Trump orders insurance rule changes
Circumventing the Affordable Care Act, critics say, could force older Americans into higher-cost plans.
President DonWASHINGTON — ald Trump signed an executive order Thursday intended to circumvent the Affordable Care Act by making it easier for individuals and small businesses to buy alternative types of health insurance with lower prices, fewer benefits and weaker government protections.
The White House and allies portrayed the president’s move as wielding administrative powers to accomplish what congressional Republicans have failed to achieve: fostering more coverage choices while tearing down the law’s insurance marketplaces. The order represents Trump’s biggest step to date to reverse the health care policies of the Obama admin-
istration, a central promise since last year’s presidential campaign.
Critics, who include state insurance commissioners, most of the health insurance industry and mainstream policy specialists, predict that a proliferation of these other kinds of coverage will have damaging ripple effects, driving up costs for consumers with serious medical conditions and prompting more insurers to flee the law’s marketplaces. Part of Trump’s action, they say, will spark court challenges over its legality.
The most far-reaching element of the order instructs a trio of Cabinet departments to rewrite federal rules for “association health plans” — a form of insurance in which small businesses of a similar type band together through an association to negotiate health benefits. These plans have had to meet coverage requirements and consumer protections under the 2010 health care law, but the administration is likely to exempt them from those rules and let such plans be sold from state to state without insurance licenses in each one.
In addition, the order is designed to expand the availability of short-term insurance policies, which offer limited benefits as a bridge for people between jobs or young adults no longer eligible for their parents’ health plans. The Obama administration ruled that short-term insurance may not last for more than three months; Trump wants to extend that to nearly a year.
Trump’s action also is intended to widen employers’ ability to use pretax dollars in “health reimbursement arrangements” to help workers pay for any medical expenses, not just for health policies that meet ACA rules — another reversal of Obama policy.
In a late-morning signing ceremony in the White House’s Roosevelt Room, surrounded by supportive small-business owners, Cabinet members and a few Republicans from Capitol Hill, the president spoke in his characteristic superlatives about the effects of his action and what he called “the Obamacare nightmare.”
Trump said that Thursday’s move, which will trigger months of regulatory work by federal agencies, “is only the beginning.” He promised “even more relief and more freedom” from ACA rules. And although leading GOP lawmakers are eager to move on from their unsuccessful attempts this year to abolish central facets of the 2010 law, Trump said that “we are going to pressure Congress very strongly to finish the repeal and replace of Obamacare.”
The executive order will fulfill a quest by conservative Republican lawmakers, especially in the House, who have tried for more than two decades to expand the availability of association health plans by allowing them to be sold, unregulated, across state lines. On the other hand, Trump’s approach conflicts with what he and GOP leaders in Congress have held out as a main health policy goal — giving each state more discretion over matters of insurance.
Health policy experts in think tanks, academia and the health care industry pointed out that the order’s language is fairly broad, so the ensuing fine print in agencies’ rules will determine whether the impact will be as sweeping or quick as Trump boasted — his directive will provide “millions of people with Obamacare relief,” he said.
Significant questions that remain include whether individuals will be able to join associations, an issue that could raise legal issues; whether the administration will start to let association health plans count toward the ACA’s requirement that most Americans carry insurance; and whether such plans can charge higher prices to small businesses with sicker workers — or refuse to insure them.
The president issued the directive less than three weeks before the Nov. 1 start of the fifth open-enrollment season in ACA marketplaces for people who do not have access to affordable health benefits through a job. Trump noted that about half of the nation’s counties will have just one insurer in their exchange, and he claimed that “many will have none.” However, the most recent canvass shows that there will be no “bare” counties in 2018.
A senior administration official, speaking to reporters on the condition of anonymity shortly before Trump signed the order, said that the policy changes it sets in motion will require agencies to follow customary procedures to write new rules and solicit public comment. That means new insurance options will not be available in time for coverage beginning in January, he said.
Even so, with a shortened sign-up period and large cuts in federal funds for advertising and enrollment help already hobbling the marketplaces, “if there’s a lot of hoopla around new options that may be available soon, it could be one more thing that discourages enrollment,” said Larry Levitt, the Kaiser Family Foundation’s senior vice president.
Other aspects of the executive order include commissioning a six-month study, to be led by federal health officials, of ways to limit consolidation within the insurance and hospital industries. Trump also directed agencies to find additional means to increase competition and choice in health care to improve its quality and lower its cost.
The order produced predictable reactions in Congress, with Republican leaders praising the move and Democrats accusing the White House of sabotaging the law.
Among policy experts, critics warned that young and healthy people who use relatively little insurance will gravitate to association health plans because of their lower price tags. That would concentrate older and sicker customers in ACA marketplaces with spiking rates.
Mike Consedine, chief executive of the National Association of Insurance Commissioners said Thursday that the group has long opposed such plans and is concerned that the administration will allow ones that can bypass state licenses and have such weak financial underpinnings that some will collapse, leaving customers stranded and state insurance regulators “picking up the pieces.”
Short-term health insurance makes up a tiny fraction of the policies sold, with fewer than 30 companies covering only about 160,000 people nationwide at the end of last year, according to NAIC data.
Experts could not point to figures for how many association health plans exist or how many people they insure. Such arrangements have existed for decades, and scandals have on occasion exposed “multi-employer welfare arrangements” started by unscrupulous operators who took members’ money and either did not have enough reserves to cover hospital bills or absconded with premiums.
The National Federation of Independent Business, a small-business lobby, has pressed Congress to allow use of association plans, arguing that they can be less expensive and give workers more insurance choices. Sen. Rand Paul, R-Ky., has promoted the idea, and he stood just behind Trump at the morning ceremony. After nearly walking out of the room without signing the order, the president returned to affix his bold signature to the document and then hand Paul the pen.
Selling health plans from state to state without separate licenses — the idea underlying much of the president’s order — has long been a Republican mantra. It has gained little traction in practice, however.
Half a dozen states — before the ACA was passed in 2010 as well as since then — have passed laws permitting insurers to sell health policies approved by other states. And since last year, the ACA has allowed “compacts” in which groups of states can agree that health plans licensed in any of them could be sold in the others. Under such compacts, federal health officials must make sure the plans offer at least the same benefits and are as affordable as those sold in the ACA marketplaces.
As of this summer, “no state was known to actually offer or sell such policies,” according to a report by the National Conference of State Legislatures. A main reason, experts say, is insurers’ difficulty in arranging networks of doctors and other providers of care far from their home states.