Trump Executive Order Healthcare. What Has Trump Done And Who Will It Affect?

President Trump signed an Executive Order Healthcare directing HHS, the Treasury, and Labor Dept to consider several changes to health insurance regulations. This EO does not change any laws or rules currently in place, just directs the above departments to consider drastic rule changes. No changes were made to the Open Enrollment period scheduled for Nov 1st through Dec 15th, nor were any changes made to the plans currently available on the marketplace. ACA compliant employer-based coverage is unchanged for the moment as well. 

The short of it: You may eventually have access to cheaper plans, but they won’t have the same coverage levels, including protections for pre-existing conditions.

Winners: The young, healthy, and people who can’t afford marketplace plans, who can opt for cheaper coverage.

Losers: Sick people, employers and their employees, who will likely see premiums rise significantly OR their benefits cut.

Long term: Healthy, young, and financially-strapped people could leave the marketplace, leading to higher premiums for everyone, especially in the employer market. Facing higher costs, employers are likely to switch to plans that don't cover essential health benefits, including mental health coverage and maternity care. 
 


Trump Executive Order Healthcare (soundbite of archived recording)

 

PRESIDENT DONALD TRUMP: The competition will be staggering. Insurance companies will be fighting to get every single person signed up. And you will be hopefully negotiating, negotiating, negotiating. And you'll get such low prices for such great care.

MCEVERS: In a moment, we'll hear how this executive order could affect people and the health insurance industry. First, NPR's health policy correspondent Alison Kodjak is with us to talk about the order itself. Hey, Alison.

ALISON KODJAK, BYLINE: Hey, Kelly.

MCEVERS: So what does the order do?

KODJAK: Well, I have been told several times today that the order itself doesn't really do anything to the health care system.

MCEVERS: OK.

KODJAK: But what it does do is direct three different federal agencies to look at their regulations around health insurance to try to make it easier for trade groups and small businesses to work together to negotiate with insurance companies for better deals. And those companies can be in different states. And they theoretically could get cheaper insurance than they do now. Small businesses today have to buy their insurance through their local Obamacare exchange.

MCEVERS: Right. I mean, it sounds like a reasonable concept. Is - will it work?

KODJAK: Well, there are a couple of challenges. And the first one is legal. There are a whole bunch of people - health care analysts, lawyers - that are saying essentially there are significant legal hurdles to creating what these - they're called association health plans - in a way that makes them cheaper than insurance that's already on the market. And these are people - Democrats and Republicans.

What would have to happen is the administration has to allow those small businesses to be governed by the rules of large employers. That would pretty much reverse a long history of legal precedent in how that law has been understood. The order says this outright. It encourages the agencies, as they say, to modernize their interpretation of the law. The second challenge is just that these plans are only cheaper if they cut benefits or exclude people who are sick or small businesses with a sicker employee group.

MCEVERS: I mean, why is that? Wouldn't their combined market power give them advantage - an advantage?

KODJAK: Well, not necessarily because today, small businesses already are sort of combining their market power through the Obamacare exchanges. They're buying in a group. All the businesses in D.C., for example - in Washington, D.C. - they have to buy on the Washington exchange. So there's not really a new strength in numbers that would come with these association plans. The advantage only comes if they include companies with younger people and leave out older, sicker people.

MCEVERS: These association plans weren't the only thing in this executive order, I understand. What else did the president put in there?

KODJAK: So he's trying to loosen rules regarding short-term insurance plans. And these are policies - right now they're limited to only 90 days, and they'd be good for up to a year. And I looked at some today on the market that are available now, and they have the deductibles as high as $10,000. They don't necessarily cover prescription drugs. And they don't have to cover you if you have a health history. So they're not the greatest insurance, and they don't fit the Obamacare consumer protections.

MCEVERS: Overall so far, what has been the reaction to this executive order?

KODJAK: Well, as I said, there's some skepticism about whether or not it's legal or can accomplish...

MCEVERS: Right.

KODJAK: ...Anything. And then there's this figure that it could split the market again to where it was before the Affordable Care Act was passed, which is, people who are healthy and young can get really cheap insurance, but people who need health care will find it really hard, expensive or out of reach.

