Trump signs order hitting Obamacare, eyes changes to job-based health coverage, short-term insurance plans

President Donald Trump signed a new executive order Thursday in an effort to expand health-coverage options and reduce costs for Americans — an order that Obamacare defenders fear will damage gains made under that health-care law.

The executive order eyes loosening of rules surrounding the issuance of health plans by small businesses, as well as rules about enrollment in short-term health insurance plans — which are less expensive, and less comprehensive than Obamacare health plans.

Trump said the order is “taking the first steps to providing millions of Americans with Obamacare relief.”

“This is promoting health care, choice and competition all across the United States,” Trump said during the signing ceremony in the Roosevelt Room in the White House.

“This is something that millions and millions of people will be signing up for, and they’re going to be very happy. This will be great health care.”

Donald Trump

Yuri Gripas | Reuters
Donald Trump

But the order will not necessarily have any significant practical impact on the nation’s health insurance system by the time Obamacare’s next open enrollment season starts next month.

That’s because of the time it takes to propose and take public comment on the potential changes.

And the order does not lift the Obamacare rule that most Americans have some form of health insurance for the year or face a tax penalty.

As a result of that omission, and other factors, it is not clear if the order will have any negative effect on enrollment in individual health plans sold on Obamacare plans that go into effect in 2018.

“I don’t know that it accomplishes all that much” in the short-term, said Gary Claxton, a vice president at the Kaiser Family Foundation, a leading health-care policy research group, when asked about the impact of the order.

But Trump noted that the order is just the beginning of what his administration expects will be other executive actions to reform rules related to the Affordable Care Act, as Obamacare is formally known.

Other changes will be coming in the next several months, officials said.

Claxton said if the administration ends up loosening enforcement of the Obamacare coverage mandate, “it could be disruptive, and it could happen very quickly.”

The order comes after months of failed efforts by Trump and Republican leaders to get Congress to pass legislation that would repeal and replace Obamacare.

Senior administration officials on Thursday said Trump still believes such legislation needs to happen, but that the president is signing the order Thursday because of a need to provide relief to people whom the administration claims are suffering because of Obamacare.

“Obamacare is failing,” said a fact sheet distributed by the administration in advance of the order. “The status quo is not delivering quality healthcare options for the American people, who are facing higher premiums and fewer options.”

Officials pointed out that they expect that half of the counties in the United States will have just one insurer offering Obamacare individual health plans next year, up from one-third of such counties this year. They also noted double-digit proposed premium increases for 2018 as evidence of Affordable Care Act’s problems.

The order will direct the Labor Department to “consider expanding access to Association Health Plans” for American businesses, so small businesses can easier band together to offer health coverage. The order contemplates AHPs being formed across state lines.

However, it is not clear if the Labor Department will end up allowing people who are not employed by companies in such AHPs to get health insurance coverage through them.

Obamacare advocates fear that if that is allowed, it could reduce the number of healthy people buying individual health plans on Obamacare exchanges, which in turn would lead to greater price hikes than have already been seen. They also worry that the AHP plans will not be as comprehensive in terms of covered benefits as Obamacare plans.

The order also directs several federal agencies to consider reversing an Obama administration directive that limited enrollment in short-term insurance plans to just three months.

Short-term health insurance currently does not satisfy Obamacare’s coverage mandate, which means that someone enrolled in only those plans is subject to a tax penalty.

Claxton said that if the administration only ends up increasing the amount of time a person can be enrolled in a short-term insurance plan, “it would not have a big effect on undermining the [Obamacare] marketplaces,” which sell more comprehensive, and more expensive, health coverage.

Claxton said that because individuals would still be subject to the penalty, there would not be a big influx of people into short-term plans, and exodus out of Obamacare marketplace plans.

But “the issue would be, what comes next?” Claxton said.

If the administration liberalizes rules about the duration of short-term health plans, and then also makes it easier for people to get hardship exemptions from Obamacare’s mandate, then it could lead people to sign up in large numbers for short-term coverage.

“That could be very disruptive, and it could happen very quickly,” Claxton said.

Dave Dillon, a fellow of the Society of Actuaries, said, “Overall, the proposal has potential to bring increased instability and volatility to the health insurance markets by separating the market into two smaller pools.”

“Longer length short-term plans may further segment the market,” Dillon said. “The proposal offers more choice to consumers in terms of coverage options. Healthier consumers will likely be able to enroll in plans with lower insurance rates, while more medically complex consumers may be subject to significant rate increases.”

Trump’s order also will direct federal agencies to consider making changes to rules around health-reimbursement arrangements, which allow employers to set aside tax-shielded money that workers can use for out-of-pocket health costs.

The order also directs multiple agencies to review the level of competition among health-care providers and insurers nationally, with an eye toward identifying actions that could increase competition.

Officials said the administration is concerned about the large volume consolidation in the health-care sector since adoption of the ACA, which they said has had the effect of increasing prices, and potentially affecting the quality of health care.

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