OBBBA and Beyond: Upcoming Policy Changes and Their Impact on Employers

OBBBA and Beyond: Upcoming Policy Changes and Their Impact on Employers
August 29, 2025 8 mins

OBBBA and Beyond: Upcoming Policy Changes and Their Impact on Employers

OBBBA and Policy Shifts Reshape Employer Health Plans

OBBBA and other reforms signal big shifts ahead for employer-sponsored group health plans. Organizations need to start preparing now.

Key Takeaways
  1. ACA premium subsidy expiration and major funding cuts and eligibility changes to Medicaid will leave millions without coverage, prompting a potential surge in employer-sponsored group health plan participation, and added cost pressure from increased uncompensated care.
  2. OBBBA created new ways for employers to boost primary care access and affordability.
  3. Proactive strategies will be essential to manage the ripple effects of the OBBBA and other reforms, and protect organizational budgets.

OBBBA is set to significantly reshape health policy. Even though its effects will be delayed, OBBBA’s far-reaching implications require immediate attention from HR and benefits leaders. For a group already managing unpredictable healthcare costs, evolving employee needs, and external pressures like rising medical trends, developing proactive strategies is key.

OBBBA at a Glance

Now signed into law, the OBBBA introduces sweeping changes to Medicaid and health policy funding, with provisions on those issues set to take effect starting January 1, 2028. While many provisions in the law do not directly target employer-sponsored health plans, the ripple effects are likely to have a sizable impact on employer-sponsored insurance plans and budgets.

The OBBBA lands at a time when uncertainty is already sky-high. With rising healthcare costs, increasing frustration with traditional insurers, and trends around aging and sicker populations, the OBBBA intensifies existing pressures while creating new complexities. For employers in low-wage industries, these shifts will be particularly challenging. A rise in employees losing coverage through Medicaid or ACA plans could drive increased participation in employer-sponsored group health plans, and with it, higher costs.

The good news is that employers are not powerless in the face of these impending shifts. By taking proactive steps now—such as reviewing plan design, assessing coverage options, and strategizing for increased enrollment—organizations can position themselves to absorb future shocks with greater resilience.

Key Components of the OBBBA and Their Potential Effects

Medicaid

The OBBBA will impact Medicaid the most, with significant funding cuts and reduced eligibility scheduled to take effect on January 1, 2028 (unless a new bill is passed to restore funding or the effective date is further extended). Medicaid’s decentralized, state-by-state structure means the impact will be uneven, but the overall trend is clear: millions will lose coverage, particularly in low-income and rural areas.

What Employers Should Know About Medicaid Changes:

Change System Impact Employer Impact
Loss of Medicaid Coverage Many employees in low-wage industries who rely on Medicaid may turn to employer-sponsored group health plans. Increased enrollment and cost pressures for group health plans.
Provider Cost-Shifting Hospitals burdened by uncompensated care will seek to recoup their losses by negotiating higher reimbursement rates with commercial insurers. Increased health plan cost pressures for employer sponsored group health plans.

Possible provider consolidation.
Access Challenges Rural and underserved communities will be disproportionately affected as providers cut service lines or close entirely due to unsustainable finances. Could create new healthcare access issues for employees in these areas.

Additional Policy Changes to Watch

Affordable Care Act (ACA)

Although the OBBBA doesn’t modify ACA subsidies, timing matters. If enhanced premium tax subsidies (introduced through the American Rescue Plan Act (ARPA) in 2021 and extended by the Inflation Reduction Act (IRA) in 2022), are permitted to expire at the end of 2025. That expiration will lead to steep cost increases for ACA enrollees or result in ACA coverage being dropped.

Impact on Employers:

  • Shift in Enrollment: With ACA costs soaring, individuals may choose to switch jobs to obtain employer-sponsored plans, driving enrollment spikes for new employees that affect overall costs and contribution strategies. Employees may also choose to work longer if pre-Medicare retiree individual health insurance is not available, driving up the average cost of health coverage for employees.
  • Marketplace Stability Risks: ACA marketplaces are likely to see a pricing spiral, where healthier individuals opt out, leaving a sicker pool of enrollees and driving premiums even higher. This could have long-term economic repercussions for all interconnected health ecosystem, with providers and carriers looking to the commercial market for lost revenue.
  • Provider Participation: Uncertainty around ACA reimbursement and stability may lead providers to reconsider network participation, impacting the availability of certain healthcare services and increasing uncompensated care.