MCEVERS: NPR health policy correspondent Alison Kodjak, thanks a lot.

KODJAK: Thanks, Kelly.


Trump Executive Order Healthcare
President Trump signs Executive Order on Health Care

1) When does this actually go into effect?

Trump has technically asked federal agencies to consider issuing new regulations that achieve the executive order's goals. That's all.

Federal rulemaking takes some time, months upon months. Senior administration officials told reporters today that they didn't expect any changes to be made before the end of the year.

2) Which Obamacare regulations are actually being targeted?

This answer comes in two buckets.

For association health plans: If they can be considered large-group plans, they no longer have to comply with Obamacare's requirement that they cover certain essential health benefits. Large employers are exempt from that rule, which is limited to individual and small-group plans.

For short-term insurance: These plans are completely free from the ACA's regulations. Carriers can deny people coverage based on their medical history, charge people higher premiums based on their health status, and limit their benefits significantly more than the health care law allows. 

3) Can individuals buy into association health plans? 

This is maybe the biggest question. Experts generally agree that if individuals are allowed to join the association plans, the impact on the Obamacare marketplaces will be much more severe.

The executive order itself seems to limit the plans to businesses. But administration officials, in their call with reporters, indicated that they will look at whether they can allow self-employed people to buy into these associations.

"That is both a legal and policy question," one official said, adding it was "potentially possible" to allow those people to join associations.

4) Will this coverage be considered compliant with the individual mandate?

This is another issue with huge consequences. The one deterrent for people absconding to these skimpy plans, particularly the short-term insurance, is that they could still be subject to the individual mandate because the plan doesn't qualify as minimal coverage.

But if that changes, people would have even more incentive to abandon Obamacare and buy these skimpier plans, which would further damage the law's markets.

In the call with reporters, administration officials were coy. They simply noted that the executive order didn't address what is considered minimal coverage. They did point out that large-group coverage, which is what many association plans may soon be considered, is generally found to satisfy the mandate.

Any further changes to that threshold, particularly if the Trump administration makes short-term coverage compliant, would be a game changer.

5) What can states do?

We won't know until we see the regulations how much the traditional state authority to regulate association health plans and short-term insurance will be preempted. But experts are watching closely.

If states still have significant oversight, they could — if they so chose — potentially do a lot to limit people migrating to these skimpier plans.

But the Trump administration may try to write the new rules to handcuff states as much as possible.

6) Can these changes be challenged in court?

We simply won't know for sure until the administration proposes some actual regulations.

"It’s just a set of marching orders," Nicholas Bagley, a law professor at the University of Michigan, said of the executive order.

"We can speculate about what the agencies might do, and whether what they might do might be unlawful," he added. "But it’s hard to handicap the odds of a challenge to something that hasn’t yet happened."


How will President Trump's recent executive order affect the health insurance markets?

Donald Trump wanted Obamacare completely repealed, and when he didn’t get that he decided to weaken the law instead. His recent actions have basically encouraged health association plans and weakened certain ACA requirements for essential health benefits. He also announced he would loosen rules around providing birth control, and would stop making cost-sharing reduction payments to insurance companies meant to subsidize copay and deductible discounts to low-income Americans. All three moves can — or have — affected insurance markets.


Health associations, for instance, allow groups to come together to have the same purchasing power as large companies. But the plans a person can buy through one aren’t required to cover the same robust benefits as an ACA plan. So the fear is that these less comprehensive — and therefore cheaper — health association plans might lure younger and healthier people away from ACA exchanges. Without healthy people to subsidize sicker people, the market could destabilize, sending prices skyrocketing.

The essential health benefits standardized coverage for health insurance plans. You could buy any plan and know, for instance, that it covered maternity care. Weakening these requirements — or pushing people toward plans that aren’t subject to them — is making shopping for plans more confusing. It could also make it more expensive. For instance, if insurers don’t have to cover maternity care, they could charge more for plans that do.

