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Foiled in Congress, Trump Signs Order to Undermine Obamacare Foiled in Congress, Trump Signs Order to Undermine Obamacare
(about 9 hours later)
WASHINGTON — President Trump signed an executive order on Thursday that clears the way for potentially sweeping changes in health insurance, including sales of cheaper policies with fewer benefits and fewer protections for consumers than those mandated under the Affordable Care Act. WASHINGTON — President Trump signed an executive order on Thursday that clears the way for potentially sweeping changes to the country’s health insurance system, including sales of cheaper policies with fewer benefits and protections for consumers than those mandated under the Affordable Care Act.
But most of the changes will not come until federal agencies adopt regulations, after an opportunity for public comments — a process that could take months. The president’s plan, an 1,100-word directive to federal agencies, laid the groundwork for an expanding array of health insurance products, mainly less comprehensive plans offered through associations of small employers and greater use of short-term medical coverage.
“With these actions,” Mr. Trump said Thursday, “we are moving toward lower costs and more options in the health care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.” It was the first time since efforts to repeal the landmark health law collapsed in Congress that Mr. Trump has set forth his vision of how to remake the nation’s health care system using the powers of the executive branch. It immediately touched off a furious debate over whether the move would fatally destabilize the Affordable Care Act marketplaces or add welcome options to consumers complaining of high premiums and not enough choice.
“This is going to be something that millions and millions of people will be signing up for,” the president predicted, “and they’re going to be very happy. This will be great health care.” In Congress, the move seemed to intensify the polarization over health care. The Senate majority leader, Mitch McConnell of Kentucky, said the president was offering “more affordable health insurance options” desperately needed by consumers. But the Senate Democratic leader, Chuck Schumer of New York, said Mr. Trump was “using a wrecking ball to single-handedly rip apart our health care system.”
The order resulted from Mr. Trump’s frustration with his inability to persuade a Republican-controlled Congress to repeal the Affordable Care Act, a pillar of President Barack Obama’s legacy. Supporters of the current health law called the order “sabotage,” a way to destroy the Affordable Care Act without winning a majority in Congress. Most of the changes will not occur until federal agencies write and adopt regulations implementing them. The process, which includes a period for public comments, could take months. That means the order will probably not affect insurance coverage next year, but could lead to major changes in 2019.
Mr. Trump directed three cabinet agencies to develop rules that would expand access to less expensive, less comprehensive insurance, including policies that could be sold by trade associations to their members and short-term medical coverage that could be offered by commercial insurers to individuals and families. “With these actions,” Mr. Trump said at a White House ceremony, “we are moving toward lower costs and more options in the health care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.”
Many of the new insurance products could be exempt from requirements of the Affordable Care Act that Republicans say have contributed to sharp increases in premiums but that supporters say have created a baseline of care that has protected consumers from “junk insurance.” “This is going to be something that millions and millions of people will be signing up for,” the president predicted, “and they’re going to be very happy.’’
Administration officials said they had not yet decided which federal and state rules would apply to the new products. But many patients, doctors, hospital executives and state insurance regulators were not so happy. They said the changes envisioned by Mr. Trump could raise costs for sick people, increase sales of bare-bones insurance and add uncertainty to wobbly health insurance markets.
Mr. Trump’s order could eventually make it easier for small businesses to band together and buy insurance through new entities known as association health plans, which could be created by business and professional groups. A White House official said these health plans “could potentially allow American employers to form groups across state lines” — a goal championed by Mr. Trump and many other Republicans. “Today’s executive order could leave millions of cancer patients and survivors unable to access meaningful coverage,’’ said Chris Hansen, the president of the lobbying arm of the American Cancer Society.
The action on Thursday followed the pattern of previous policy shifts that originated with similar directives from the president. Within hours of his inauguration in January, Mr. Trump ordered federal agencies to find ways to waive or defer any provisions of the Affordable Care Act that might burden consumers, insurers or health care providers. In May, he directed officials to help people with religious objections to the federal mandate for insurance coverage of contraception. In a statement from six physician groups, including the American Academy of Family Physicians, the doctors predicted, “Allowing insurers to sell narrow, low-cost health plans likely will cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options.”
Both of those orders were followed up with specific, substantive regulations. While many health insurers remained silent about the executive order, some voiced concern that it could destabilize the market.
In a summary of the new executive order, the White House said that a broader interpretation of federal law — the Employee Retirement Income Security Act of 1974 — “could potentially allow employers in the same line of business anywhere in the country to join together to offer health care coverage to their employees.” As a result, it said, “workers could have access to a broader range of insurance options at lower rates in the large group market.” The Trump proposal “would draw younger and healthier people away from the exchanges and drive additional plans out of the market,” warned Ceci Connolly, the chief executive of the Alliance of Community Health Plans. “In turn, premiums would continue to increase, threatening the security of affordable coverage for millions of working families.”
