After continuously failing to pressure Congress to repeal the Affordable Care Act (ACA), President Donald Trump on Thursday morning signed an executive order to weaken the national health insurance law, promising that it would "provide millions of Americans with Obamacare relief," but which critics warn will have grave and costly consequences for sick Americans and the nation's healthcare system overall.
"This executive order will put sand in the gears of the ACA markets, leading to increased destabilization."
—David Levine, American Sustainable Business Council
"The Trump administration's attacks on the Affordable Care Act are damaging to our teetering healthcare system," said David Levine, CEO and co-founder of the American Sustainable Business Council. "This executive order will put sand in the gears of the ACA markets, leading to increased destabilization. American businesses—both large and small—need more stabilization of the ACA markets, not less."
"Now that President Trump and the Republican Congress failed to end the Affordable Care Act by legislation, the president is sabotaging the law by executive action," said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. "This order will only drive up costs for the sick, and put the health of millions at risk."
Trump's new order has three targets. The first is expanding access to association health plans (AHPs), which enable small businesses and trade groups to collectively purchase insurance. The president directs the Secretary of Labor to consider allowing employers to team up to buy coverage across state lines, which could enable new AHPs to be considered large employers with regard to health insurance.
"This will allow thousands of small business employers to have the same purchasing power as large employers," Trump said on Thursday. Under the ACA, large employers aren't required to cover all essential health benefits or a minimal percentage of an enrollee's medical costs.
"Critics, who include state insurance commissioners, most of the health-insurance industry, and mainstream policy specialists, predict that a proliferation of such health plans will have damaging ripple effects: driving up costs for consumers with serious medical conditions and prompting more insurers to flee the law's marketplaces," the Washington Post reports. In other words, "young and healthy people who use relatively little insurance will gravitate to those plans because of their lower price tags, leaving older and sicker customers concentrated in ACA marketplaces with spiking rates."
Even before the order was released, Vox's Sarah Kliff explained that we have already seen the consequences of expanding AHPs. Under the ACA, these plans were not allowed to offer skimpy coverage and were required to charge the same rates for healthy and sick people.
"Except that didn't actually happen in Tennessee," Kliff writes. "State insurance regulations have actually created a loophole where a major association health plan called Farm Bureau is not subject to Obamacare regulations. It can offer skimpy plans and it can charge sick people higher premiums."
Tennessee is the one state that allows the type of health plans that Trump wants to expand.— Sarah Kliff (@sarahkliff) October 12, 2017
It’s not going well: https://t.co/YXYNYYGTf8
Last year, Tennessee's insurance marketplace had "the sickest enrollees in the entire country" and some of the highest premiums. "Splitting the insurance market" into two groups, Kliff concludes, "creates winners and creates losers." Sicker Americans are the losers who "have to navigate an individual insurance market that is expressly discriminating against them."
"The ACA ensured that association health plans in the small group market provide essential health services such as maternity care and prescription drug coverage, and instituted a community rating system, which prevents sharp premium increases based on health status, age, or gender," said Amanda Ballantyne, National Director of Main Street Alliance. "Eliminating these vital protections will allow insurance companies to peddle low quality, junk plans, while at the same time raising premiums on small businesses whose employees have a diverse set of healthcare needs."
Trump's executive order further directs the Departments of Treasury, Labor, and Health and Human Services to consider changes to health reimbursement arrangements (HRAs), which allow employers to use pre-tax dollars to reimburse employees for healthcare costs. The president also directs those three departments to "consider expanding coverage through low cost short-term limited duration insurance (STLDI)," which is meant to help enrollees bridge a coverage gap between jobs or when transitioning from a parent's plan. These plans typically have high out-of-pocket costs and offer fewer benefits because they aren't subject to ACA rules.
Nicholas Bagley, a University of Michigan law professor and health law expert, responded to the order in a series of tweets. Noting that for unstated reasons "the administration dropped the more aggressive proposal to allow AHPs to market to individuals," he believes "the most significant portion of the" order is the proposal to amend short-term plans.
Former President Barack Obama rolled back the allowed length of STLDI plans from 364 days to only three months. Trump's new order could amend the rule and extend that period, which critics say would also push healthy people to seek STLDI plans and drive up marketplace costs.
"If you allow them to sell 364-day policies, or policies that are renewable, that's just going to suck a lot of the healthy people out of the individual market," Tim Jost, a law professor at Washington and Lee University, told Vox.
"Here's the take-home message: 'Make Garbage Insurance Great Again,'" Bagley said, while also concluding that it is too soon to tell what the consequences will be, as they will depend on what actions the departments take in response to the president's order.
19/ Until then, it's just grandstanding. /fin— Nicholas Bagley (@nicholas_bagley) October 12, 2017
However, many others have expressed concerns and issued warnings about the potential consequences of these actions.
In an interview with Politico Karen Pollitz, a Kaiser Family Foundation senior fellow who worked at Obama's Health and Human Services Department, predicted that "within a year," the new rules "would kill the market."
"This executive order is a cynical effort by the Trump Administration to sabotage the ACA after several failed attempts to move an unpopular repeal through Congress."
—Amanda Ballantyne, National Director of Main Street Alliance
"This executive order is a cynical effort by the Trump Administration to sabotage the ACA after several failed attempts to move an unpopular repeal through Congress," concluded Ballantyne. "It's a backdoor approach to undermine and destabilize the small group and individual markets, by exacerbating adverse selection and driving up costs for the most vulnerable enrollees."
"By allowing the sale of poorly regulated plans, Trump is doubling down on his attacks on the Affordable Care Act and threatening to further drive up healthcare costs," said Eagan Kemp, Public Citizen's healthcare policy advocate, predicting that the order will "take us back to a time when unethical insurers issued poorly regulated plans that offered false promises to consumers and abandoned them when they got sick."
Because the order was issued just three weeks ahead of the open-enrollment season for ACA marketplaces, the Washington Post reported Thursday that an administration official said the "new insurance options will not be available in time for coverage beginning at the start of 2018."
During the signing ceremony on Thursday, Trump vowed that the new order was "only the beginning" and that he would continue to "pressure Congress very strongly to finish the repeal and the replace of Obamacare once and for all."