President Donald Trump claimed an executive order he signed Thursday will “increase competition, increase choice, and increase access to low cost, high-quality options” for health insurance consumers, but some health care policy experts disagree with that prediction.
Trump has cast the order as the first step in dismantling the system established by the Affordable Care Act (ACA), often referred to as Obamacare.
“Seven years ago congressional Democrats broke the American health care system by forcing the Obamacare nightmare on the American people,” Trump said.
While the ACA has enabled millions to obtain health insurance through an expansion of Medicaid eligibility or new individual insurance marketplaces, those who earn too much to qualify for federal subsidies have faced enormous premium increases in some states, and some have opted to pay a penalty rather than comply with the law’s mandate to purchase coverage.
Republicans have long promised voters they would repeal the ACA, but they have been unable to cobble together 50 votes to pass a repeal bill in the Senate since Trump took office. The signing of the order on Thursday punctuated Trump’s frustration with the lack of legislative progress.
The order directs the Departments of Labor, Treasury, and Health and Human Services to consider three regulation changes that would ostensibly expand choices and reduce costs.
First, access to association health plans (AHPs) could be expanded to allow employers to form groups across state lines to offer less expensive insurance plans to their employees unburdened by some federal and state regulations.
Second, availability of short-term limited duration insurance could be extended from the current three-month maximum length to nearly a year. These plans, generally intended for those in between jobs or with limited coverage options, are less expensive than ACA insurance offerings, but they are not required to comply with its mandates and rules.
Third, the use of Health Reimbursement Arrangements may be expanded. These untaxed accounts can be used by employers to reimburse employees for their health care expenses.
At the signing ceremony, Sen. Rand Paul, R-Ky., who worked with the Trump administration on crafting the order, called it “the biggest free-market reform in health care in a generation.”
Chris Pope, a senior fellow at the Manhattan Institute, applauded the order as offering “real hope” to those without employer-sponsored coverage.
“It’s been attacked as undermining Obamacare, but it doesn’t cut a penny from the budget, and it maintains all the regulations and subsidies that make affordable coverage of individuals with pre-existing conditions possible and profitable,” Pope said in a statement. “But it also delivers what Obama had initially promised to do: if people liked the plans they had before the Affordable Care Act, they will now be able to keep them.”
Democrats had one word to describe Trump’s order: sabotage.
“Having failed to repeal the #ACA in Congress, @POTUS is using a wrecking ball to singlehandedly rip apart & sabotage our healthcare system,” said Senate Minority Leader Chuck Schumer, D-N.Y., on Twitter.
“This executive order is trying to return us to the days when you could buy junk insurance – it was cheap, because it didn’t cover much,” Sen. Bob Casey, D-Penn., said in a statement. “They have a maniacal obsession with repealing the Affordable Care Act. That obsession is harming families across the nation.”
“By signing this order, President Trump is further sabotaging the insurance market and putting Americans' health care at risk. Shameful,” tweeted Sen. Maggie Hassan, D-N.H.
The response to the order from health insurance industry organizations was somewhat lukewarm.
“We believe that all Americans should have access to affordable coverage and care, including those with pre-existing conditions,” said Kristine Grow, senior vice president of America’s Health Insurance Plans (AHIP). “We believe that reforms must stabilize the individual market for lower costs, higher consumer satisfaction, and better health outcomes for everyone. And we believe that we cannot jeopardize the stability of other markets that provide coverage for hundreds of millions of Americans.”
Grow added that AHIP plans to participate in the rulemaking process to “help lower premiums and improve access for all Americans.”
“The NAIC has long expressed concerns with expanding AHPs in a manner that reduces consumer protections or solvency requirements that promote safe and sound markets,” Ted Nickel, president of the National Association of Insurance Commissioners, said in a statement. “We also have concerns about the impact of such a proposal on already fragile markets. We look forward to working with the Administration and DOL in their rulemaking process to help address these concerns.”
Experts say the ultimate impact of the order will depend on the rules that the departments come up with and how much leeway they grant to insurers and employers to bypass the ACA’s requirements. Considering the length of the rulemaking process and the potential for legal challenges, it could months or years before any proposed changes take effect.
“In the short term, it doesn’t do anything,” said Capri Cafaro, a former Ohio state senator and current executive in residence at American University’s School of Public Affairs.
In the long run, the administration’s embrace of AHPs and short-term plans could create what she called “an imbalance in the risk pool.” Healthier and younger adults currently on the individual markets or priced out of it could move to cheaper plans that do not provide the essential benefits of the ACA.