Finally, Trump’s decision to stop cost-sharing reduction (CSR) payments has already influenced the 2018 Obamacare marketplace, mostly by forcing insurers to raise premiums to make up for the subsidies the government is no longer paying them. But it hasn’t been all bad news for consumers: Many states asked insurers to increase premiums solely on Silver plans, which are most popular among consumers who qualify for subsidies. That, interestingly, has made more robust Gold plans cheaper in some states for people who don’t get subsidies.

Again, there are a lot of moving parts here, but the big takeaway is, it’s even more important to comparison shop for a healthcare plan this year. The best plan for you this year might look a lot different than the plan you chose last year.

You may have read that President Trump is doing away with health insurance subsidies for low-income people under the Affordable Care Act (the ACA or Obamacare). Phrased as starkly as that, the statement can be misleading.

Let’s look at how subsidies work under the Obamacare law, what the president’s executive order actually changes, and what it may mean for health insurance shoppers this coming open enrollment period.


How Obamacare subsidies work

Under the Obamacare law, health insurance subsidies officially known as “advanced premium tax credits” are made available to people earning up to 400 percent of the federal poverty level. That’s about $48,000 for a single person or $98,000 for a family of four.

Most of the time, when someone refers to Obamacare subsidies, these are the subsidies they’re talking about. These subsidies are designed to help recipients cover the cost of their monthly premiums so that they can afford to buy health insurance.

But there’s a second kind of subsidy under Obamacare. These subsidies (which are officially known as cost-sharing reductions or CSRs) are different from the first in two ways.

First, they’re only available to people earning up to 250 percent of the federal poverty level (about $30,000 for a single person). And second, they don’t help with monthly premiums but lower the annual deductibles that recipients would otherwise have to pay when they receive covered medical care.

What President Trump's Executive Order Healthcare actually does

Trump's Executive Order Healthcare signed on October 12, 2017 does away with the second kind of subsidy (CSR subsidies) but leaves the first kind of subsidies (advanced premium tax credits) intact.

As a result of the Executive Order Healthcare, the federal government will halt subsidy payments to insurance companies to help cover the cost of annual deductibles for people earning 250 percent of the federal poverty level or less.

Government payments to help qualifying persons cover their monthly health insurance premiums will continue as before.

What does this all mean for health insurance shoppers today?

The nationwide health insurance open enrollment period for 2018 is scheduled to begin on November 1, 2017 and it’s only natural that health insurance shoppers will have questions about subsidies.

The good news for people earning no more than 400 percent of the federal poverty level is that subsidies that help them cover their monthly premiums will continue to be available as usual.

It’s less clear precisely what the cessation of CSR subsidies will mean for 2018 health insurance shoppers. It seems likely to result in increased monthly premiums as health insurance companies try to balance out costs without government help.

Increased premiums sounds like a bad thing, of course. And it may indeed be a bad thing for middle-income folks who don’t get government help with their monthly premiums. (In many cases, if Obamacare-compliant coverage becomes too costly for you, eHealth can help match you with a medical insurance package for protection against unforeseen medical costs.)

However, for people earning 400 percent of the federal poverty level or less, the other kind of subsidies will likely come to the rescue. Because of the way these subsidies are designed, they increase in value as the cost of premiums increases. So, people who lose government help covering their deductibles may effectively end up with more government help covering premiums for lower-deductible plans.

References:

[1] Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States https://www.whitehouse.gov/presidential-actions/presidential-executive-order-promoting-healthcare-choice-competition-across-united-states/

[2] Here's what's in Trump's executive order on health care https://edition.cnn.com/videos/cnnmoney/2018/06/19/trump-executive-order-health-care-luhby.cnnmoney

[3] How Will Trump's Executive Order Affect Health Insurance Markets? https://www.forbes.com/sites/quora/2017/12/04/how-will-trumps-executive-order-affect-health-insurance-markets/

[4] What President Trump’s Executive Order on Health Insurance Subsidies Means, and Doesn’t https://www.ehealthinsurance.com/resources/affordable-care-act/president-trumps-executive-order-health-insurance-subsidies-means-doesnt