Trump order to allow lean, lower-cost health plans
New executive rule undercuts Obamacare insurance standards, but key elements remain unclear.
WASHINGTON — President Trump moved Thursday to scale back rules on health insurance across the country in the administration’s most ambitious effort to use its regulatory powers to undermine the Affordable Care Act.
The controversial new executive order Trump issued aims to open the way for a greater number of relatively cheap health plans that could offer skimpier coverage than allowed under the healthcare law, often called Obamacare.
The broadly worded order leaves many key elements of the new plans uncertain, however, subject to a lengthy administrative process, which means the order’s impact will remain unclear, and the new plans unavailable to consumers, for this year’s open enrollment season and many months to come.
Trump avoided that point as he formally released the order at the White House, declaring that it would “provide millions of Americans with Obamacare relief” and would “increase competition, increase choice and increase access to lower-priced, high-quality healthcare options.”
“People will have great, great healthcare,” Trump said, speaking to an audience made up of Cabinet officials, Vice President Mike Pence, Sen. Rand Paul (RKy.) and owners of several small businesses who the White House said would benefit from the new plans.
Though loosening consumer protections in the Affordable Care Act might make insurance cheaper for those in good health, that would happen at the expense of millions of sicker Americans, who will have to
pay more, according to patient advocates, state regulators and others across the healthcare sector.
“Today’s executive order jeopardizes the ability of millions of cancer patients, survivors and those at risk for the disease from being able to access or afford meaningful health insurance,” said Chris Hansen, president of the American Cancer Society’s advocacy arm.
The president’s moves, which come after congressional Republicans repeatedly failed to roll back the 2010 healthcare law this year, also renewed fears that Trump is determined to deliberately destabilize insurance markets and weaken President Obama’s signature domestic policy achievement.
The administration already has taken steps to undermine those markets, including sharply cutting federal support for efforts to enroll people in marketplace coverage next year.
The Affordable Care Act imposed new requirements on insurers, prohibiting them from turning away sick consumers or placing annual and lifetime limits on medical coverage, something that was once commonplace, and mandating a basic set of benefits. Those include coverage of prescription drugs, maternity care and mental health treatment.
Republicans have long complained that these requirements drive up costs.
Trump’s order aims to change that, but the president cannot scrap the existing insurance protections altogether. They are in law and therefore can be changed only by an act of Congress.
Instead, Trump’s executive order directs federal agencies to develop new rules that would allow insurers to bypass some of these requirements through alternative kinds of insurance plans.
How effective the new plans will be at lowering costs for some — and how much of a threat they pose to the marketplaces — will depend on how aggressively the agencies act in writing those new rules. They face constraints from existing federal laws, and their new rules could draw challenges in court, just as Republicans challenged Obama-era rules that they argued overstepped the president’s authority.
Trump’s new proposals include expanded use of short-term plans, which don’t have to meet the insurance protections in the Affordable Care Act.
The Obama administration issued rules that prohibited consumers from buying these plans for more than three months.
But the Trump administration is proposing to allow people to remain on these plans longer and renew them.
Trump’s order also instructs federal agencies to make it easier for individual Americans or small businesses to join together to get health insurance through so-called association health plans.
It directs the Treasury Department to look at ways to expand the use of tax-free accounts called Health Reimbursement Arrangements that allow employers to provide their workers with additional money for healthcare expenses.
And the order calls on federal agencies to look at how consolidation among hospitals, doctors and other providers may be driving up costs in some markets around the country.
Backers of association health plans argue that they give small employers and individuals the ability to get cheaper coverage.
On Thursday, the head of the National Restaurant Assn. praised Trump’s order.
“By allowing small businesses and individuals to join together to access health insurance through their association memberships, President Trump’s executive order provides more opportunity for Americans to purchase affordable healthcare coverage,” Dawn Sweeney said.
Administration officials said that new associations would be subject to some of the Affordable Care Act’s health insurance requirements.
But association health plans historically have also been a way to circumvent state insurance regulations. And they could avoid mandates in the current law requiring plans to cover a basic set of benefits.
If association health plans or short-term plans do not have to offer as many benefits as plans governed by the 2010 health law, they may cost less. And a less comprehensive health plan might be attractive to healthier consumers, who might conclude they don’t need coverage for prescription drugs or mental health treatment because they don’t use those services.
But a flood of health plans that offer more limited benefits could also leave many more Americans with inadequate coverage — one of the problems that existed before the Affordable Care Act, which the healthcare law aimed to fix.
“People were unfortunately very susceptible to junk insurance” in the past, said Karen Pollitz, an insurance market expert at the nonprofit Kaiser Family Foundation.
Consumers often did not understand the limits of the coverage they bought, leaving them without protections if they unexpectedly got sick, patient advocates found.
Allowing less comprehensive health plans back into the market also tends to make health coverage more expensive for sick people.
The Affordable Care Act aims to create large risk pools for people who don’t get insurance on the job or coverage under a government plan, such as Medicare.
Healthy people in the pool offset the costs of sicker people, making insurance feasible for those with preexisting health problems.
Creating a two-tier system in which some consumers can buy skimpier plans could reduce costs for the healthy but over time can destabilize an insurance market as insurers are forced to charge more and more for the sickest patients, according to experts such as the American Academy of Actuaries.
“A key to sustainability of health insurance markets is that health plans competing to enroll the same participants must operate under the same rules,” the actuaries said in a brief this year on association health plans.
The group warned that “ultimately, higher-cost individuals and small groups would find it more difficult to obtain coverage.”
On Thursday, Ted Nickel, the president of the bipartisan National Assn. of Insurance Commissioners and the current Wisconsin insurance commissioner, warned that commissioners have “long expressed concerns with expanding association health plans in a manner that reduces consumer protections or solvency requirements that promote safe and sound markets.
“We also have concerns about the impact of such a proposal on already fragile markets.”
‘Ultimately, higher-cost individuals and small groups would find it more difficult to obtain coverage.’ — American Academy of Actuaries, assessing association health plans, which will be boosted under Trump’s executive order