employee belongs to a national plan and automatic payroll deductions are permitted. There are a number of states who have implemented automatic IRA-type plans and there are more states considering the option, as it does help people to save.
The changes to SECURE and SECURE 2.0 that have been enacted to-date are intended to improve retirement savings through auto-enrollment and auto-escalation, which have been shown to help individuals save. Policymakers, the media, and others should consider focusing on financial literacy and supporting a separation between retirement savings and emergency savings vehicles. Knowing that for those who struggle to save at all, they are more likely to tap into a retirement account, which leaves them in a precarious situation in the future.
Property/Casualty Q&A with Rich Gibson
One of the hottest topics today is artificial intelligence—it’s in every newspaper and frequently talked about by policymakers and business leaders. With property/casualty actuaries frequently at the front line as we talk about climate and cybersecurity, where do you see AI fitting in and how can they help policymakers address some of the key issues?
RG: Regulators and legislators are watching and weighing in on AI. The White House, in Executive Order 14110, “Safe, Secure, and Trustworthy AI,” has laid out eight guiding principles for AI. These principles are aimed at federal agencies. Further focus on AI principles is provided by the National Institute of Standards and Technology (NIST), aimed at providing guidance to industry as AI applications are developed and rolled out. The National Association of Insurance Commissioners (NAIC) has spent considerable time on this, and it has led to a model bulletin on the use of AI systems by insurers. Of course, various state regulators and legislators have implemented varying positions on the use of AI in insurance. All these documents have articulated aspirations to reap the benefits of AI while controlling potential detrimental aspects. Generally, the emphasis is being placed on risk management and governance. Clearly, actuaries can have considerable impact in both of these areas.
The Academy has created a cyber toolkit, which is a great resource for state and federal regulators. Looking ahead to 2025, are there any challenges that are particularly important for insurers and regulators to address or think about—especially given the increasing propensity and impact of cyberattacks on public and private sector entities?
RG: Thanks for mentioning the Cyber Risk Toolkit, which was most recently updated in October 2024. The Academy’s Committee on Cyber Risk has expended significant time and effort to develop the toolkit and its content. Currently, there are more than a dozen papers and/or other resources within the toolkit. More are being researched and discussed all the time.
Most, if not all, conversations regarding cyber risk start from the premise that cyber threats and cyberattacks continue to evolve. In short, the landscape of threat vectors is ever-changing. Certainly, underwriting for the risk and cyber hygiene is evolving as well. Clearly this is a primary challenge.
Adding to this is the question of how well the average individual or business understands the exposure to cyberattacks and their consequences. Viewed long term, it is reasonable to expect this understanding to grow. Similarly, the cyber insurance market is expected to grow. Near term, regulators and legislators will likely grow their focus and understanding of cyber risk exposures as well. We can see that at the NAIC through its Cybersecurity Working Group, at the federal level through the Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Insurance Office (FIO), and at the state level with increased rollout of data privacy laws.
Lastly, as one considers the evolution of these areas, it is not difficult to expect that considerable diligence will be required to reduce risks associated with cyber actors.
Extreme weather events, such as hurricanes, floods, wildfires, and tornados, are testing property insurers and consumers like never before. The high cost of claims and the challenge of managing the risks has led to some difficult choices for companies, regulators, and individual homeowners. The Academy has helped convene policymakers, insurers, state agencies, and other interested parties to identify solutions and discuss the implications of significant public policy changes. Are there potential solutions or considerations that actuaries or the Academy should be identifying for both the immediate term and the longer term?
RG: I am going to answer this with a series of additional questions. First, is it reasonable to expect that the additional costs associated with extreme weather continue to be passed on to insurance consumers through the price of insurance? In short, can we price our way through climate change? Can we help the average insurance consumer better understand what is and is not covered by an insurance policy? Is there measurable benefit to be gained by improved mitigation, and can we catalogue and act on those benefits? Can we identify all the correct constituents affected by the problem of rising costs and bring them together to seek constructive discussion of potential solutions?
I suspect there are numerous additional questions that could be asked. The Academy will be looking to answer—and ask more—of these questions in 2025. Look for publications and presentations from the Extreme Events Committee, the Homeowners’ Task Force, and the Climate Change Joint Committee to name just three volunteer groups that are actively engaged and involved in convening policymakers, industry, and others to discuss potential solutions and the implications of the current environment. This collaborative spirit leads to valuable solutions or proposals—like theActuaries Climate Risk Index, published in January 2020, which is a product of joint efforts among the four North American actuarial associations.
There has been a lot of interest and focus on water and the issues that come from flooding, particularly for those who live in flood-prone areas. The National Flood Insurance Program (NFIP) has struggled for some time with funding issues, which has seemingly exacerbated some of the problems. What are the challenges hindering a long-term extension to the National Flood Insurance Program, and is the program robust enough to handle the increased climate challenges in this country?
RG: The need for the NFIP grew out of the belief by insurers, decades ago, that flood is an uninsurable peril in the private marketplace. Notwithstanding current efforts to provide private flood coverage, the NFIP still faces key challenges. Perhaps the most prevalent challenge is the very high cost of flood insurance in the most flood prone areas. In short, flood coverage may not be affordable to those who need it most. Unfortunately, we have continued to build more structures in flood exposed geographies. The NFIP has responded to the need to move their rates to a more adequate overall structure through their roll out of Risk Rating 2.0, which is intended to better align prices with the riskiness of the property insured. However, achieving what they call full risk rates will take some time due to the annual capping of increases in the rates.
I should point out that FEMA has put forth a 17-point proposal for NFIP improvement. Furthermore, in recognition of the challenges facing flood insurance and flood insurance consumers, the Academy has supported the proposition of long-term re-authorization of the NFIP.
Property and casualty insurance includes a very broad swath of issues and concerns, not all of which are always at the top of campaign issues. If you were advising the next Administration—both federally and at the state level—what would you encourage them to consider addressing?
RG: This is difficult to answer with specificity—although clearly the next Administration will want to focus on the issues we’ve already discussed: AI, cyber, and extreme events. What should be emphasized is that the Academy will be there as a trusted resource, just as we’ve been for the past 60 years. As they look to address issues, they can trust that the Academy will offer objective advice that is aimed at bringing clear, fact-based understanding to the questions and issues being considered.