President Trump is moving Thursday to scale back rules on health insurance across the country in the administration’s most ambitious effort to date to use its regulatory powers to undermine the Affordable Care Act.
The controversial new executive order being formally released later today aims to open the way for more relatively cheap health plans that potentially offer skimpier coverage than allowed under the healthcare law, often called Obamacare.
Senior administration officials said that the laxer insurance requirements would bring relief to millions of Americans facing skyrocketing premiums and promised that the Trump administration will take additional actions in coming months.
“The president still firmly believes that Congress must act,” said Andrew Bremberg, director of the White House Domestic Policy Council. “But before that can happen, this administration must act.”
Though loosening consumer protections in the ACA might make insurance cheaper for those in good health, that would happen at the expense of millions of sicker Americans, who’ll have to pay more, warn patient advocates, state regulators and others across the healthcare sector.
The president’s moves, which come after congressional Republicans repeatedly failed to roll back the 2010 healthcare law this year, also renewed fears that Trump is determined to deliberately destabilize insurance markets and weaken Obama’s signature domestic policy achievement.
The administration has already taken steps to undermine those markets, including sharply cutting federal support for efforts to enroll people in marketplace coverage next year.
The ACA imposed new requirements on insurers, prohibiting them from turning away sick consumers or placing annual and lifetime limits on medical coverage, something that was once commonplace, and mandating a basic set of benefits. Those include coverage of prescription drugs, maternity care and mental health treatment.
Republicans have long complained that these requirements drive up costs.
Trump’s order leaves many important parts of the new plans unsettled. That’s because the president cannot scrap the existing insurance protections altogether. They are in law and can therefore only be changed by an act of Congress.
Instead, Trump’s executive order directs federal agencies to develop new rules that would allow insurers to bypass some of these requirements through alternative kinds of insurance plans.
How effective the new plans will be at lowering costs for some — and how much of a threat they pose to the marketplaces — will depend on how aggressively the agencies act in writing those new rules. They face constraints from existing federal laws, and their new rules could draw challenges in court, just as Republicans challenged Obama-era rules that they argued overstepped the president’s authority.
Trump’s new proposals include expanded use of short-term plans, which don’t have to meet the insurance protections in the ACA.
The Obama administration issued rules that prohibited consumers from buying these plans for more than three months.
But the Trump administration is proposing to allow people to remain on these plans longer and renew them.
Trump’s order also instructs federal agencies to make it easier for individual Americans or small businesses to join together to get health insurance through so-called association health plans.
It directs the Treasury Department to look at ways to expand the use of tax-free accounts called Health Reimbursement Arrangements that allow employers to provide their workers with additional money for healthcare expenses.
And the order calls on federal agencies to look at how consolidation among hospitals, doctors and other providers may be driving up costs in some markets around the country.
Backers of association health plans argue they give small employers and individuals the ability to get cheaper coverage. And administration officials said Thursday that new associations would be subject to some of the ACA’s health insurance requirements.
But association health plans historically have also been a way to circumvent state insurance regulations.
If association health plans or short-term plans do not have to offer as many benefits as plans governed by the 2010 health law, they may cost less. And a less comprehensive health plan might be attractive to healthier consumers, who might conclude they don’t need coverage for prescription drugs or mental health treatment because they don’t use those services.
But a flood of health plans that offer more limited benefits could also leave many more Americans with inadequate coverage -- one of the problems that existed before the Affordable Care Act, which the healthcare law aimed to fix.
“People were unfortunately very susceptible to junk insurance” in the past, said Karen Pollitz, an insurance market expert at the nonprofit Kaiser Family Foundation. Consumers often did not understand the limits of the coverage they bought, leaving them without protections if they unexpectedly got sick, patient advocates found.
Allowing less comprehensive health plans back into the market also tends to make health coverage more expensive for sick people.
The ACA aims to create large risk pools for people who don’t get insurance on the job or coverage under a government plan, like Medicare. Healthy people in the pool offset the costs of sicker people, making insurance feasible for those with preexisting health problems.
Creating a two-tier system in which some consumers can buy skimpier plans could reduce costs for the healthy, but over time, can destabilize an insurance market as insurers are forced to charge more and more for the sickest patients, according to experts such as the American Academy of Actuaries.
“A key to sustainability of health insurance markets is that health plans competing to enroll the same participants must operate under the same rules,” the actuaries said in a brief earlier this year on association health plans.
The group warned that insurance markets in many states could be “challenged” and “ultimately, higher-cost individuals and small groups would find it more difficult to obtain coverage.”
That is why proposals in the past to expand the use of association health plans have been viewed suspiciously by state regulators, patient advocates, even some insurers.
Legislation in the early 2000’s to allow more association health plans drew opposition from more than 450 national and local organizations around the country.
The National Governors Assn. warned at the time that the plans “would be free to selectively market to healthy groups by selling stripped-down benefit packages that exclude benefits now required by states.”