A White House official said that “employers participating in an association health plan cannot exclude any employee from joining the plan and cannot develop premiums based on health conditions” of individual employees. The Affordable Care Act has expanded private insurance to millions of people through the creation of marketplaces, also known as exchanges, where people can purchase plans, in many cases using government subsidies to offset the cost. It also required that plans offered on the exchanges include a specific set of benefits, including hospital care, maternity care and mental health services, and it prohibited insurers from denying coverage to people with pre-existing medical conditions.
The order’s quickest impact on the marketplaces would be the potential expansion of short-term plans, which are exempt from Affordable Care Act requirements. The Obama administration limited the length of time people could enroll in such plans because companies were marketing them to healthy customers and luring people away from Affordable Care Act marketplaces, said Sabrina Corlette, a research professor at Georgetown University. She predicted companies would seize the opportunity to resume sale of such policies, which are much less expensive than A.C.A. plans. “There are companies that are poised to aggressively market this stuff,” she said.
Many health policy experts worry that if large numbers of healthy people move into such plans, it would drive up premiums for those left in Affordable Care Act plans because the risk pool would have sicker people.
“If the short-term plans are able to siphon off the healthiest people, then the more highly regulated marketplaces may not be sustainable,” said Larry Levitt, a senior vice president for the Kaiser Family Foundation. “These plans follow no rules.”
Short-term policies could be useful to people in counties where only one insurer is offering plans in the Affordable Care Act marketplace, according to a White House document.
But short-term policies can also limit benefits and charge higher premiums to people who have expensive medical conditions, a type of discrimination banned in policies regulated under the Affordable Care Act.
Mr. Trump’s order would also eventually make it easier for small businesses to band together and buy insurance through entities known as association health plans, which could be created by business and professional groups. A White House official said these health plans “could potentially allow American employers to form groups across state lines” — a goal championed by Mr. Trump and many other Republicans — allowing more options and the formation of larger risk pools.
Association plans have a troubled history. Because the plans were not subject to state regulations that required insurers to have adequate financial resources, some became insolvent, leaving people with unpaid medical bills. Some insurers were accused of fraud, telling customers that the plans were more comprehensive than they were and leaving them uncovered when consumers became seriously ill.
“This could turn back the clock three decades on small business insurance,” Mr. Levitt said. Without the oversight by states, “this could create an unregulated and risky market that we haven’t seen for decades,’ he said.
The order won applause from potential sponsors of association health plans, including the National Federation of Independent Business, the National Restaurant Association, the U.S. Chamber of Commerce and Associated Builders and Contractors, a trade group for the construction industry.
The White House released a document saying that some consumer protections would remain in place for association plans. “Employers participating in an association health plan cannot exclude any employee from joining the plan and cannot develop premiums based on health conditions” of individual employees, according to the document.
But state officials pointed out that an association health plan can set different rates for different employers, so that a company with older, sicker workers might have to pay much more than a firm with young, healthy employees.But state officials pointed out that an association health plan can set different rates for different employers, so that a company with older, sicker workers might have to pay much more than a firm with young, healthy employees.
“Two employers in an association can be charged very different rates, based on the medical claims filed by their employees,” said Mike Kreidler, the state insurance commissioner in Washington.“Two employers in an association can be charged very different rates, based on the medical claims filed by their employees,” said Mike Kreidler, the state insurance commissioner in Washington.
Mr. Trump also directed the secretaries of the Treasury, labor and health and human services to find ways of expanding access to “short-term limited duration insurance.” And the White House said that such insurance “is not subject to costly Obamacare mandates and rules.” Mr. Trump’s order followed the pattern of previous policy shifts that originated with similar directives to agencies to come up with new rules. Within hours of his inauguration in January, he ordered federal agencies to find ways to waive or defer provisions of the Affordable Care Act that might burden consumers, insurers or health care providers. In May, he directed officials to help employers with religious objections to the federal mandate for insurance coverage of contraception.
Short-term policies could be particularly useful to people in counties where only a single insurer is offering plans in the Affordable Care Act marketplace, the White House said. Both of those orders were followed up with specific, substantive regulations that rolled back policies of President Barack Obama.
“In 2018,” it said, “more than 1,500 counties — nearly 50 percent of all counties — are projected to have only one option on their individual insurance exchanges.” In battles over the Affordable Care Act this year, Mr. Trump and Senate Republicans said they wanted to give state officials vast new power to regulate insurance because state officials were wiser than federal officials and better understood local needs. But under the order, the federal government could pre-empt many state insurance rules, a prospect that alarms state insurance regulators.
But short-term policies can limit benefits and charge higher premiums to people who have expensive medical conditions, a type of discrimination banned in policies regulated under the Affordable Care Act. The National Association of Insurance Commissioners, representing state officials, has long opposed association health plans because they could be largely exempt from state regulation. Ted Nickel, the president of the National Association of Insurance Commissioners, who is also the top insurance regulator in Wisconsin, said the proliferation of association health plans could further destabilize “already fragile markets.’’
