Jan 16, 2025

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Driving the day

Donald Trump speaks.

Employer groups hope President-elect Donald Trump will take a fresh look at the Biden administration's mental health parity rule, which requires insurers to cover mental health care on the same level as other types of care. | Evan Vucci/AP

EMPLOYERS’ ASKS — Groups representing employers that offer health insurance are gearing up to defend and try to bolster the largest source of health coverage for people under 65 in the U.S., your host reports.

Donald Trump’s election and Republican majorities in Congress have raised some uncertainty on what’s coming down the pike for employer-sponsored health insurance, which covers almost 165 million Americans.

Some conservative think tanks with ties to Trump, including the Paragon Health Institute, have floated capping the tax exclusion for employer-sponsored health insurance, which exempts employer contributions to premiums from federal income and payroll taxes. Right-leaning groups argue the exclusion costs the government hundreds of billions of dollars in tax revenue and drives up health care prices.

But employer groups vehemently oppose capping or getting rid of the tax exclusion, arguing the move could spur some companies to no longer offer health insurance amid affordability concerns. The groups said they will lobby the Trump administration and lawmakers in Congress to keep the tax exclusion in place.

“If that was to actually go through, I think there's a significant existential threat to employer sponsored insurance,” said Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.

Here are employers’ other priorities for the incoming administration:

Enhanced transparency and competition: Employer groups hope Trump will build on efforts from his first term to increase transparency in health care pricing, which the groups say encourage employers to negotiate lower health costs.

The first Trump administration mandated that insurers and hospitals publicly post the prices they negotiate for medical services, but compliance with the regulations has lagged, and efforts to codify these regulations in Congress have stalled.

“If we're going to address lowering health care costs for employers and working families, then it’s really trying to address some of those root causes that are driving rising health care costs: namely, a lack of transparency and hospital consolidation,” said Ilyse Schuman, senior vice president of health policy for the American Benefits Council.

Reevaluating mental health parity: Employers also want the Trump administration to take a fresh look at the Biden administration’s mental health parity rule, which requires insurers to cover mental health and substance use treatment on the same level as other types of care.

Insurers and employers have argued that workforce shortages are the main drivers of barriers to mental health care and that the Biden administration’s rule could lower quality of care for patients and increase costs for employers.

“We think that that rule is completely unworkable, and we are happy to tell anybody who is listening all about the problems with that rule,” said James Gelfand, president and CEO of the ERISA Industry Committee.

WELCOME TO THURSDAY PULSE. I’m Kelly Hooper, POLITICO’s health insurance reporter. Hat tip to former Pulse co-author Ben Leonard, who pointed out that the Energy and Commerce Committee’s power button logo is actually a sideways E and C. Send your tips, scoops and feedback to khooper@politico.com, and follow along @kelhoops.

A message from AMAC Action:

The Inflation Reduction Act took billions from the Medicare Part D prescription drug program to fund electric vehicle tax credits and green energy investments, and now seniors’ prescription drug premiums are skyrocketing. Seniors are calling on Congress to pause the Inflation Reduction Act and return those funds back to Medicare where they belong. Visit PauseTheIRA.com.

At the White House

President Joe Biden speaks.

President Joe Biden delivers his farewell address from the Oval Office. | Pool photo by Mandel Ngan

BIDEN’S FAREWELL — In his farewell address to the nation Wednesday evening, President Joe Biden touted his administration’s top health care achievements, including getting Medicare to negotiate drug prices and reaching record Obamacare enrollment numbers.

“Together, we've launched a new era of American possibilities,” Biden said before highlighting perhaps his most sweeping health policy: the drug pricing provisions included in the Inflation Reduction Act.

The provisions, which allow Medicare to negotiate drug prices with manufacturers, have led to a string of challenges from the pharmaceutical industry. Under Donald Trump, the Department of Justice will have to decide whether to continue defending the program in court. It’s unclear whether Trump stands on the policy, but congressional Republicans have introduced bills to repeal or restrict the Inflation Reduction Act.

Biden also emphasized that “more people have health care than ever before” — a reference to the record 24 million people who enrolled Affordable Care Act plans this open enrollment period.

But Obamacare also faces an uncertain future under Trump and a Republican Congress. The enhanced tax credits that help low- and middle-income people pay for their Obamacare premiums — and largely drove the record enrollment — are set to expire this year, and Republicans are unlikely to extend them.