Plan sponsors who leverage the ACA market for active employees (with an Individual Coverage Health Reimbursement Arrangement (ICHRA)) or pre-Medicare retirees (with a retiree Health Reimbursement Account (HRA)) should be prepared for increased market instability, impacting member premiums and the insurance options available to plan participants.

Medicare

Though minimally impacted by OBBBA provisions, Medicare faces indirect pressures that will ultimately affect employer plans. Recent trends point to reduced government reimbursements for Medicare Advantage plans, which has already led to financial losses for insurers and providers with some insurers announcing departure from this market.

Impact on Employers:

Healthcare insurers and providers are likely to shift these financial burdens onto commercial insurance plans. The resulting higher costs will likely funnel into employer-sponsored group health plan market. Sponsors of retiree medical plans for Medicare retirees may continue to see increased premium volatility and fewer insurance options.

Health Savings Accounts (HSAs)

The OBBBA introduces some direct opportunities for employers sponsoring high-deductible health plans (HDHPs) with HSAs. The permanent inclusion of both telehealth and direct primary care (DPC) services before the deductible creates new flexibility. Additionally, DPC costs can now be reimbursed even if not covered by plan.

Impact on Employers:

  • Enhanced Primary Care Strategies: Employers can now adopt more robust primary care initiatives using HSAs and HDHPs, such as DPC-first health plan designs. These options may also improve employee engagement in primary care.
  • Potential Cost Shifts: While these changes are mostly positive, more generous HSA provisions may lead to increased plan costs over time.

What to Watch

It’s crucial to view the OBBBA within the larger context of existing healthcare trends. Trends to monitor include:

  • Shift to Value-Based Payment Models

    As providers look to negotiate higher commercial reimbursement rates—the opportunity exist for increasing participation in value-based payment models in exchange, which provides better incentive alignment across the system.

  • Network Participation Reductions

    Both ACA and commercial networks may see a decline in provider participation, further straining access and increasing costs for employer plans.

  • Employee Affordability Gaps

    Rising healthcare costs will intensify affordability challenges for employees, making benefit strategies to address gaps a central focus for benefit leaders.

  • Health Plan Enrollment

    Anticipate a possible increased enrollment in employer-sponsored plans. Changes may drive more employees and their dependents to seek coverage through workplace benefits.

Proactive Strategies for Employers

These complex changes don’t allow for a “wait-and-see” approach. Employers must adapt now.

  1. Stay Ahead of the Curve: Anticipate the downstream effects of OBBBA by understanding your exposure and associated costs—such as the portion of your workforce currently enrolled in ACA, the extent of your rural footprint, and the potential for increased caregiving burdens due to government program cuts. Consider how telehealth and DPC can now play a more strategic role across your plan offerings and begin integrating these insights into your benefits planning as soon as possible.
  2. Budget for Growing Costs: Adjust financial models to account for future volatility brought on by market wide funding and enrollment shifts. Consider adding margin or making additional adjustments to your healthcare budget to account for volatility.
  3. Enhance your Governance Strategy: Increasing cost and disruption will bring increasing levels of scrutiny onto plan sponsors. Ensure robust governance is in place to adapt and respond to the changes coming.
  4. Evaluate Vendor Performance: Prioritize predictability, transparency and accountability when partnering with vendors, ensuring costs remain aligned with employee and plan needs. Challenge vendors to continuously advance offerings to better support employees through the volatility.
  5. Bolster Data Usage: Leverage analytics to assess the value of current benefits and identify where adjustments can mitigate potential risks. Increase frequency at which reviewing and making program adjustments. Dive into current utilization by location and provider to understand how OBBBA may impact your population.
  6. Educate Employees: Help employees understand new health coverage and HSA opportunities, particularly those impacted by ACA premium increases or Medicaid changes. Seek DPC partnerships that can refer into benefit ecosystem and is not a stand alone offering.
  7. Lean into Technology: Evaluate new opportunities to integrate latest technology to maximize value and use of benefits. Highest value opportunities exist around increasing access to care, benefits navigation, and personalized communications.

Time to Act

Now is the time to critically assess health benefits strategy, plan redesign needs, and cost mitigation options. As the regulatory environment continues to shift, it is essential to maintain active oversight and adaptability in benefits strategy. Aon will continue to assess changes and potential impacts as OBBBA and other policy changes evolve, helping employers navigate emerging requirements and seize opportunities to optimize health plans. By staying informed and agile, organizations can weather uncertainty and position themselves for sustained success in the face of ongoing transformation.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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