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.”
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.
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