Biden also noted in his speech “the resilience of essential workers getting us through once-in-a-century pandemic.” The Biden administration this week released a “roadmap” for maintaining pandemic defenses, some of which Trump has promised to dismantle.

At the Agencies

PEPFAR DIRECTOR RETURNS TO CDC — Dr. John Nkengasong, the coordinator of the $5-billion-a-year U.S. program fighting HIV and AIDS globally, will leave the State Department and join the CDC, POLITICO's Carmen Paun reports.

CDC Director Mandy Cohen announced the move in an email to the agency’s senior leadership seen by POLITICO. Nkengasong, who leads the President's Emergency Plan for AIDS Relief — America’s biggest global health program — has said he would resign once the Trump administration comes in, as required of political appointees.

A Cameroonian American virologist, Nkengasong worked at the CDC for more than two decades, ending in 2016. He then directed the Africa Centres for Disease Control and Prevention, leading Africa’s response to the Covid pandemic.

President Joe Biden nominated him in 2021 to run PEPFAR, and the Senate confirmed him in May 2022.

During his time at the CDC, Nkengasong served as acting deputy director for the Center for Global Health, and he will return to the agency as deputy director for global health, Cohen wrote.

A message from AMAC Action:

Eye on the FDA

GOODBYE RED DYE — The FDA has banned Red Dye No. 3 in food products amid concerns about its link to health risks, including cancer, POLITICO’s Grace Yarrow and Marcia Brown report.

Manufacturers will have until Jan. 15, 2027, to reformulate their products to exclude the dye, which is frequently used in food products like supplements, candy and drinks. Companies that use the dye in ingested drugs will have an additional year to update their products.

The ban also extends to foods imported into the U.S.

Why it matters: Public health advocacy groups have pushed the FDA to ban the dye in foods for years, as the ingredient is known to cause cancer in animals and has been banned in cosmetic products since 1990.

The FDA’s decision on Wednesday came after a 2022 petition challenged the use of Red 3 in foods based on the so-called Delaney Clause, which says the FDA cannot authorize a food additive if it has been found to cause cancer in humans or animals, according to the agency.

“Today’s action by the FDA marks a monumental victory for consumer health and safety,” said Ken Cook, co-founder and president of Environmental Working Group, in a statement. “For years, Red 3 remained in food products, despite growing evidence linking it to health problems, particularly in kids.”

IN THE STATES

Georgia Gov. Brian Kemp delivers the State of the State speech.

Georgia Gov. Brian Kemp will seek federal approval for a limited expansion of Medicaid. | Brynn Anderson/AP

GEORGIA SEEKS MEDICAID EXPANSION — Republican Georgia Gov. Brian Kemp said Wednesday he’ll seek federal approval for a limited expansion of Medicaid in the state, a move that could extend health coverage to tens of thousands of Georgians.

Kemp’s proposal would allow parents and legal guardians of children age 6 and younger with household incomes at or below 100 percent of the federal poverty level to enroll in Medicaid.

Key context: Georgia has the country’s only active Medicaid work requirement program, which expires this year. Enrollment in the program has been much lower than state officials initially projected, and it has done little to change the state’s double-digit uninsured rate.

When the state submits its renewal application to the Trump administration in a few months, it will request adding the limited expansion to parents of young children, Kemp said Wednesday.

“In a growing state that needs more Georgians in the workforce than ever before, providing health insurance to a family or individual with young children may be the last piece they need to restart a career and be on a path for a brighter future,” he said during a news conference.

WHAT WE'RE READING

POLITICO’s Sophie Gardner writes about CDC Director Mandy Cohen’s final days at the agency.

The New York Times reports on how a private company has made millions off of the 340B Drug Pricing Program.

STAT writes about the only publicly traded health insurer to attend this year’s J.P. Morgan Healthcare Conference.

A message from AMAC Action:

The IRA took money from Medicare Part D to fund EV tax credits under the guise of a fake “drug price negotiation.” As premiums are skyrocketing, seniors are demanding their money back.

70% of seniors are calling on Congress to pause the Inflation Reduction Act.

85% of them want the money that was taken from Medicare to fund EV tax credits to be returned to Medicare where it belongs.

Congress: It’s time to pause the IRA and fix what it broke, first by giving money back to Medicare.

Visit PauseTheIRA.com to learn more.