Another part of Mr. Trump’s order indicates that he may wish to crack down on the consolidation of doctors, hospitals and other health care providers, a trend that critics say has driven up costs for consumers. Mr. Trump said that administration officials, working with the Federal Trade Commission, should report to him within 180 days on federal and state policies that limit competition and choice in the health care industry.Another part of Mr. Trump’s order indicates that he may wish to crack down on the consolidation of doctors, hospitals and other health care providers, a trend that critics say has driven up costs for consumers. Mr. Trump said that administration officials, working with the Federal Trade Commission, should report to him within 180 days on federal and state policies that limit competition and choice in the health care industry.
In battles over the Affordable Care Act this year, Mr. Trump and Senate Republicans said they wanted to give state officials vast new power to regulate insurance because state officials were wiser than federal officials and better understood local needs. But under the executive order, the federal government could pre-empt many state insurance rules, a prospect that alarms state insurance commissioners.
Mr. Trump’s initiative is supported by business groups that see association health plans as a possible way to provide more affordable health insurance to their members. These include the National Federation of Independent Business, the National Association of Wholesaler-Distributors and the National Restaurant Association.
But consumer groups and the National Association of Insurance Commissioners, representing state officials, have opposed association health plans because they could be largely exempt from state regulation.
Association health plans can “cherry-pick healthy groups,” making it more difficult for less healthy groups to find affordable coverage, the National Association of Insurance Commissioners told Congress this year.
Some state regulators and insurers greeted the move with alarm and warned that by relaxing standards for association health plans and short-term policies, Mr. Trump would create low-cost insurance options for the healthy, driving up costs for the sick and destabilizing insurance marketplaces created under the Affordable Care Act.
“By siphoning off healthy individuals, these junk plans could cannibalize the insurance exchanges,” said Topher Spiro, a vice president of the Center for American Progress, a liberal research and advocacy group. “For older, sicker people left behind in plans regulated under the Affordable Care Act, premiums could increase.”
But to business groups, the executive order offers an opportunity to bind their members together and sell large-group insurance policies that are cheap and attractive. Dirk Van Dongen, the president of the National Association of Wholesaler-Distributors, said that he was delighted with Mr. Trump’s initiative and that his group would seriously consider establishing an association health plan.
“Small to midsize businesses have very little leverage in the insurance market,” Mr. Van Dongen said. “Anything that allows them to amalgamate their purchasing power will be helpful.”
Large employer-sponsored health plans are generally subject to fewer federal insurance requirements than small group plans and coverage purchased by individuals and families on their own. They are generally not required to provide “essential health benefits,” such as emergency services, maternity and newborn care, mental health coverage and substance abuse treatment, although many do.
A decision by Obama appointees in 2011 discouraged the use of association health plans as a substitute for Affordable Care Act policies because officials feared they would be used to circumvent the law’s coverage mandates. The Obama administration said that coverage offered to dozens or hundreds of small businesses through a trade or professional association would not be treated as a single large employer health plan for the purpose of insurance regulation.
Instead, the Obama administration said, the government would look at the size of each business participating in the association, so that many small employers would still be subject to stringent federal rules.
The Trump administration now wants to make it easier for small businesses to buy less expensive plans that do not comply with some requirements of the 2010 law.
Large-group plans are still subject to some requirements of the Affordable Care Act. They generally must cover children up to age 26 on their parents’ plans, cannot impose lifetime limits on covered benefits and cannot charge co-payments for preventive services like mammograms and colonoscopies.
But they are generally exempt from the requirements to provide a specified package of benefits and to cover a certain percentage of the cost of covered services.
The Trump administration is also looking for ways to ease restrictions on short-term health insurance plans that do not meet requirements of the Affordable Care Act. Under a rule issued last October by the Obama administration, the duration of such short-term plans, purchased by hundreds of thousands of people seeking inexpensive insurance, must be less than three months. The rules previously said “less than 12 months.”
The Obama administration said some insurers were abusing short-term plans and keeping healthier consumers out of the Affordable Care Act marketplaces. People are buying these short-term plans as their “primary form of health coverage,” and some insurers are pitching the products to healthier people, the Obama administration said.
But the U.S. Chamber of Commerce said short-term policies “serve an important purpose for consumers” who are between jobs.
The influx of a set of plans exempt from the Affordable Care Act rules will essentially divide the market and make it increasingly unstable, said Rebecca Owen, a health research actuary with the Society of Actuaries.
People who want or need broad coverage could find it increasingly difficult to obtain an affordable policy, experts say. While the administration’s goal may be to give people a broader choice of plans, it could have the opposite effect on people who need or want the robust coverage available under the Affordable Care Act.
“The easier you make it not to buy comprehensive coverage, the harder you make it to buy comprehensive coverage,” said Katherine Hempstead, a health policy expert at the Robert Wood Johnson Foundation.
Insurers still on the Affordable Care Act’s online marketplace are most jittery about the possibility of a surge in short-term plans. Many of the large national insurers, like UnitedHealth Group, already offer these plans, and there would be little difficulty in their introducing more because of the executive order, analysts said.
“They can cobble these things together pretty easily,” said John Graves, a health policy expert at Vanderbilt University.
Individuals may already be attracted to short-term plans because of their low costs. These plans tend to limit benefits or offer policies only to people who do not have expensive medical conditions.