Insurance groups were split on the recently signed One Big Beautiful Bill, with some raising concerns over $930 billion in Medicaid cuts and the exclusion of provisions to regulate third-party litigation funding (TPLF).
The Congressional Budget Office estimates that 11.8 million Americans will lose health coverage by 2034 under the bill, while the American Hospital Association expects a $232 billion reduction in federal payments over the next decade.
America's Health Insurance Plans said it will support those impacted by the sharp decline in Medicaid coverage. With millions expected to face disruptions, the group stressed the urgency of extending ACA premium tax credits beyond their scheduled expiration later this year.
The law also excluded rules that would have changed how profits from TPLF are taxed. The Tackling Predatory Litigation Funding Act, which was ultimately cut from the One Big Beautiful Bill, was introduced by Rep. Kevin Hern in the House and Sen. Thom Tillis in the Senate.
“Frivolous lawsuits have gotten out of control in recent years, largely because of these third-party funders fueling a market that is ballooning. Taxing these third-party entities will limit unmeritorious lawsuits and provide economic relief to the middle class,” said Hern.
The act would have taxed profits from lawsuit funding at the top individual income rate, plus 3.8%. The rules would have also blocked investors from avoiding taxes on lawsuit payouts and changed when taxes apply to pass-through businesses.
National Association of Mutual Insurance Companies (NAMIC) said it will continue to push for greater transparency and fairness in the largely unregulated third-party litigation funding industry.
"The intense assault on language simply closing a tax loophole for TPLF funders makes it clear how important and profitable it has been for funders to exploit the legal system, and how much of an uphill battle we have in front of us,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC.
NAMIC, however, welcomed the removal of a proposed 10-year moratorium on state AI regulations, which it said would have threatened the integrity of the state-based insurance regulatory system.
Insurance groups also supported provisions in the law that maintain tax rules recognizing the unpredictable nature of insurance losses, as advocated by the National Association of Mutual Insurance Companies.
Grande said the provision offers much-needed stability and consistency in federal tax treatment for companies.
"Just as importantly, NAMIC led industry efforts to prevent bad policy, such as the proposed cap on corporate state and local taxes that would have massively increased costs for insurers and consumers, from being added into the bill,” Grande told BestWire in an email.
David Chavern, president and chief executive officer of the American Council of Life Insurers, said the provision will ensure the life insurance sector can continue supporting financial security for families and small businesses.
The bill also makes several business deductions permanent, including those for short-lived assets, R&D expenses, and more relaxed limits on interest deductions, according to the Tax Foundation.
The law also continues payments under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, while expanding access to supplemental crop insurance to ARC participants, a benefit that was formerly limited to PLC enrollees.
Is the law a step forward or a setback for insurance and healthcare? Tell us what you think.