This could then raise costs for those left in the markets and increase risks for insurers who would have less incentive to continue offering coverage through the markets at all.
“That would essentially contribute to an unraveling of the existing marketplace,” Cafaro said.
According to Joseph Antos, a scholar focused on health care policy at the American Enterprise Institute, fears of this order precipitating a collapse of the individual marketplace are overblown.
“I think that’s completely wrong,” he said. “If there was enough market share at stake, then I would say, yeah it could, but I don’t see much market share here.”
Despite Trump’s prediction that “millions and millions of people” will sign up for these programs, Antos is skeptical that AHPs and short-term plans will appeal to much more than a subset of a subset of the market. Many of the healthy young people who are not buying insurance now do not want to pay for insurance at all and will not necessarily flock to these programs.
Antos also suggested interstate association health plans may prove unattractive for insurers and employers.
“The question really is how good a business opportunity is this for the insurance industry,” he said.
Health care costs vary widely by location. To offer the same plan across multiple states, insurers would likely either need to set a consistent price for all, which those in less expensive areas would object to, or set prices based on local market cost, which would limit the ability to negotiate a good deal. The other alternative would be to offer plans that provide very skimpy benefits.
“How many people want to buy that product?” Antos asked.
That is what many Trump critics fear, though—a market where cheap plans with minimal benefits draw younger and healthier patients, leaving the sickest and most expensive patients alone on the Obamacare exchanges.
Topher Spiro, vice president for health policy at the Center for American Progress, warned that middle-income workers could be left with “junk plans” that provide insufficient coverage.
“Trump is trying to take us back to the bad old days before the Affordable Care Act, when coverage wasn’t there when you needed it and when people who were older or had pre-existing conditions faced sky-high costs,” Spiro said in a statement.
Andy Slavitt, who ran the Centers for Medicare and Medicaid Services in the final years of the Obama administration, described the executive order as “long on propaganda, short on details.”
“Insurers will raise premiums & leave markets. New entrants will be the junk insurance companies that had gone away,” he said on Twitter. “That's not competition.”
Providing access to less regulated, less comprehensive coverage for some will make coverage less affordable for others, according to Sara Collins, vice president for health care coverage and access at the Commonwealth Fund.
“Both of these policies could encourage healthy people to buy skimpy health insurance that won’t protect them from high out-of-pocket expenses if they get sick,” she said in a statement. “Increasing access to short-term and association health plans could also siphon off healthy individuals from traditional health insurance, driving up premiums and putting the market at risk. Association health plans also have a long history of subjecting enrollees to fake insurance and other kinds of fraud.”
However, according to Antos, companies have little to gain from offering their employees poor insurance coverage just because the law allows it.
“I don’t know that employers think like that,” he said.
If the other critics are right, though, this could instigate the kind of “death spiral” some Republicans have claimed the individual markets have already begun. Trump has insisted he would bear no political responsibility for the collapse of Obamacare markets, but Democrats seem convinced otherwise.
“After failing to convince the American people & the majority of Senators, Trump is now forcing Trumpcare via executive order. It's sabotage,” Sen. Cory Booker, D-N.J., tweeted Thursday.
The list of overt actions the Trump administration has taken to undermine the ACA continues to grow, including scaling back enrollment promotion, cuts to funding for “navigators” who help people sign up, shortening the enrollment period, and producing videos aimed at discouraging people from using the program.
Administration officials defend these decisions as efforts to mitigate Obamacare’s failure, but some experts believe the markets would stabilize if the government continued to support them. Contrary to Trump’s assertions, much of the country says this is now his problem to solve.
An August Kaiser Family Foundation poll found that 78 percent of Americans want the Trump administration to do what it can to make the ACA work, including 52 percent of Republicans and 51 percent of Trump supporters.
In the same poll, 60 percent of respondents said Trump and congressional Republicans are now responsible for future troubles with the ACA, while 28 percent said blame should still rest on Obama and the Democrats.
Given that this is Trump’s executive order, it would make sense to hold him responsible for its effects, but the even less popular Republican Congress that has failed to fulfill its promise of repealing the ACA for years could become an easy target.
“Politically speaking, I would bet that President Trump would be more likely to point the finger back at Congress,” Cafaro said.
In the current highly partisan political environment, it is difficult to predict how a collapse of the individual insurance markets would shake out with voters.
“Politics is also perception and everybody is going to be pointing fingers at everybody else,” Cafaro said.